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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: TimbaBear who wrote (16277)	1/26/2003 11:07:46 AM
From: Dale Baker	Read Replies (1) \| Respond to of 78710

Just in general, oil service stocks are not the best way to play the overall move in oil and gas prices. The integrated oils are the safest (XOM, RD, etc.) followed by the exploration companies who benefit from higher prices directly, then drillers who work for the bigger fish and eventually the oil service crowd that does stuff for the drillers and EPs. Lately these companies have not moved up in sync with the oil and gas prices. Energy is not a simple sector to invest in for all these reasons (subsectors, commodity price swings, world headlines pushing prices around, etc.) Oil is tricky now because perceptions about price drops after a war in Iraq are strong. That's probably why I haven't talked much about my energy portfolio here even though it's a quarter of my current holdings. It's hard to make traditional value calls in the sector.

To: TimbaBear who wrote (16277)	1/26/2003 3:25:02 PM
From: Don Earl	Read Replies (1) \| Respond to of 78710

Timba, At least a little bit of what I'm doing in the current discussion is thinking out loud, and maybe try to get some ideas (second opinions). The two assumptions I'm more or less working off of for the big picture are: 1. There will be a war in Iraq. 2. The economy won't recover before Bush is out of office. My view (subject to change without notice) is if my assumptions are correct, then my best bets are likely to come from companies either mostly immune to weak economic conditions or companies where there might be a silver lining under current conditions. I'm not 100% sure the oil patch is the best place to look for bargains, or if it is, if seismic is the best place to look. Opening ANWR would be seismic's white knight since shooting a bunch of surveys would be the first step in any exploration activities, plus oil companies tend to invest more money in future production when commodity prices are high. Dale more or less covers some of my own misgivings about timing. I wouldn't quite put seismic in the greater fool theory category though, because they really do make money when market conditions are good. About the best analogy I can come up with is they're a lot like the retailers who fight a holding action 3 quarters out of the year to be in a position to make a killing at Christmas time. Sort of like that with longer cycles and a certain amount of unpredictability about when the Holiday season starts. I do think there is some fundamental value there, but a big part of realizing that value comes from catching the right part of the cycle. Right now I suppose I'm mostly thinking of it as something that should be a good candidate for a watch list.