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

To: chowder who wrote (42029)	4/17/2005 4:29:55 PM
From: cyesp	Read Replies (1) \| Respond to of 206338

Dabum - I wrote the symbol down wrong, I meant NRP. I try to read all your posts and have learned much from you, so I am troubled by your questions of my purchases. I will try to explain what I am doing. It should serve as a good opportunity to check my logic. First, the time frame for most of my holdings are well over a year. I trade with a small portion of my holdings, 10% or less. Second, the long term (30 year) trend of the overall market is up, so I like to be at least 50% invested at all times. I am presently about 30% cash. I have a lousy history of timing the market in general, but have learned enough here and at other sites to think I might have a little better luck going forward. About 1/3 of my assets are in energy since I, like my father before me, work in the energy business. I write covered calls against my largest positions, SLB and DVN which have extremely low basis. In addition, I am reducing SLB somewhat. Third, while I am not as bullish as Frank, I do believe in Peak Oil. My expectations for the next 10 years are that prices will be in the $40-$100/bbl range instead of the $14-$35 range of the last 2 decades. Nat Gas should have a similar jump. So I am shifting cash and stocks into higher yielding energy stocks with the idea that most of these are multi-year holds. If oil is consistantly $60/bbl in 2012, what will ERF be worth? If it will pay 10% dividends and double in value to $65/share, I don't have to worry too much about whether I pay $38 or $33 per share today. So the big question (again) is... have we indeed shifted to a new price band well over twice the price band of the past 20 years? I say yes. If I'm wrong, I'm hosed and will lose half the value of my energy portfolio which will be half of my overall portfolio, so 1/4 of my savings. Ouch, but not life threatening. I find it a prudent downside risk from my perspective to more than double the portfolio value. Now, the less than 10% that I trade with... I have thank you and JimP and KB and SOB and Kol for encouraging me to take profits in energy, which I did! I also thankyou in particular for the 3-5 bar reversal strategy which is helping me pay for my wife's a new car (she thanks you also). Why am I buying now? - in general, I see a well defined upward channel over the last 3-4 years in energy stocks. Some of the stocks I want to own are near the bottom of the channel. I do not think the fundamentals have changed to break the channels. This is a technical analysis and I do not claim to have much knowledge in this area, but I do believe it represents long term money flow into the sector, which I think will continue. Looking at the homebuilders as a analog, they have been in the same type channel for the past 6 years, and despite the recent pull back, are still in the upward channel. I think they may be done, but I will cover my shorts in that sector when they hit the bottom of the channel just in case I'm wrong. UPL - last year, I conducted a fairly detailed analysis of the Pinedale Anticline, UPL's largest asset. Using this analysis and $5 NYMEX gas, I believe UPL is worth $50/share. If gas prices are higher or the Anticline can be down-spaced to 10 acres (and still add reserves), UPL would be worth much more. So, I am willing to buy UPL below $50 and sell above $55. I don't see too much downside risk, BWDIK. Thanks for your questions, I hope this makes some sort of sense. Cy