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

To: energyplay who wrote (106631)	8/6/2008 1:04:46 AM
From: Paul Senior	Read Replies (2) \| Respond to of 206191

Have to sell? Well, of course there are always some who have to sell. I've gone back through my list of oil/gas/related stocks to see just how many have fallen (from their highs), 20% or more, as a previous poster suggested has occurred. I cannot find one stock that has not fallen less than 20%. Which I interpret as that the entire oil/gas sector of stocks is down at least 20%. An awful lot of money. My opinion is that while there might be a few people who have to sell "be cause of some really nasty reason - margin call, tax bill, need cash to pay mortgage, etc." they are very few in number: 1. Imo,there are not that many people who use margin for oil bets and face margin calls. The occasional hedge fund maybe, people no. I base that on what I see on this thread: Puts/calls/options/leaps - yes, but nobody talks about their margin. (Ergo, I assume if it's used, it's insignificant in amount or number of people who employ it.) 2. People having trouble paying mortgages have already gone through their stock portfolios - if they were even the types of people who had such. If in 401k's/iras, then oil/gas likely to be a small component held by funds there, and massive redemptions of 401k's wouldn't correspond to the 20% fall in oil/gas stocks in past two months. 3. Tax bills. Taxes on what? Profits taken in the stock market this year? One hopes. For USA citizens, estimated tax bills were due 6/15 and next up is 9/15. (Estimated taxes for individuals) So there's no reason to sell oil/gas stocks just recently just to fund a tax bill payable in Sept. My opinion is that it's people - individuals as well as fund managers - who are just being scared out of oil/gas positions as we see media reports that oil might drop further, maybe to $110 or $100 or $80, implying oil stocks dropping further too. And of course there are possibly plenty of sophisticated speculators who are doing what you have said you are doing, which is hedging (e.g. buying DUG). I am guessing that's likely more significant than the number of people who "have to sell".