Energy stocks seem to be coming off their lows as there was a real hurry to get out of the group for a while. I may have this wrong but it seemed like after such a big, fast puke down, that some measure of snap back makes sense as I mentioned the other day.
Let's pretend for a second that I am right and the next thing energy stocks do is retrace 50% of the decline before doing anything else-materials too while we're at it.
I have disclosed several times that I will lag the market this quarter. A decent retrace would absorb a chunk of that lag. I would accomplish this by just being patient. By the same token tech, which I have been underweight, has gone up so much that some sort of decline seems plausible as well. A combo of energy, material up and tech down might erase the third quarter lag altogether.
Even if it does not pan out this way this time something similar will happen to your portfolio at some point in the future. There are times to take the lag and be patient and times where you really need to make changes. Being cognizant of this idea will help you at some point in your investing lifetime.
Proud Member Of
Random Roger
© 2009 | Gadget Theme Blogger Template
Original WPtheme By Blogger Template | Converted By Gadget Lover
| Distributed by eFree Blogger Help
Original WPtheme By Blogger Template | Converted By Gadget Lover
| Distributed by eFree Blogger Help
10 comments:
Roger,
After I posted in your previous energy posting, thinking that oil services and drillers are due for a 10-15% rally in the next 6-9 months.
SLB had their analyst meeting and upped their rev forecast to mid-high teens until 2010. I am surprised they decided to do this now with the energy markets as it is but it should mean there is some great visibility in contract flow... (I know you said that you have not looked into this sector too much but I do like a sector that is willing to guide until 2010...)
Not sure if you can catch up this quarter but with your long energy and material, Q4 should be "spring loaded" ... Some time investing is like setting traps, you never know when they get sprung but you will get rewarded if you are patient.
BTW, what is your take on the homebuilder stocks? Are you in the “near the bottom” or “ways to fall” camp?
∞α
I have written about the homebuilders a few times in the past. Candidly, I have never understood the "never ending demand" for new homes.
We all have blind spots and this is one of mine. As I do not get the supply and demand of the group I have and will continue to stay away.
Actually "fair value" of crude is less than $45, imho.
Keep in mind, Exxon can be profitable at $30 crude, so anything above that drops to the bottom line. National oil companies extract oil for less than $10 per barrel (everything above that is pure profit)
Also, based on today's inventory numbers we're adding 1 million barrels (42 million gallons) of refined gasolines to the already massive inventory levels EVERY DAY. Can you visualize that? Each day, 42 million gallons refined over current demand. Hmm. At this rate, we'll run out of storage capaciy soon.
But, why not try to bid up the price yet again so we can send OPEC governments more of our money for crude we don't seem to be able to consume.
Process question. Roger, what are the catylsts to re weight sectors? At what point will you increase tech? Is it fundamentals, price action, buzz among fellow investors, sentiment etc. Do you battle second thoughts?...which of course, you do conquer them. Do you think re-balancing more often can be an interim step..namely, trim profits as they occur versus letting winners ride for too long? While your process does not include big bets, is it fair to say that there is variablity in your sector weighting which requires some executive decesions and re-decisions? As always you are a rare entity that deals with the mess of process. Your colleagues talk about the importance of managing risk...umm, initials, b.r. come to mind, but rarely in my reading do more than give lip service to it unless someone is counting contrariain blather.
1:22pm..continued...re b.r, only sarcasm meant, he is well worth reading, as I do.
i will do the weekend video(with the lights on) on this question of sectors.
Roger, I suppose that when OPEC starts making noise about investors not being happy with $60 oil, it provides a bit of a floor for the price. It's hard to understand the fundamentals (demand/supply)driving these price changes (all commodities) when you have money whipping in and out. I wish someone would do a study that parses price between "hot money" premium and fundamentals. If any have seen such parsing, kindly advise.
The Energy sector bounce was an easy call:
1. Rydex Asset flows are in oversold territory.
2. less than 20% of stocks in the sector have been above their 10, 50, and 200 day averages during the past few weeks.
3. XLE short interest has been at rock bottom.
4. The XLE summation index is way oversold but turning up.
hey Tom K, I thought you were new to investing;-)
Not new to investing, but unfamiliar with your approach...which I find very interesting.
Post a Comment