There are 2 buys that are consistent staples in my yearly buying routine. The first is Best Buy (BBY) in the fall and the second is oil in the winter. It's as sure as Mike Tyson doing something nutty in the boxing ring. The bottomline is this. More people are driving than ever and two, cars aren't that much more efficient (actual fuel economy has been stable for the past decade at around 21 miles per gallon). On top of that, Saddam's death won't go over well and I expect greater resolve from rebel forces in the Middle East because of it. We'll see however whether we win the war or not, I'm in on oil.
Currently, the prices of oil are dropping and actually briefly dipped below $50 dollars a barrel today. The economists say that it will go as low as $40 but gosh, I just don't see it. World demand is way higher than before as other countries begin to industrialize and beginning Feb 1st (2007) OPEC will cut production even more. The so-called experts say, it going to continue the drop. OPEC (the real experts) says it's not really concerned. The only thing I have to say is that I got flash backs of Apple snickering when people said that the Zune was a threat to the iPod empire.
What it comes to is this. Oil is down now because surpluses are up but that doesn't mean demand is down as well. Equal or greater demand plus reduced production equals higher prices for us all. I'm sure the "experts" see a lot of things but if you haven't noticed, gas prices haven't really gone down all that much but Valero (as well as many other oil related stocks) are near 52 week lows. Opportunity isn't just knocking. It just kicked down the door, got down on one knee, and told you she wants to marry you.
As always. We'll see...
Notes:
In Portfolio: Yuppers
Duration: Sell right before Labor Day
Waiting for: 9pm to roll around. Grey's Anatomy left me hanging last week. Those bastards.
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