Powayseller, I noted you mentioned oil stocks. Are you attracted to oil stocks because of their low P/Es or is it because you think oil price will continue to rise or stay near these levels despite your conviction that recession is around the corner ?
Lately oil’s been coming down hard and fast. Some attributes that to the loss of war premium. I’m not sure because the world, or specifically middle east, doesn’t seem to be a safer place than it was just a few weeks or months ago. Rather, is it possible that oil traders are pushing oil prices down because they anticipate an economic downturn ?
And since oil prices is the main driver behind oil stocks. Would oil stocks still do well in absolute terms if oil prices were to level off ? If it does happen, the only way oil stocks will continue its up trend is a re-rating of the sector, i.e. the market assigning higher PEs to oil companies.
