Monday, February 28, 2005


There's an article on which quotes a number of oil analysts as puzzled on the price of oil.

Clearly the oil stocks have gone vertical, with a year's worth of return in 2 months. So it's a dangerous time to buy, I think.

Jim Cramer on his radio show Friday spoke a lot about the oils, and his recommendation was to trade out of the more expensive ones into the cheaper ones. [Interesting, but not something I'm doing. I may just outright be selling some.]

Bob Brinker on his Moneytalk show ranted over the weekend on OPEC and how they are gouging us. He seems to use straight stocks (mutual funds), bonds and cash, so I'm not sure if we'll ever see an oil call from him. (But maybe we use his rants as a timing signal? Or that of his callers? They were mostly focused on general questions, with a lot of real estate.)

Welcome aboard to Prudential Equity Group, fashionably late as usual.

Richard Russell, a gold and stocks guy, talking about oil? A sign?

I noticed something else last week. Oppenheimer oil analyst Fadel Gheit, who throughout last year showed up on CNBC saying oil prices were "too high, didn't really belong there, and you shouldn't buy oil stocks as a result", now is saying "buy them now, because if you don't, they will be more expensive next year if you have to buy them then."

I always get very wary when I see someone finding religion like that. Last one in the pool is a rotten egg! But judging by the article mentioned at the top, we might have a ways to go.

Frighteningly profitable quote of the week:

"If you plugged in $50 oil and $7 gas into the numbers for exploration and production companies and the majors and carry that through to the service companies, you would end up with phenomenally large earnings," he said.

Under that scenario, oil and gas earnings would account for 20 to 25 percent of all S&P 500 earnings. Last year, they accounted for about 15 percent of the S&P 500 earnings.