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

To: Frank who wrote (42748)	4/26/2005 3:27:52 PM
From: aerosappy	Respond to of 206272

Professor Frank, It almost seems as if denintex addressed this Y! post to one of the persistent o&g skeptics here at Big Dog's place... Ol' Rip Van by: denintex 04/26/05 11:21 am finance.messages.yahoo.com An o/g investor, away for a year in the dark African jungles, returns to his computer to view his investments. The news is not good: ML predicts a commodity meltdown; o/g inventories at record highs, rising 7 of the last 8 weeks; another rise expected tomorrow; OPEC pledges more; Fed to raise interest rates; Kudlow is very bearish on oil. “Oh no,” he screams, as he turns to look at pricing. But to his amazement, oil is in the 50s, gas in the $7s, and they have been lodged there for weeks. His e&ps are up nicely too, with his sector leading the market year after year; stock splits are in his portfolio. He turns off his computer and says, “Ah, but it is only Rip Van Institution,” and goes out to play a game of golf. Rip Van has slept in our midst for several years now. While he looks thoroughly modern, his voice is like a scratchy 78 rpm from a bygone era. Rising inventory is his mantra. He anticipates oil pricing collapse with each EIA report, and each OPEC proclamation is further evidence that a “wall of oil” is near. But he never acknowledges: rising depletion; rising Asian demand; rising f&d costs; rising population; rising refinery costs; lack of refining capacity; or, spare capacity that is shrinking into oblivion. When inventory rises, he pushes the sell button, only to find prices rebounding back several days later. Rip Van manages millions of investment dollars, has a secretary who serves him a pastry and a morning coffee, has access to the best software, and a large advertising budget, and he returns for his clients a lofty 2-5% annual return. We are a ragged bunch. We have a computer, a feisty message board, and an ounce of common sense. I have a dog named Scotty, who refuses to serve me coffee. Yet, most of us thump Rip Van and his colleagues year after year with our o/g returns. We listen to ol’ Rip Van, yes, but also remember his track record. We rely on the information flowing through our message board to make investment decisions. Rip Van thinks for today -- to him, the 4th qtr is a century away. To us, it is several months away, and we have seen its bullish cast over o/g pricing for months. Rip Van has slept through it. While OEPC sends Rip Van into a state of fear, it sends us into a state of good humor. Yesterday, Rip Van Saudi pronounced that, from its alleged current production of 9.5 mmbd, the Saudis will raise capacity to 12.5 mmb in’09. But this 3mmbd increase won’t even satisfy the extra 3+mmbd needed to meet 4th qtr ‘05 demand. So while the red rubber ball of oil pricing bounces around with each EIA report, causing CNBC Rip Vans to sneer and gloat, several days later oil prices will still be around $50, gas around $7. Tomorrow, inventories may rise (as they should in the 2nd qtr), and Rip Van will, in 78 rpm, scream of impending glut. “Oh,” we will say. “That is just Ol’ Rip Van.” He will sell. We will smile. And profits will march on. JMHO