May 21, 2010

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dan_s
Posts: 34463
Joined: Fri Apr 23, 2010 8:22 am

May 21, 2010

Post by dan_s »

Fear and Greed drive the stock markets.

Fear, or should I say Panic, has driven down the DOW by 12% and oil prices by 20%. Gold the "Safe Haven" is down over 4%.

Our Sweet-16 Portfolio is now up just 2% YTD when it was up close to 24% just a couple weeks ago.

I can't speak for all the stocks in the market but I can tell you that all of the Sweet-16 companies are in much better shape today than they were at the beginning of this year. All of them (except MIND which is on a FYE of January) reported strong 1st quarter results and despite the recent dip in oil prices, they will report solid 2nd quarter results. Most of them have production growth locked in that will offset the decline in oil prices. Most of them have a significant portion of their production hedged so the dip in commodity prices doesn't effect their cash flows as much as the Market might think. Plus, the oil price that you see reported each day is the futures prices (the front month NYMEX contract) so they did get very good oil prices for the first half of 2nd quarter already.

Each of you needs to assess your own tolorance to market risk but the energy sector sure looks oversold to me. Use the Market's "Panic" to get some Core Holdings on the cheap.

Dan
Dan Steffens
Energy Prospectus Group
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