DISCIPLINE
LARGE CAP ENERGY STOCKS
I am torn about energy patch now. Commodity has corrected a bit in the last couple of days and crude has fallen from $55 to $50. Is this an opportunity or a trap? Should I increase exposure or stay put? On the positive side, (1) demand / supply favorable; (2) blockbuster earnings coming; (3) still reasonably valued; (4) discounted at $35-40 crude, and downside risk is limited; (5) trend favorable; (6) other sectors suck. On the negative side: (1) over-weighted already; (2) even they are discounted at $40, if the crude falls from $50 to $40, all stocks will fall with them; in other word, they will go down before they go up. Shouldn’t we be more opportunistic? This is why discipline is so much more difficult to achieve. For this reason alone, I think I will resist the temptation to add more energy stocks.
I am torn about energy patch now. Commodity has corrected a bit in the last couple of days and crude has fallen from $55 to $50. Is this an opportunity or a trap? Should I increase exposure or stay put? On the positive side, (1) demand / supply favorable; (2) blockbuster earnings coming; (3) still reasonably valued; (4) discounted at $35-40 crude, and downside risk is limited; (5) trend favorable; (6) other sectors suck. On the negative side: (1) over-weighted already; (2) even they are discounted at $40, if the crude falls from $50 to $40, all stocks will fall with them; in other word, they will go down before they go up. Shouldn’t we be more opportunistic? This is why discipline is so much more difficult to achieve. For this reason alone, I think I will resist the temptation to add more energy stocks.
posted by ZIGZAG at 10/29/2004 05:34:00 PM
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