Rick: My commendations for an excellent comparative analysis! Very thorough and insightful.
In light of your comments about downside protection, I would tend to agree that your personal choice of VGENX is probably more appropriate for yourself than, say, for myself, since I don't mind the downside risk of FSESX, and I specifically want exposure to the higher returns of the service sector on the upside.
IMHO, I still believe there is more potential for upside surprises in the service sector than downside surprises over the next 2-3 years. Given my position and experience in the industry, I feel quite confident that the fundamental outlook for the Energy Service sector is much more solid than for the Energy sector per se, especially when factoring in the depressing effects of the downstream side of the pure energy business on the vertically integrated oil & gas companies like the Majors (i.e., Exxon, Shell) and the Domestic Integrateds (i.e., Phillips, Amoco). I have yet to find a specific sector in Energy Service sector that is encumbered with the same structural problems that are inherent in the downstream sector. (Just 2-3 years ago, I could not say that, but the technological advances of 3D seismic and horizontal drilling, combined with the rapid closure of supply/demand balances in the service sector, have so fundamentally changed the economic outlook for the service companies that the industry rules have almost been completely rewritten.) Energy Services is truly a growth industry once again. Hence I fully expect 1997 returns for FSESX fully equal to or greater than 1996 returns, as unbelievable as that might sound. Call me crazy if you want, but I'm making my call based strictly on industry fundamentals.
Thanks again for the info, and good luck with VGENX. |
