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Gold/Mining/Energy : KOB.TO - East Lost Hills & GSJB joint venture -- Ignore unavailable to you. Want to Upgrade?

To: Sam who wrote (5800)	10/17/1999 2:40:00 PM
From: Robert McCullough	Respond to of 15703

This is an Interesting Analysis...As the O&G Market is part of the Inflationary Pressure, quite often it can perform contrary to almost everything else... . THE NAPEAGUE LETTER Sunday, October 17,1999 Editor: Bob Davis napeague.com The market is in a now-classic technical position - one that frequently has preceded the start of a financial panic. And I sense that we may be at the brink of one right now - If I were a gambler, I'd put my chips on Tuesday... Although it may not be evident from watching the DJIA or the NASDAQ Composite Index, the broader market reached its highs several months ago, back in mid- July. Most indexes and individual stocks have been declining through August and September. This broad gradual decline has been obscured by two brief rallies.but these have been "failed rallies" which ran out of steam at progressively lower levels, and each has been followed by a progressively steeper decline. On the TNL website there is a chart that shows this (can't E-mail it...). This chart indexes both the Russell 1000 and the Russell 2000 against their base prices as of July 16, 1999, and updated through October 15th. It shows that the "blue chip" Russell 1000 has dropped over 12% since mid-July. The decline over the last week was particularly severe, as the Russell 1000 dropped 6.7%. I sense that this weekend many investors are looking at charts like this one and comparing their portfolios to where they were in mid-July, and making decisions as a result. Even if most investors decide to "hang in there", some are undoubtedly planning to take profits next week. The resulting selling will cause the market to decline further, and the continued declines will then cause other investors to rethink the decisions made this weekend. More declines will result. I believe that three forces drive the market; - Factual information about the investing environment, - The effectiveness with which this data is communicated to investors, and - The often-emotional interpretation placed on this information. Please note that "factual information" is only one of the three forces that I've identified. The recent "Bogeyman" articles have explored each of the "fears" currently facing investors, to identify which are supported by "information" and which are caused by "spooky noises in the night". I still feel that most of these fall into the latter category - they are "noisy goblins" that will disappear at sunrise. However, the market is terrified by these "bogeymen", even if they are less than real. In fact, it appears that the market may soon begin to run away from them even faster. Analyzing "factual information" isn't very helpful on the brink of a serious market decline. But it can be extremely useful when the worst of the decline is over. I predicted the August 1998 correction a month before it hit, because I could see serious economic problems developing, but I did not foresee that these problems would be overcome. For that reason, I did not predict the rapid turnaround that took place. Today (10/17/99), I foresee a possible market decline within the next few days. But I also see that there are fewer real economic problems facing us today than in July 1998. As a result, I am tempted to predict another rapid rebound, but I'm not going to do this until I see how the market reacts during the last half of October, and until I've analyzed the additional economic data that will be released in the next few weeks. Yesterday's Philadelphia Enquirer quoted Mark Vitner, an economist and vice president of First Union Bank in Charlotte, N.C. This quote sums up my feelings: "If you've got a lot of gains and are thinking about taking them, this is probably not a bad time to do it, because the stock market is still way up from where it was a couple of years ago. But the other way to look at this, there are still a lot of good stocks that have gotten beaten up along with the bad ones, so there are buying opportunities." There are in fact huge numbers of good stocks which have not participated in this last year's market run-up, and they may become even more undervalued in the next few days. But I wouldn't try to take advantage of these "buying opportunities" until the dust settles, which may take a couple of weeks. If a serious market panic develops, I will update the TNL web site whenever I have new ideas or comments that are not already being repeated by the financial press. If you have any questions or comments, please E-mail them to me. NOTICE This analysis is based on publicly-available information, and is in no way warranted by me as to accuracy or completeness. I do not guarantee to advise you as to any change in this information. I currently am not a stockholder in any of the Companies mentioned in this edition of The Napeague Letter, although I may from time to time purchase or sell these Company's securities on the open market. I otherwise have no affiliation with any of these Companies, and I am not compensated by them in any way whatsoever.