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Strategies & Market Trends : Strictly: Drilling II -- Ignore unavailable to you. Want to Upgrade?

To: Frank Pembleton who wrote (4409)	11/26/2001 11:46:51 AM
From: SliderOnTheBlack	Read Replies (1) \| Respond to of 36161

Frank re: the oilpatch I don't think Oil needs to hit $30 and imho, this is a very simple play here. 1. Hopefully most people were allready out, or short from the June Swoon and collapse in the OSX...and then picked up a few shares on that infamous ABN Amro downgrade & short run sub OSX 60. 2. OSX 45-60 is the bottom leg of the historic valuation & trading range to the index; so accumulating & averaging into all selloffs sub OSX 60 is a when, not if - money making proposition... and a 50%-100% one at a minimum. So, only patience and some "averaging in" is required to make money in the OSX. 3. It's important to accept that the fundamental momenteum is still moving to the downside...and that goes to the "patience" component of successfull investing/trading here. Rarely does the OSX not re-test support to either the upside, or the downside... OSX 58 more than likely wasn't the ultimate bottom and it surely will be re-tested/penetrated before any meaninfull breakout of the OSX 65-90 range here imo. Nat Gas has terrible weather related comps (coldest Nov & Dec in history last year)to begin the drawdown season with - along with a still slowing US Economy. Crude has a potential Russia/OPEC game of chicken and a still slowing global economy - along with the paper market for Oil - set up once again to overswing to the downside. ... patiently waiting for the market to overswing in either direction is what contrarian cyclical investing is all about... when, not if - it (overswings) allways occurs. 4. Valuation-wise... OSX 65-90 is the probable fair-value trading range of this environment... with risk still outweighing reward; anywhere in the upperband of that range. 5. Imho; only buying "real value" sub OSX 60 is warranted here & then imo... I like "crude levered" plays - due to the Risk Premium of any potential War/Oil Supply disruption. I also like "Calls" here and see no reason to make any serious portfolio weightings in the OSX 65-90 range either fwiw. Take the chip shots... allways take profits on the runs - keeping "some" low cost - LT entry positions... and I like flipping "some" (not all) of the trading profits taken into outlying calls & leaps here. The patch has few attractive values here presently and given the fundamentals economically and the trend in dayrates & rig counts etc... I see no compelling reason to be anything other than patient & disciplined on waiting for more capitualations sub OSX 60 and the very realistic potential of once again picking up some OSX 45-50 "no-brainer" plays and then & only then - doing so on a significant portfolio weighted basis. The only thing that has changed in the patch is that the cycles will be shorter & more volatile imho...and that to be successfull you must be disciplined and patient - waiting for absolute no-brainer valuations before buying/re-entering... and then being willing to sell into still rising fundamentals and sentiment - when making an exit. FWIW: ... if you don't get flamed when you buy/re-enter... you're too late. ...and if you don't get flamed when you sell/exit... you're also too late (VBG). - it's really that simple ~