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

To: carranza2 who wrote (70667)	9/29/2006 6:23:12 PM
From: Wyätt Gwyön	Read Replies (2) \| Respond to of 110194

i chalk it up to Wall Street herd mentality. VLO has had a 5x or lower forward PE most of the time since i first bought it in 2002. analysts typically lowball the earnings. every conformist hack on Wall Street knows you don't want to buy cyclicals at peak earnings, and they see the low PE and think peak earnings. they have been calling peak earnings over the entire 1000% rise in earnings. i keep thinking eventually VLO will get a little bit of respect, but it hasn't happened. in a Barron's big money survey of top "professional" investors (read: people who couldn't become rich trading their own account and who instead became rich by being parasites on OPM) last year it was considered one of the top 10 overpriced stocks in the market, at under 6x forward actual earnings. my long term thesis on energy stocks is eventually they get the respect that has been bestowed upon tech stocks these last 12 years. not that many of us actually remember, but the record books show tech stocks used to trade at a discount to the market because they were considered cyclicals (which they are). then the PC revolution, followed by the Internet revolution, happened, and coincided with the Boomer investment revolution to give tech stocks the push they needed to become overpriced bubble stocks. the tech bubble of course led to overinvestment, which led to overcapacity, which led to poor future returns that have plagued the tech market ever since. i think it takes about a decade of a sector bull market before perceptions start to change. if the tech bull started with MSFT's 1986 IPO, it was household news by Netscape's 1995 IPO. as for my energy thesis--if this plays out, then by the end of this decade or early next decade energy stocks will start to be taken more seriously, and maybe even start trading at premiums to the market (even a market multiple would be a huge move up for a 5x PE stock). in the meantime, we have a lot of volatility as leveraged traders are periodically taken out and shot like over the past few weeks. time will tell.