Reconsidering my energy strategy
It is obvious that my jump into energy stocks ~3 weeks ago is not playing out yet.
My premise was that oil prices would pull back - so I bought DUG (and have since added to that position).
My second premise was that the target energy-related companies would still do well despite an ease in prices. I was correct - earnings show across the board upside surprises. But their stock prices have continued to collapse.
I could exit and take my losses. For example, if oil continues to ease towards $100, then these stocks will clearly droop as well.
I could hold firm, knowing that these companies are now severely undervalued and should rally. Eventually.
It is clearly sentiment. Oil is still ~20% higher than it was 6 months ago, yet these stocks are below their prices of 6 months ago. This is clearly foolish and a sign of fear/panic.
So I vote to wait a few more weeks.
My premise was that oil prices would pull back - so I bought DUG (and have since added to that position).
My second premise was that the target energy-related companies would still do well despite an ease in prices. I was correct - earnings show across the board upside surprises. But their stock prices have continued to collapse.
I could exit and take my losses. For example, if oil continues to ease towards $100, then these stocks will clearly droop as well.
I could hold firm, knowing that these companies are now severely undervalued and should rally. Eventually.
It is clearly sentiment. Oil is still ~20% higher than it was 6 months ago, yet these stocks are below their prices of 6 months ago. This is clearly foolish and a sign of fear/panic.
So I vote to wait a few more weeks.
posted by Andrew at
9:21 AM
3 Comments:
FYI
http://royaldutchshellplc.com/2008/08/04/natural-gas-prices-may-fall-next-year-on-supply-surge/
Today is the right time to book partial profits on dug..once fed is over oil will go up with some excuse.
Do you still hold DUG? I thought you got into DUG and QID as trades... btw, what happened to your SRS and SKF positions? Still hold them? Planning to add to them after today's 331 point DOW jump?
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