[Leanan]

CNN has an article about how to adjust your portfolio, now that we've reached the midpoint of the year:

http://money.cnn.com/2005/06/10/pf/mid- ... /index.htm

They think it's time to sell oil:

$this->bbcode_second_pass_quote('', 'I')f you have held oil or other basic materials stocks for a while, you've done well. It's time to take profits and diversify. These industries tend to outperform at the start of a recovery, when growth is at its peak.

[gt1370a]

That sounds like a great way to transfer more wealth from the working class to the super rich!

Two times that article said "the price of oil is falling". Where do they get that idea? On Friday oil hit a high of $55 and settled at $53.50. We're just at the beginning of a high-demand season, and a hurricane season, and there's "no spare capacity".

I tend to think things will turn out more like the Goldman Sachs Superspike report predicts. If so, then you are right, this could present a good buying opportunity.

[Leanan]

Agree that saying oil is dropping is a bit premature.



It's not rising like it was, but that could be strictly temporary.

[jaws]

Even if peak oil is 20 years away, the world right now is going through a massive economic transformation. Economic growth at the scale of China and India (two and a half billion people) has never been seen, and it is creating huge demand for all commodities, natural resources topping the list. I would buy oil, gold, steel, lumber, any commodities.

[MicroHydro]

Note there is a difference between oil (or gold) stocks and oil (or gold) futures. Most investors use extraction industry stocks as a surrogate for commodities. One can do this, but recall that Enron and Yukos were once highly touted stocks. I am more comfortable with owning actual commodities, as there are many transparency issues with stocks. We have certainly learned that many corporate annual reports are works of fiction.

[joewp]

$this->bbcode_second_pass_quote('MicroHydro', 'N')ote there is a difference between oil (or gold) stocks and oil (or gold) futures. Most investors use extraction industry stocks as a surrogate for commodities. One can do this, but recall that Enron and Yukos were once highly touted stocks. I am more comfortable with owning actual commodities, as there are many transparency issues with stocks. We have certainly learned that many corporate annual reports are works of fiction.

[Zentric]

Rationally, at least, a stock should be valued based on its earnings per share multiplied by the amount of time the company is expected to maintain this level of earnings. This approximation is admitedly crude, but stick with me.

If you anticipate the demand for oil is only going to increase in the near and long term, and no significant "windfall profit tax" will be levied upon the oil companies, then yes, you might do well to buy oil stocks.

On the other hand, if an economic crisis is to unfold soon, one that is so devastating that demand for oil falls off precipitously, then there stands to be a glut of oil on the market, causing oil shares to lose value.

In such an economic crisis, fiat bucks around the world might soon be recognized as a poor way to preserve wealth. But gold might not have this problem. Therefore, precious metals might weather all seasons better than oil stocks.

[Leanan]

$this->bbcode_second_pass_quote('', 'A') gold or silver coin will always be accepted in exchange for food, drink a a dry bed.

[chris-h]

$this->bbcode_second_pass_quote('Leanan', '')$this->bbcode_second_pass_quote('', 'A') gold or silver coin will always be accepted in exchange for food, drink a a dry bed.

[Devilboy]

$this->bbcode_second_pass_quote('Leanan', 'I')'m not so sure about that. Did you see the "Sarajevo" post in the Planning For the Future forum? It said in Sarajevo, when TSHTF, gold soon lost its value, but toilet paper was always a valuable trade good. And that people would trade much-needed meals for items like soap, deodorant, and cosmetics. Just so they could feel human again.

[teemu]

$this->bbcode_second_pass_quote('MicroHydro', 'N')ote there is a difference between oil (or gold) stocks and oil (or gold) futures. Most investors use extraction industry stocks as a surrogate for commodities. One can do this, but recall that Enron and Yukos were once highly touted stocks. I am more comfortable with owning actual commodities, as there are many transparency issues with stocks. We have certainly learned that many corporate annual reports are works of fiction.

[rockdoc123]

$this->bbcode_second_pass_quote('', 'R')ationally, at least, a stock should be valued based on its earnings per share multiplied by the amount of time the company is expected to maintain this level of earnings. This approximation is admitedly crude, but stick with me.

[Falconoffury]

Something I haven't really seen mentioned on this site is the value of platinum and palladium, which are also valuable metals.

[Leanan]

$this->bbcode_second_pass_quote('', 'T')hat's not at all what it says.