3 replies to this topic

[Cirrus]

The OSX just printed an ATH. I cut back on my exposure to energy positions a couple days early. I would think the energy stocks need to base for a few weeks but that may not be the case. FWIW I still think energy is in a major secular bull market and there is plenty more upside in store for any groups in the energy related business--whether it's petro, uranium, or alternative energy.

[gti_99]

Hi, Cirrus, I have read that the energy usually goes up late in an economic cycle. Is that the case? Or that the world is very different (or the Fed is different) now that the above statement is no longer valid anymore. Thanks.

[Cirrus]

That is correct. Typically energy and energy stocks peak last and have done so in prior market and economic cycles. I've posted my thoughts on the sector in the past. I've spent a lot of time gathering and reading data concerning petro supply and demand over the past several years. You can count me with T Boone Pickens and Jimmy Rogers in the peak oil camp. I think world crude oil production either just recently peaked or will peak over the next 12 months. This doesn't mean production will fall off a cliff--just that the world will never average more than 86 +/- MBpD for a CY. I suppose I'll find out if I'm right over the coming 12 to 18 months. Thus, this energy cycle is substantially different than prior cycles as the world now has 2.5+ billion new oil customers (BRIC) whose per capita use will continue to grow rapidly at a time when world production has likely peaked. Therefore I expect this cycle to be dramatical different than prior cycles.

[gti_99]

Thanks for the reply. One thing that puzzles me is the strength of the OSX. As the stock investors are looking at the future, there just are not many places to drill for oil anymore, no matter what the price of oil is / will be. I'd appreciate very much if you can shed some light on this subject. Thanks.