Sunday, September 08, 2002 1:10:44 AM
CLASSIC SLIDER POST RE BEAR MARKET & PMs
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http://www.siliconinvestor.com/stocktalk/msg.gsp?msgid=17956016
Roebear re: "According to these figures, I would suggest there IS NO War premium, only an OPEC premium."
My point is that Crude Oil has the "risk premium" - not the OSX, or XOI stocks and understandably so...the market has very correctly (imho) refused to put any premium into the Oilpatch stocks - because a temporary spike in crude due to OPEC/Mid East supply/War Disruption risk - is NOT going to lead to any massive cap ex increase by the majors - leading to increased rig counts, dayrates and equipment & service momenteum.
The producers will just pocket the "premium" here... they should return it to shareholders via increased dividends imho.
If we don't go into Iraq, or if it's settled quickly; given the global economy; we could be doing a beeline to $14/$15 crude next year...and if the broad market continues to correct toward historically supported valuation multiples - then OSX 45-60 is in the cards imho. There could be a nice trading pop in the OSX stocks on the move into Iraq... a pop from the 60/70's here to the mid 90's even 100 is likely - but, it will be a great short opp at those levels and I like the risk vs reward of shorting that move up AFTER it occurs, rather than buying it here and counting on the rally.
We shall see...
It's all about Risk vs Reward here to me and there is not any compelling major play imho... other than Cash & Patience with a healthy position in PM's and a very slow - wide pricepoint average in strategy.
OSX 45-60 is longterm buy & hold territory and oilpatch stocks could drop significantly from here if the DOW goes to historic valuation multiples - let alone true Bear Market levels.
The conundrum is that we've fallen so far and seen such pain & capitulation that it's impossible for many stocks & sectors here to not seem "cheap"....but, few are by historic metric's and the DOW is unbelieveably over-priced historically.... on multiples of it's dividends - per Barrons...it's amazingly STILL valued at levels reflecting a speculative bull market !?!?!...and using trailing earnings (any why would anyone believe forward estimates ?) the case can (and has) been made for S&P 300...another 60% down from here...
EXHAUSTION is what will determine "the" bottom imho... when emotions, balance sheets, savings accounts, media coverage etc - are ALL "exhausted" and literally no one is any longer trying to call, or catch "the" bottom... only after that "timeframe" has passed.... will we all perhaps realize the bottom is in... time, not technical price points, or any one single event - will determine "the" bottom and imho.... it will be determined much past where and when it actually occured this time...
Months ago I mouthed a prediction here of 7% unemployment as a minimum and said I thought we might see 9%... well folks - 7% is dead ahead... it won't take many more Consolidated Freightway's or additional job cut waves from the IBM's of the world to get us there...
Unemployment is the next card the Bear is going to play...and given US Consumer Debt Loads... consumer spending which is 2/3rds of GDP is going to contract substantially.... soon, very soon... as only the Mortgage Refi Boom has kept it going... like "0%" financing in the auto sector... continually lower Mortgage Rates and the Refinance Boom which has supported sentiment and consumer spending... can't and won't last forever.
Companies are just not seeing earnings rebound and there is more accounting clean up's to come... job cuts are inevitable and corporate belt-tightening and cuts in cap ex are going to get tighter instead of rebounding strongly - as is reflected in virtually marketwide expectations going forward.
I think we may have another 1 to 2 years to sort out and assimilate what was truly a historic misallocation of capital and one of the greatest transfers of wealth (from Ma & Pa Kettle and our Pension Funds to the Rubinite Investment Banks)in history...
Patience, Cash and Gold/Silver...and maybe a few TIPS....RISK is overshadowing Reward in virtually every sector imho, other than Gold/Pm's.
http://www.siliconinvestor.com/stocktalk/msg.gsp?msgid=17956016
(:
My Threads --
Archive of Trading Stuff #board-1220
PPT Archive #board-1280
Charting Experiments #board-1263
----------------------------------------------------------------
http://www.siliconinvestor.com/stocktalk/msg.gsp?msgid=17956016
Roebear re: "According to these figures, I would suggest there IS NO War premium, only an OPEC premium."
My point is that Crude Oil has the "risk premium" - not the OSX, or XOI stocks and understandably so...the market has very correctly (imho) refused to put any premium into the Oilpatch stocks - because a temporary spike in crude due to OPEC/Mid East supply/War Disruption risk - is NOT going to lead to any massive cap ex increase by the majors - leading to increased rig counts, dayrates and equipment & service momenteum.
The producers will just pocket the "premium" here... they should return it to shareholders via increased dividends imho.
If we don't go into Iraq, or if it's settled quickly; given the global economy; we could be doing a beeline to $14/$15 crude next year...and if the broad market continues to correct toward historically supported valuation multiples - then OSX 45-60 is in the cards imho. There could be a nice trading pop in the OSX stocks on the move into Iraq... a pop from the 60/70's here to the mid 90's even 100 is likely - but, it will be a great short opp at those levels and I like the risk vs reward of shorting that move up AFTER it occurs, rather than buying it here and counting on the rally.
We shall see...
It's all about Risk vs Reward here to me and there is not any compelling major play imho... other than Cash & Patience with a healthy position in PM's and a very slow - wide pricepoint average in strategy.
OSX 45-60 is longterm buy & hold territory and oilpatch stocks could drop significantly from here if the DOW goes to historic valuation multiples - let alone true Bear Market levels.
The conundrum is that we've fallen so far and seen such pain & capitulation that it's impossible for many stocks & sectors here to not seem "cheap"....but, few are by historic metric's and the DOW is unbelieveably over-priced historically.... on multiples of it's dividends - per Barrons...it's amazingly STILL valued at levels reflecting a speculative bull market !?!?!...and using trailing earnings (any why would anyone believe forward estimates ?) the case can (and has) been made for S&P 300...another 60% down from here...
EXHAUSTION is what will determine "the" bottom imho... when emotions, balance sheets, savings accounts, media coverage etc - are ALL "exhausted" and literally no one is any longer trying to call, or catch "the" bottom... only after that "timeframe" has passed.... will we all perhaps realize the bottom is in... time, not technical price points, or any one single event - will determine "the" bottom and imho.... it will be determined much past where and when it actually occured this time...
Months ago I mouthed a prediction here of 7% unemployment as a minimum and said I thought we might see 9%... well folks - 7% is dead ahead... it won't take many more Consolidated Freightway's or additional job cut waves from the IBM's of the world to get us there...
Unemployment is the next card the Bear is going to play...and given US Consumer Debt Loads... consumer spending which is 2/3rds of GDP is going to contract substantially.... soon, very soon... as only the Mortgage Refi Boom has kept it going... like "0%" financing in the auto sector... continually lower Mortgage Rates and the Refinance Boom which has supported sentiment and consumer spending... can't and won't last forever.
Companies are just not seeing earnings rebound and there is more accounting clean up's to come... job cuts are inevitable and corporate belt-tightening and cuts in cap ex are going to get tighter instead of rebounding strongly - as is reflected in virtually marketwide expectations going forward.
I think we may have another 1 to 2 years to sort out and assimilate what was truly a historic misallocation of capital and one of the greatest transfers of wealth (from Ma & Pa Kettle and our Pension Funds to the Rubinite Investment Banks)in history...
Patience, Cash and Gold/Silver...and maybe a few TIPS....RISK is overshadowing Reward in virtually every sector imho, other than Gold/Pm's.
http://www.siliconinvestor.com/stocktalk/msg.gsp?msgid=17956016
(:
My Threads --
Archive of Trading Stuff #board-1220
PPT Archive #board-1280
Charting Experiments #board-1263
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