Wednesday, May 03, 2006
A little over a year ago I blogged about getting stopped out of Murphy Oil (MUR) after a big run up. I have continued to watch the stock since being stopped out a year ago March.
In that time the stock has traded poorly. It used to be a good proxy for the energy sector but that changed. I know that Murphy had exposure to Louisiana and maybe that accounts for all of the lag or maybe there is more to it but either way something has changed and the stock no longer captures the energy effect. Anyone who owns Murphy as their only energy stock has really missed out on the move.
Trading like this would be a reason for a top down investor to sell if he hadn't done so already. A bottom up value investor might attempt to seek out why the stock has trailed off and look for a catalyst that could make the stock rev up again.
I think trying to figure out what will make a stock, in this case MUR, start to do well is a lot harder than finding a stock that merely captures the energy effect, in this case 40% in the last 12 months.
Posted by Roger Nusbaum at 6:19 AM