Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Pastimes : Crazy Fools LightHouse -- Ignore unavailable to you. Want to Upgrade?

To: ms.smartest.person who wrote (2934)	12/24/2007 8:14:31 PM
From: ms.smartest.person	Read Replies (1) \| Respond to of 3198

&#8362 David Pescod's Late Edition December 14, 2007 MOTHER SAID THERE WOULD BE YEARS LIKE THIS! This year started out with so much fun in the natural resource sector, but now it’s ending abysmally. We assume that the worse will be out of the way with the end of tax-loss selling in the next 10 days, but it has been horrific of late. Many resource stocks have dropped 50%, uranium stocks even worse. And of course there’s banking, financial and brokerage stocks—ouch! Glad we missed that! We’ve been a big follower of Don Coxe, who has been an advocate that for the decade we should have fun in the commodity sector. We expected there would be bumps along the way, but this is more than a bump. In the most recent Don Coxe weekly webcast, he talks about how bad this had been. “It’s a true global financial crisis and it’s more serious now than it was earlier.” He continues, “there’s no precedent in financial history for what we are experiencing and today, there has never been a better time to make sure you have your financial ducks in a row.” “This is a big deal” he repeats. He makes the great comment looking at a chart of Citigroup that “if this were the chart at the end of the hospital bed, for someone in a hospital, you would probably be sending flowers to the widow.” Our own assumption however, is that these things eventually do end and this may be an opportunity. We do have Nick Majendie of Canaccord who had been bearish on the market, has suddenly turned bullish and has just recently published an interesting article; “Twelve Reason to Currently be Bullish on the Market”. There are certainly a lot of cheap stocks out there right now. Meanwhile, one of our other favorite commentators, Jeff Rubin, the head market guy at CIBC has been making outrageous prognostications that have almost always come correct (two decades ago when he suggested Toronto real estate would drop 25%, he raised lots of excitement) and he’s a big believer that energy prices will remain high if not higher and the sector six months from now will be better than ever. Meanwhile, since we’re in this frame of mind, let’s review the biggest component of oil and gas (at least in Alberta) and that’s natural gas, and it’s been ugly. Take a look at some of the charts outlining this and it shows you over the last two years how absolutely beaten natural gas stocks have been. Remember, if you are talking oil and gas in Alberta, 70% of the revenue comes from natural gas. Most trusts, and oil and gas companies are dominantly gas. It’s very few that are oil in the majority and have benefited from $90 oil. All have been hit by what’s happened in natural gas where we’ve seen relatively low prices as well as a soaring loonie, high labor costs, high service costs and now a government that hasn’t figured out that it’s gas that pays the bills! With the upping of royalties coming in down the road, this could make things worse. Maybe we’ll see many other companies doing what Exalta did, and just give up and sell themselves for whatever they could get. What happens next for some of these natural gas companies? Well things could get even tougher as so far, there is no sign of winter through much of North America except for a brief bit in the U.S. Mid-West, and with inventories at near record levels, it’s hard to get excited about this sector. If winter doesn’t come, one wonders how many gas companies will be left. You can see mergers, consolidations, you name it, which of course gets us to another industry that has been annihilated as well—the drilling and service companies. With gas prices down, a lot of the companies are pulling back and now that the royalty regime has been changed, you have companies like Encana (ECA) saying that they will be cutting back half a billion dollars in their drilling plans next year and Canadian Natural Resources (CNQ), could be much, much more so. The juniors still play a big role in this industry, but their ability to finance in this market has simply disappeared. If they need money to drill projects right now, it either comes out of cash flow or it doesn’t happen… Once again, you have to ask the question, are there going to be many other service companies that end up like Leader Energy (LEE)...hanging on by fingernails… ********************************************* Tired of all this gloom and doom, a wrap up of what we’ve seen over the last few months...I’m sure you know how bad it’s been. Time for a little bit of fun on Monday. We go to some of the most successful stock market pickers over the last while and ask them one simple question: “If you could pick only one stock that could change your lifestyle, what would it be?” Needless to say, we are talking about “improving” your lifestyle, not like the markets have done to you in the last while and decrease your lifestyle!