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

To: pz who wrote (30817)	10/16/1998 7:54:00 PM
From: diana g	Read Replies (1) \| Respond to of 95453

Re:"...what drives these stocks..." Hi Paul, I think oil price is certainly a factor, but isn't this rally based on the assumption of increased future Demand? What if, through some strange circumstance ('new car runs on solar power'), demand shrunk 90% but price went to $25 brl. I think the drillers and service companies would be in Big Trouble. If, on the other hand, demand doubled, drilling and service companies would be going full blast at high margins and growing like Topsy as long as the price of oil was just a little bit higher than the cost of production. I think Price, Supply and Demand are linked in a complex way. Price effects both Supply and Demand, of course. Supply moderates Demand, but the Driver of Oil Service and Drillers is basically DEMAND, first and foremost. Disagreement and Correction Welcome, regards, diana

To: pz who wrote (30817)	10/16/1998 8:02:00 PM
From: RGinPG	Read Replies (1) \| Respond to of 95453

Yeah, that is a real problem with these stocks. Not only that, but now everyone knows that their earnings are dependent on the price of oil, making them much less reliable money makers than previously thought. So in the future, even in the best of times, I doubt these stocks will command the P/E's they used to. The market rewards consistent and dependable earnings. I think we are having a time of deflation due to global financial events which will not last forever. The price of oil will eventually get up to its historical norm (at least). The problem is, if you want to guess at a bottom in these stocks, you have to know when that will be 6 mths ahead of time.