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Zecco.com » General Investing » Screening & Picking » Risk/Reward of energy stocks
Last post 03-05-2008, 8:38 AM by predatorprey. 4 replies.
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  •  02-28-2008, 9:01 AM 24296

    Risk/Reward of energy stocks

    Reply Quote
    I really found the GOOG bottom piece to be an intriguing discussion, thus I'm going to talk about a sector that had a flipside. Energy up until the 3rd of the year was on fire, but than many energy stocks fell sharply and they became buys. They have since come up from those lows and it is my opinion that the risk/reward of owning an energy stock isn't worth it. I'm wondering if others concur or think it will continue to trend higher.
    Aqua

  •  02-28-2008, 11:37 AM 24306 in reply to 24296

    Re: Risk/Reward of energy stocks

    Reply Quote
    This is a tough one.  I obviously think everyone should have some long-term energy exposure in their portfolio.  But on a short-term basis, I concur the risk/reward right here probably doesn't justify an entry.  I think we'll see the XLE (this is what I use as a proxy for the overall energy sector) approach its late-2007 highs, but whether we'll take out those highs in the next few months seems a 50/50 coin flip at best.  When you see long-time energy investors like T Boone Pickens talking about a pullback, it's probably not the time to be initiating longs.

  •  02-28-2008, 12:43 PM 24309 in reply to 24306

    Re: Risk/Reward of energy stocks

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    There was a good related post on our blogs this morning: http://www.zecco.com/
    tonyleachsf, Zecco Associate

  •  03-02-2008, 4:05 PM 24485 in reply to 24296

    Re: Risk/Reward of energy stocks

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    aquaswim47:
    I really found the GOOG bottom piece to be an intriguing discussion, thus I'm going to talk about a sector that had a flipside. Energy up until the 3rd of the year was on fire, but than many energy stocks fell sharply and they became buys. They have since come up from those lows and it is my opinion that the risk/reward of owning an energy stock isn't worth it. I'm wondering if others concur or think it will continue to trend higher.


    Honestly, here is how I see the markets in the coming months.

    I think stocks will stay in a range for a couple of months while we "wade through the recession".  During this time, commodities will remain high (Oil 100+, Gold 1000+, Copper 4+), and the housing market will bottom.  Come April - May, buyers will return with cash in hand (taxes/stimilus) and will go out and do what they do.  During this time, I expect energy/comm. to take a hit like stocks did from 1550 to 1300 (S&P), Stocks will have broken up to 1400, and be taken out of their bearish viewpoint. (S&P could hit 1200)

    Honestly, Gold & Oil can go a lot higher from here, but I just don't have the b@ll$ to try.  I'll wait to get gold on a major correction.

    Good Luck,
    Scott
    S&P 500 Trend

  •  03-05-2008, 8:38 AM 24616 in reply to 24485

    Re: Risk/Reward of energy stocks

    Reply Quote
    I believe oil will soon peak and head down as a slow down world wide takes hold.
    Oil, I expect will fall as well as world wide markets.


    So since the energy sector stocks are linked to the price of oil, they will take a double wammy hit.
    Get hit by lower energy prices, and get hit by a bearish market.
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