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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: russwinter who wrote (28484)	3/12/2005 12:16:11 PM
From: Wyätt Gwyön	Read Replies (2) \| Respond to of 110194

. Plus most of these companies are failing to replace reserves. consider the long-term price implications of what you just said. there's a reason they aren't replacing reserves--they're hard to find. the low c/f multiples, combined with the paranoia about a supply glut, continue to lead the E&Ps to buy in shares or deliver dividends as opposed to risking overexpansion which the market would only reward with low multiples. I don't think liquidating royalities should be premium priced. no doubt. ironically, it is the actual liquidating royalties (RTs) which are premium-priced to the E&Ps, due to the yield starvation factor which has likewise driven up the prices of REITs and utilities. but there are long-dated reserves in some places if you look. like the oil sands. Being long energy now is high risk. perhaps, but i fail to see how being long stocks trading at 7-8x PE and 3-6 times c/f, which are already discounting a steep drop in the world's most important commodity (which is now undergoing a historical and irreversible supply peak and where the best geological prospects are in the most geopolitically risky places on the planet), is more risky than being long gold miners that carry a 50x PE and thus discount a huge rise in the price of gold. thus, i prefer to be long the energy equities and long gold the commodity (via GLD). the fact that others see it differently is what makes a market. and bull markets are vines that must climb a wall of worry. when the worries are gone, i'll be worried.