Energy and Miners

The beefers are rotating out of the energy and miner groups, creating the potential for good entries for long term buys. I've followed these groups for years and have seen this game played out several time. As long at Asia demand is strong these groups will outperform long term [in my humble opinion].

If you don't own any of these and are a long term investor, I suggest watching them over the next few weeks or couple of months. There is a some seasonal basis for the pullback, too. No rush to buy - the stocks usually bounce around a bottom awhile building a base for the next leg up. I already own a lot of them, so likely won't buy them this time around. I might trade some through options.

Here are my positions in energies and miners.

Oils: CVX, DVN, XOM, COP, MRO, HES
Oil Sands: SU
Pure Gas; CHK
Deep Water Drillers: RIG, GSF [these two are merging soon], DO, NE
Refiners: VLO [HES and MRO have refining, too, as do the big integrated oils]
Oil Service: NOV
Miners: BHP, RIO, RTP, FCX, PCU, AA
Uranium: CCJ

CVX and DVN have really good properties in the deep water Gulf of Mexico, so have great prospects for substantial adds to reserves. The deep water drillers have great long term prospects as that is the only place that really large oil finds are likely to be made.

Gasoline prices will likely rise in the spring, so stocks with refining could move then, viz., VLO, MRO, HES and the integrated oils.

I think PCU will eventually be bought by China. I think someone will buy AA - either another miner or a Russian aluminum firm. There have been rumors that BHP will buy FCX ... and AA ...and they are trying to buy RTP. I think MRO and HES could be bought by a major integrated.

These are all long term positions for me and I expect to hold them into 2009 or longer.

Here's a bit more rationale: these companies produce raw materials that are costs for the rest of the world economy. And the demand is going up as are the prices. So overweighting these stocks is the only way to capture the value in that sector and to offset the increased costs that negatively affects other stocks. So I overweight them through my Alpha Fund holdings.

PS: yesterday was another in a long line of "Day 1" for potential rallies. This one had higher volume. As before, these mean nothing until a follow-thru day occurs.