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Gold/Mining/Energy : Strictly: Drilling and oil-field services -- Ignore unavailable to you. Want to Upgrade?

To: rocklobster who wrote (80348)	11/29/2000 8:33:02 PM
From: BigBull	Read Replies (2) \| Respond to of 95453

Actually, I think it is much much simpler. It's called the business cycle. It's been ten years since the US has seen the down side of a cycle. People have forgotten what they look like and how they work or even that they can and do happen. This one is proceeding along fairly classic lines. What's different this time was the extreme levels of euphoric valuations attached to all things tech. Econ 101 - Never, ever ignore the inverted yield curve. It is where stocks go to die. Get ready for the PC price wars.... servers next. biz.yahoo.com

To: rocklobster who wrote (80348)	11/30/2000 9:40:32 AM
From: SliderOnTheBlack	Read Replies (2) \| Respond to of 95453

rocklobster; telemarketer et al - why the Oilpatch is down I think most the reasons everyone referred to are valid; but in the most simplistic sense - the answer is because this is; was; and will allways be - a CYCLICAL sector. It does NOT matter that earnings are still ramping; that some drillers, or OS companies have eps forecasts that are near doubles for next year; as that "SAME, EXACT" environment existed in 1998. Oilpatch stocks have, can and will implode - crash & burn into those incredibly positive foreward looking earnings estimates... again; that is exactly what they did in 1998. It's all about the "curve" in my opinion. We are either on the "upward cusp" of an Oilpatch cycle, the "crest" that forms at the top; or the "downward slope". In my experience; the OSX reaches peak valuation at about the 75-85% point of that "upward cusp" of the cycle - and it's beginning to look like that "sweetspot" point in the "upward cusp" of this cycle was this summer... and that we are now forming the "crest" - if not even beginning the downward slope. What confuses people; is that the "cusp, the crest & the downward slope" of "VALUATIONS" - DO NOT; coincide with earnings. The market anticipates earnings, it looks far, far forward. The potential for $7-$8 Nat Gas was priced into the E&P's this summer - just as it was in the summer of 1999; when the E&P's peaked valuationwise; then imploded & sold off from massive profit taking in September 1999 - months before the peak winter heating season arrived. It seems illogical; that the market does not wait to see if a sever Winter ramps Nat Gas prices to run them to their highs during the peak of heating demand season & the peak for Nat Gas Prices; but it doesn't. - the Nat Gas Stocks have been seeing their peaks and their profit taking/selling inflection point - in late summer/Sept; as the market is anticipating all the possible paramaters of a harsh, normal, or mild winter 4-6 months in advance. The "game" of holding these E&P's into Peak Winter Heating & Nat Gas demand season has been a fools game for the last 2 cycles in the patch; but yet few; very few have learned how this game is played. In the 1997-98 cycle; we had the peak of shareprice valuations & the OSX index reached in Oct 1997 - nearly 112-15-18 months before the earnings for most OSX companies peaked. Yes ! - OS companies reached their shareprice peak in Oct 1997 when they were posting eps figures for example of say .12 cents for the qtr & maybe .36 cents for the trailing 12 mos; with forward looking eps for year 1998 of perhaps $1.50+ looming on the horizon. - they reached their peak; 12-15 mos. before their peak quarter in earnings was reached; yes - they sold off directly into eps estimates doubling their earnings, they sold off directly into "record reporting quarters"... The Market in 1997-98 was looking out 12-18 mos into the cycle and stocks sold off much, much sooner than what nearly everyone thought they would - expect the instituional investors who were the first to leave... That taught me about playing the "curve" of a cyclical sector. To exit & take profits in the Oilpatch and to do so; anywhere near the peak - one must leave so soon, into such incredibly positive underlying fundamentals, into such enticing forward looking earnings & analysts estimates - that when one publically announces that exit/profit taking - they surely will be "stoned" by the masses... and if they aren't; they aren't leaving soon enough - you can take that to the bank. It does NOT matter that we are falling from $35 Oil and $7 Nat Gas; it ONLY matter that we have reached the peak and that we have turned and that we ARE falling... that the peak in this commodity price cycle has been reached is what matters. We are playing out this cycle just like the cycle played out in `1997-1998. It matters not from what floor we fall from; just that we're falling... I think few here realize how much the OSX depends on non-energy specialist, or die-hards for investment here. Once the periphial, casual Oilpatch investors leave; their is not enough "die-hard" - real Oilpatch money left to support this sector, let alone ramp it to new highs. The Oilpatch needs those non-energy investors; once they leave (and they allways leave at the first sign of commodity prices peaking)- we begin to crest & then rollover & turn to the downward slope of the shareprice cycle. - and remember; the shareprice cycle DOES NOT coincide with the "present" commodity price, or the eps & fundamental cycle. The stocks today are being priced for where O&G prices will be next Sept - Dec and where Cap Ex Spending will be in 2002, not 2001. For the OSX to go to 150-165 (new highs) the non-speciality/non-diehard energy investors; must see Cap Ex Spending ramping though ALL of 2001 AND 2002. If they see 2001 as the peak, or if they see the Majors playing "wait & see" as to how "soft" the US Economy lands - then they're OUT OF HERE ! - and that's just what we're seeing imho... The investors we need to stay here; and to put "more" money to work here; are either seeing the Majors playing "Wait & See" and/or they are seeing Cap Ex Spending peaking in 2001, or early 2002; verus this being a multi-year significant expansion cycle in the Oilpatch. Add all this necessity to be out very, very early on a sentiment & commodity price basis; to the external negatives of an implosion/correction to what by all means is now clear to all; the correction from a market valuation bubble AND then add the Election Debacle and we've got the chance to go down further & faster than most may imagine. Is it all doom & gloom ? - No. There is a good chance that this WILL BE a multi-year oilpatch expansion cycle; but what is also clear - is there WILL BE a significant "pause that refreses" correction here; before part deux resumes... Having allready taken significant profits off the Oilpatch table here is paramount; as will be picking an attractive risk vs reward re-entry point to re-invest to a fully invested position; "if AND when" the signs appear that the pause is refreshing, versus just turning and rolling over. The most valuable discussion going forward here will be about the "signs" that we need to be watching for to endorse that this is going to be a multi-year expansion cycle vs. just another 2 year cycle whose peak has allready come & gone... albeit, a record commodity price spike that never saw it's impact fully translated to the shareprices... but; then again - should they be ? ... be carefull out there - Cash is both King & a Man's best friend ~