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Gold/Mining/Energy : Big Dog's Boom Boom Room -- Ignore unavailable to you. Want to Upgrade?

To: Meridian who wrote (38445)	1/14/2005 2:49:38 PM
From: jim_p	Read Replies (3) \| Respond to of 206325

I only have six points to make: 1. It only takes a very very small surplus to cause prices to crash (same on the upside as we just saw). This is why this is a great place to invest every 12-18 months, but you have to know when to sell or don't play the energy stocks. 2. The small independents make up most of the drilling activity and most of their production is not counted in this magical -2% supply number we keep hearing about. It's best to watch the storage numbers and not look at the top 20 producers production growth or short fall. Demand has increased from an improving economy and a housing boom, but the simple fact (weather adjusted) is supply has increased faster. 3. The world economy is slowing. Inflation is getting built into the system from both a lower dollar and higher energy prices. It takes about 12-18 months before it starts to show up in the numbers, but if you don't believe inflation is here just go to your local food store or favorite restaurant and it's pretty obvious. The government inflation numbers are a joke. If you listen to AG, he is dropping hints that rates are going up faster and higher than the market is currently anticipating. In the long run, inflation is a function of printing more money and the presses have been going pretty strong to finance the deficit and the war. Sooner or later it will increase inflation. Interest rates are just another cycle and like all cycles they tend to go to extreems in both directions. 4. Markets go in cycles. When was the last time we saw negative foreign investing in the US markets??? It's a cycle and it's in the early stage. The markets will have a hard time going up with foreigners taking money out of the system. 5. If GW gets serious to cut the deficit where is the money going to come from??? Higher taxes or lower government spending, both of which will slow the economy and decrease demand for oil. 6. How has this current economic expansion been funded??? By lower lending standards on home equity loans by any one of 4-5 offers you get in the mail or online every day. This can't go on forever and as most excesses do, it will end pretty ugly. The future growth of world economies are energy constrained and higher energy prices will lead to lower growth and lower growth will lead to lower energy prices, but the cycle has an upward trend and the growth we've been used to in the past is history and we need to get used to it. Stock prices coming onto in 05 are fully valued and this will be a year when those who take profits often will prosper. Did we miss anything?? All JMHO, Jim