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

To: regli who wrote (38144)	8/8/2005 3:50:16 PM
From: Wyätt Gwyön	Respond to of 110194

maybe. i mainly think it's investor sentiment, though. i mean, it is common for goldbugs to say gold miners should be valued based on reserves instead of (often pathetic) cash flow or EPS. this is very fortunate for insiders looking to dump shares. by contrast, the market seems to insist that oil and gas E&Ps be valued on cash flow, and moreover that said cash flow be recognized as peak cash flow and therefore given a very low multiple (as close to zero as possible). thus, E&Ps typically have higher forward than trailing multiples, since the analcysts have (incorrectly) forecast lower future energy prices for six years running. my guess is before the energy bull market ends, there will be much more of a bubble mentality towards energy stocks and a willingness to give them high multiples on much more suspect metrics than are used at present. hard to say when such a change in attitude will occur, but i think it's going to be with energy stocks above 25% weighting in SPX, as opposed to about 9% at present.