Sold BP
Thursday, September 27, 2007, 12:59 AM
Stocks by John
I sold my BP stock, probably a bit belatedly. BP is issuing warnings about earnings, and has generally been an energy sector laggard anyhow. I made some dividend and some money, so I walk away happy.
My initial concern is that oil has peaked for the year. It is hard to say where oil will settle, but I would be unsurprised if over the never six months we don't plumb some of the depths we saw last winter. I would be surprised at all to see oil dip below $60 a barrel sometime this fall or winter. Advertisements
Second, I don't like it when CEOs warn on earnings. Bad. Especially since BP has been trailing the whole sector.
I probably won't show renewed interest in BP again until it dips below $58. Even then, I wouldn't consider a buy until I see how this warning pans out.
I also want to see how the oil market shapes up going into the 2008 election. My sense of things is that the oil industry won't be issuing any gift price drops to the Republican Party like we saw in 2004. The general view is that a broad Democratic win is baked in already, and there is a decent chance the oil executives are going to look to reduce public outcry before the Dems take office.
Barring a further weakening of the dollar, which is very possible, I don't think oil will see $80 again next year.
Oil is a seasonal business. There is a lot of speculation built into the market. There isn't a penny above $70 a barrel that is anything but greed and speculators selling to even more aggressive speculators.
And worse, they're even trying to talk up a high going into winter -- short of a war with Iran, that will never happen. And there ain't gonna be a war. The US can't afford it in terms of boots on the ground. I don't even see an air strike, because frankly all this nuke talk is huff and bluff. The Iranians don't have shit.
It is time to start hedging our bets toward winter. Retail is going to be tough this year, but it might surprise. It isn't a given than a week dollar and higher prices due to China's inevitable toy quality meltdown are going to mean reduced spending.
With an aging population, I think we're staring at a shift rather than a stop in consumer spending. Big boy toys.
2007 is going to be the year of the HD television set.
So, let's hold some cash and watch and see where oil goes. I think there will be gorgeous buying opportunities after January.
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