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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: Knighty Tin who wrote (88785)	1/23/2001 11:20:57 PM
From: Mark Adams	Read Replies (1) \| Respond to of 132070

MB, I've sold the last of my ROYL and CHK, and also look to re-enter in the future. If recession induced demand drops push the price of energy down, I may actually own some of the better quality names too. I hope this isn't the ultimate outcome, as I think we all prefer a growing economic pie. Those uneconomic holes do catch the attention of companies with lower cost structures, who can exploit such known reserves. But even they take 12-18 months to bring to market. That assumes that pipeline capacity exists once the gatherers/feeders are built. It's quite possible that California, reportedly the worlds 12th largest economy, will not see substantially lower energy costs for 2 years. A couple of years ago, I read several pieces on why we may be facing chronic oil shortages, which influence NatGas, but only indirectly. Ie through power producers switching fuel sources. I also read a piece in the economist, which suggested that we may see $5 oil. Of course, if deflation were to spread globally, we still might. But I'm of the position that we are much closer to chronic shortages than oversupply. China's modernization is soaking up much of the Middle East oil capacity, and there are serious constraints on the shipment of NatGas. Pipelines from Alaska or the Artic circle aren't like to be completed near term. Market demands will create supply, but given current circumstances, as I see them, this will not take place with out somewhat severe dislocations in the short term. These dislocations do not seem to help maximize the economic pie. Pour milk out onto the ground as it cannot be processed, then raising the cost of dairy products will not increase the size of the economic pie, but perhaps net-net will be neutral for GDP? Perhaps I've spent too much time of late in the bear's den. I see real GDP declining, as real investment retreats and retrenches. Infrastructure investments will eventually be made, one would hope. And the sooner neglected infrastructure investments are addressed, the better off in the long run all will be. What does this have to do with picking stocks? Well, How can anyone hold stocks long in such an environment? Do you change your investment strategy (which is proven successful) in the face of what appears to be secular changes? Or do you ask for a perscription for prosaic, and stay out of the bear's den? [Edit: What would you feel would be the likely equilibrim price of NatGas in CA? Or to phrase it another way, what futures price would you look for to reenter BR/UCL/APA/APC? I understand you may make these decisions intuitively- so perhaps this is a question that cannot be answered with data available at this point, and certainly would be subject to change as the situation evolves. The second question is really, do you ever shrink your long portion of your portfolio based on macro economic circumstances. Say you were looking at investing in '72. Would you increase the portion of your portfolio in max income at the expense of your long portfolio, or stick to seeking out the best relative values regardless? ]