Replies to post #8537 on Pilgrim Petroleum Corp. (PGPM)

[CalTex]

I like your thoughts earl...positive just like the book "The secret"

[downsideup]

Well, I think you are half right.

I'm happy with the prospects in PGPM more than I am with the potential in stocks generally "right now". Gotta fix the credit markets before stocks will be able to thrive. I'd agree that the problem in stocks isn't quite what it seems with an eye only on the prices we are seeing now... but, there isn't any linear connection to value you can rely on in a market like this.

Credit market problems are the issue, and forced liquidation of stocks by the hedge funds who are on the hook, big time, will punish larger stocks in disproportion. Today, that is also whacking their brokers, meaning Goldman and JP Morgan. The credit markets are the problem, the result is what we see in the stock market. The hedge funds tend to run on three to five times leverage, and now they are being forced by their investors to de-leverage... so stocks are on sale, and it isn't rational selling driving share prices rather than more or less mechanical linkages to other instruments... and the gears are grinding a bit more now that we are trying to shift into a lower gear without the clutch.

There is a lot of cash on the sidelines that will stay there until the waters are less obviously roiled... much less swirling the drain as it seems is the case now. I think that makes PGPM's timing with this transition... remarkably good... if uncomfortable.

Maybe it would have generated a lot more pop if they had finished doing all this in the period before oil prices were moving up toward the peak... BUT... that history is done, and what I'm looking for now are situations that will enable some obvious upside in the "post" environment. May not have the upside now it would have then... but, relative values have changed... it has sidestepped the downdraft... looking like they have structured a decent portage around the waterfalls... well positioned now to put in downstream from the risk... and having any obvious upside potential makes for a good story in this market.

I don't expect anyone has a functional short to mid range view in their crystal ball right now... but, the rules aren't any different now than they have ever been...