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Gold/Mining/Energy : Strictly: Drilling and oil-field services -- Ignore unavailable to you. Want to Upgrade?

To: jbe who wrote (23268)	6/2/1998 1:18:00 PM
From: Chuzzlewit	Read Replies (1) \| Respond to of 95453

Good morning jbe, As Clinton would say, "I understand your pain." I think you raise an issue that has not been sufficiently discussed by those of us (myself included) who advocate a buy and hold strategy - namely an exit strategy. The general problem with Glassman is that discovering changes in fundamentals is time consuming and requires a significant amount of knowledge and judgement. Technological acceptance of standards can render competing technologies useless in short order. Look, for example, at how the VCR format displaced the beta format and how Intel's 8x86 chips rose to preeminence over Motorola's offerings. This means that equities in emerging technologies are not good candidates for passive investors. However, investments in entrenched technological leaders such as Microsoft, Cisco and Intel probably are good candidates for such an investment strategy. That's why I have always preached that the investor should exit an emerging growth company when its underlying growth story is compromised. Re: The Oil Patch: I will admit it straight off. I am totally befuddled by this group. I am confused. I am exasperated. But I am not leaving! I see nothing of a fundamental nature that alters my initial investment decisions. Maybe I will be dead and buried before I make any money with ESV or GLM. But in this case little time is required for portfolio tracking. The business risks you face here are overbuilding rigs and decisions by the E&P companies to delay drilling because of weak oil prices. But if you look at the cash flows of these companies you will quickly see that they are quite healthy. It is true that VL decreased it's estimate for ESV for the coming year, but they did not change their long term outlook. VL points out that ESV's contracts are short term, so the company is in a good position to benefit from a resumption of delayed drilling projects. My personal view is that oil patch stocks are not good candidates for buy and hold because they are cyclical. I believe they are good investments for the intermediate term (five years or so). Right now the cycle has been put in suspended animation because of the Asian economies, and the consequent weakness in the price of crude. Re: Making money Of the three stocks I own in the patch, VRC is the only one on which I'm making money, so I'm certainly no expert. I think you need to forget the stock market and look to the underlying business for solace in times like these. TTFN, CTC