[pogoliamo]

$this->bbcode_second_pass_quote('threadbear', 'I') thought he wasn't supposed to take online advice. Then you proced to give him advice.

[MrBill]

$this->bbcode_second_pass_quote('mkwin', 'W')hat oil service companies do you have in your portfolio Mr Bill?

[pogoliamo]

Dear MrBill - valuable analysis!!! Thanks a lot!!!

If you permit the joke my only concern is that you are on the same
opinion as me on all of the subjects. There's a good possibility we are
both completely wrong then

[MrBill]

$this->bbcode_second_pass_quote('pogoliamo', 'D')ear MrBill - valuable analysis!!! Thanks a lot!!!

If you permit the joke my only concern is that you are on the same
opinion as me on all of the subjects. There's a good possibility we are
both completely wrong then

[DantesPeak]

As a holder of a graduate degree in Investments, but currently not be compensated in any manner for investment advice, there is some very good advice above - not only from Mr. Bill, but from others.

Sunoco has dropped quite a lot since its recent high, but I think that has more to do with market psychology than expected earnings from that company. Some issues like Exxon probably went up too fast, but ther are others that are probably oversold.

Again, what the Fed says and does are two different things. They will bailout the housing bubble from its collapse, and following that, inflation and oil prices, etc., will move up.

[Eli]

I agree about taking responsibility for ones actions but honestly I think on this site if you listen to the right people you can get great investment advice for our current situation.

Where the hell else am I supposed to get investment advice, call my broker at AG Edwards? A guy who probably knows fuck all about KSA Oil production and has no idea what Cantarell is.

If I called that guy I would be guaranteed to get bad investment advice. Only by pure dumb luck can someone be ignorant of the PO and make sound investments.

I have made close to 20% on my investments in oil so far, I think it might be time to sell some of it and reinvest in things that guard against a correction like it has already been advised.

[threadbear]

Good for you, Eli! I'll be interested in how you reinvest, if you're into sharing.

[Eli]

What about shorting some stocks?

Like home Depot which just put on a gain today they should be hurting pretty bad by the fall of 2008 one would have to think.

Also I bet Boeing, will not be in that great of a position either, right now everyone seems to love them.

What would people suggest?

Also my oil stock is adding on some more today, but I don't want to get caught being a pig.

I making a long term energy play, but I think it is not going to be straight up, I think we will see a serious dips.

I do think I need to diversify what I am holding.

Also I think longterm it may not matter that much what I invest in I think there is a very good chance that the whole game could be rewritten.

[MrBill]

Shorting stocks is like writing a blank cheque. You never know how much it will cost you? I would prefer a well diversified portfolio over short stock sales with my own savings.

Alternatively you can buy put options. They are expensive because you are paying away time value, but in comparison with the risky nature of short stock sales, at least you know your maximum loss.

On the other hand if you want to lock-in some profit from the long-side, while giving up some additional upside you can write covered calls on stocks you already own. They are not perfect protection against a falling stock market, but ATM calls in conjuntion with OTM puts do provide some insurance against falling prices.

But that's just me. Better to talk to your wife, God, your accountant or your dog before deciding what to do.

Here are some things that might go wrong with today's stock market.

$this->bbcode_second_pass_quote('', ' ')So here's the new contest: Pick the No. 1tipping point that'll push us over the edge, into a recession and bear market. Yes, it'll probably be some combo of multiple triggers, a perfect storm ... but tell us, which one single "Archduke moment" or "Seinfeld event" do you think will be the final ultimate detonator triggering a chain reaction of unintended consequences:

1. War/military defense budget busting

The tab on the Iraq and Afghanistan wars is now over $600 billion, with long-term estimates exceeding $2 trillion. Now many neocons openly predict the president will invade Iran before the next elections. WWIII will be the new "unintended consequence."

2. Real estate bubble raging

Inventories rising. Prices declining. Subprime failures rippling through hedge funds, banks. Home builders' guidance bleak. Declines expected into 2008 and beyond. The Economist says global housing is "the biggest bubble in history," fueling stock market speculation.

3. Foreign trade imbalance, trillions new debt

We spend like teen drug addicts with stolen credit cards. To pay, we're forced to borrow an unsustainable $1 trillion annually. Foreigners now own over $2.5 trillion of America.

4. China's economy overheating

She's smoking! But the Beijing bubble could pop long before the Summer Olympics.

5. Private-equity credit imploding

Moody's downgrades their debt. Credit crunch. U.S. economy hit. Blackstone "flips" Equity Office Properties in five short months. Congress may kill tax breaks.

6. 'Homeland Insecurity' failures

Borders leaking like sieves. Ports and chemical plants unprotected. Meanwhile, FEMA governed by politics, "gut instincts" and "good-job-brownies," not intelligence.

7. Hedge funds hurting retirement plans

Assets doubled since 2000 to over $1.3 trillion as pension funds, discouraged by low stock market returns, take bigger risks, further endangering your retirement.

8. Oil rocketing toward $100 a barrel

Crude's again pushing new records. Detroit is no longer the "Big 3," yet continues fighting increases in mileage standards, while marketing to the big gas-guzzling egos.

9. Weak U.S. dollar keeps sinking

Foreign nations are diversifying reserves away from an ever-weakening dollar, further damaging America's global credit rating.

10. Federal budget deficits

GAO head warns America's headed for "bankruptcy." Federal debt now $8.7 trillion. We'll add another $200 billion this year. By 2010, interest on debt will equal the defense budget.

11. Social Security entitlements

Economists call it the "coming generational storm," estimating massive 44% cuts in benefits or 44% increases in taxes. Time bomb ticks as politicians babble on, in denial.

12. Medicare's massive deficits

Big pharma's greed controls. Prescription drug benefits added unfunded $8 trillion. Estimates of $36.6 trillion deficit by 2027. Going broke faster than Social Security.

13. Health-care-insurance deficit

Yes, "Sicko;" with 47 million uninsured, costs skyrocketing, inflation rampant.

14. Climate change fuels global wars

Not Gore: The Pentagon's own research says "climate change" is the "mother of all national security issues," creating geopolitical conditions triggering wars worldwide.

15. Personal savings shortfall

We love consuming! So America's savings rate is below zero, from 10% in early 80s.

16. Consumer debt surging

Except for the military, Americans don't know "sacrifice." We live beyond our means. Consumer debt exceeds $2 trillion. Bankruptcies and foreclosures accelerating.

17. Corporate pension defaults

Congress lets pension funds use unrealistically low estimates of future returns which create underfunding. Later, after benefits disappear, U.S. taxpayers must bail them out.

18. Local government pension deficits

Over $400 billion of entitlements will exhaust local taxpayer resources. And in a recession, collapsing revenues will make matters even worse.

19. International credibility deficit

Gitmo, Abu Ghraib, black sites, wiretapping, more: America needs an image makeover.

20. Washington politics in endless gridlock

Which is more childish: Republicans vs. Democrats? Or Lindsay, Britney and Paris? At least the Hollywood trio can't set up a global meltdown, like our do-nothing leaders.

[pogoliamo]

$this->bbcode_second_pass_quote('Eli', 'W')hat about shorting some stocks?

[Eli]

OK, I am now talked out of shorting stocks or even buying puts, I will just try and diversify my account which is good idea anyway for any kind of investing.


I have too much in a vanguard oil eft, although it has done kick ass.

But what is safe and easy to invest in when I know that this whole thing is going to come apart? Also don't tell me gold, I think that the powers that be are manipulating that market and no central banks are going to let it dominate again. Every one is running fiat currencies they cannot allow gold to lead again.

I am glad I did not sell the other day, it looks like happy days are here again.


This global market it is not going to quit for any reason unless it cannot grow anymore. It is going to take a major disaster to kill it.

[mkwin]

I would have to agree that shorting doomed stocks is a bad idea just yet. In the very early days of a post-decline world a few short would be a very good idea, just not yet. I plan on spending 3-5% on shorts when i'm confident the market is soon to realise the reality of the decline. My estimation would be 2011 but we just have to roll with the punchs and see what happens.

[mkwin]

$this->bbcode_second_pass_quote('Eli', 'O')K, I am now talked out of shorting stocks or even buying puts, I will just try and diversify my account which is good idea anyway for any kind of investing.


I have too much in a vanguard oil eft, although it has done kick ass.

But what is safe and easy to invest in when I know that this whole thing is going to come apart? Also don't tell me gold, I think that the powers that be are manipulating that market and no central banks are going to let it dominate again. Every one is running fiat currencies they cannot allow gold to lead again.

I am glad I did not sell the other day, it looks like happy days are here again.


This global market it is not going to quit for any reason unless it cannot grow anymore. It is going to take a major disaster to kill it.

[mmasters]

$this->bbcode_second_pass_quote('mkwin', 'M')y portfolio will be (still have a little to do),

Oil majors 10%
Oil service 15%
Index Linked Gilts 20%
Renewable energy stocks 10% (returned 24% last year)
Gold Certificates 10%
Silver Certificates 5%
Gold coins 5%
Silver coins 5%
Other 10% (Have some major mining stocks/uranium/nuclear/coal/bit of arable land)
Cash 10% (Euros)

[NTBKtrader]

I'm in basically 30% mining, gold cos i.e. au,bhp

20% healthcare

30% international China/Europe

20% bonds, some dom stocks ie YUM.

[mkwin]

Mr Bill..... What’s your take on Shell, BP and Total?

They have lost quite a bit of ground over the last three months and I’m thinking they are now a buy.

Shell for example; when you strip out their upstream business, you are buying (P50 estimate) 30 billion barrels of oil for $5. Considering their production costs are circa $20, my view is that’s good value? When you factor in hurricane season, Iran and the tightening supply situation, there seems to be significant upside. What do you think?

[MrBill]

I am not a stock analyst, so my knowledge of each is limited. Just some thoughts though starting with the S&P Energy Index (GSPE).

GSPE
--------
534
YTD 34% YOY 24%
P/E 19
RES 541
SUPP 518
RSI 52

Comments: knocked down along with major markets, but held up by strong crude prices

RDSA
-----------
GBP 1888
YTD 5.77% YOY 3.29%
P/E 9 est. P/E 10
RES 2154
SUPP 1860
RSI 35.34

Comments: I have never liked their shareholding structure and multiple tickers. If I like CDN oil sands, for example, do I buy Shell Canada instead? A poorly managed company in the past that has under-performed its peers. A good comeback story perhaps? Regression to the industry mean. Etc. Looks more over-sold than the GSPE itself.

BP PLC
-----------
GBP 567.50
YTD 0% YOY -10%
P/E 10.6 est. P/E 11.2
RES 627
SUPP 563
RSI 34.38

Comments: Another underperforming multinational compared to its peers and the S&P Energy Index. Hit quite hard with loss of reserves in Russian through TNK-BP. Not expensive, but you have to ask why pay the same P/E ratios for a company whose share price has gone down despite an industry rally, when well-run profitable companies have done so much better? Regression to the mean?

TOTAL (FP)
--------------
56.50 euros
YTD 2% YOY 11.5%
P/E 11.5 est. P/E 10.3
RES 64
SUPP 55.60
RSI 39.05

Comments: What can I say? A slimely French company that is likely to be able to go places where American oil companies are excluded like Iran and especially Libya now that the French government is selling them formerly restricted weapons despite an earlier EU ban on such weapon technology transfers.

On the positive side it is a slimely French company that will benefit from state interference on its behalf and has no problem dealing with Sudan or Myanmar.

On the downside, minority investor rights may be trampled on by inside deals, asset stripping or transfer pricing or by holding down domestic prices to suit the government's own policies. The cost of being so close to the state.

I have often thought of buying it myself, but given low levels of French worker productivity and high labor and non-labor costs in France this is a big gamble in exchange for access to some nice fields. I would prefer Lukoil who can also explore and drill in places like Iran and Iraq as well.


LKOD LI
----------
$78
YTD -10% YOY -10%
P/E 9 est. P/E 9
RES $87
SUPP $78
RSI 39.52

Comments: Obviously, this share has been knocked down by Russian sovereign risk due to concerns about renationalization and the uncertainty surrounding Russian Presidential elections in 2008. However, most of Lukoil's expansion has been outside of Russia in downstream assets, whereas a lot of its future upstream activity will be in places like Iran and Iraq. I therefore see it as a Russian multinational oil company, unlike Gazprom who's main operations are still clearly tied to Russia. But that is just my opinion.

Note: I have traded in shares of Lukoil and will look to add to positions on any weakness. All caveats and disclosures apply.

[mkwin]

Good points. I think Russian oil stocks are just too risky though and, considering the P/E is comparable to the other European majors, I am not convinced the risk premium being paid is high enough. If it was a P/E of say 7-8, I might consider it.

What am I going to do if Putin nationalises the company? Complain to the customer services department of the KGB…err I mean the Russian administration.

[MrBill]

$this->bbcode_second_pass_quote('mkwin', 'G')ood points. I think Russian oil stocks are just too risky though and, considering the P/E is comparable to the other European majors, I am not convinced the risk premium being paid is high enough. If it was a P/E of say 7-8, I might consider it.

What am I going to do if Putin nationalises the company? Complain to the customer services department of the KGB…err I mean the Russian administration.

[MOCKBA]

After looking at my shoping list and not finding any, I looked at what others are thinking, and...

$this->bbcode_second_pass_quote('MrBill', '
')Last week's shake-out in the enrgy sphere has shown some bargains for me as some stocks I had my eye on in the meantime are looking a little over-sold.

Devon Energy (DVN) has popped up on the radar screen. It has an RSI of 36.42 that is not over-sold, but getting there, and with an estimated P/E ratio of 11-12 not unattractive. I have not owned it, but might look to add it to my portfolio as it looks cheaper than say ConocoPhilips (COP) or ExxonMobil (XOM) that appear to have further to fall until they find support.

I own some SLB still, but Baker Hughes (BHI) is looking cheaper on the P/E ratios than SLB or Haliburton (HAL). BHI got hit on lower nat gas activity in Canada, but now looks attractive for a recover in that sector. Its share price has lagged the rally in crude as well as its peers in the past 12-mos. and year to date (YTD).