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Motley Fool Global Gains / GGM: Global Gains Philosophy


Subject:  Re: Discussion on the future of oil prices Date:  6/23/2008  3:38 PM
Author:  TMFDeej Number:  50 of 5166

Thanks for moving the oil discussion over here, Anurag. I personally wouldn't have sold MDR and COP. I own and plan on staying long them for a long time unless there is a significant change to where I see the price of oil heading. Oil doesn't have to be at nearly $140/barrel for these companies to be successful. They will still crush it with oil at $100, which I see as almost the new floor for the price, long-term.

Plus both companies are not just involved in oil. COP is the largest natural gas producer in North America and MDR works on nat gas projects. Furthermore, COP has refineries that would actually benefit if oil dropped. MDR is also involved in nuclear and energy, both of which I am bullish on. These are great, safer ways to play the oil boom because they are not going to get destroyed if the bottom falls out from under oil like some of the pure oil sands or shale plays would.

If you are really bearish on oil, you should consider increasing your positions in refiners. Companies, like Valero would benefit tremendously if the price of oil fell and the crack spread (the amount of money that they make by capitalizing on the spread between the price of oil and gasoline) rose.

I like your metals plays, but I'm personally staying far away from financials at this point. A lot of money will be made in that sector eventually and people who purchase the right companies now will probably do very well in the long run, but I have a feeling that we're not at the bottom of the problems in the financial sector yet by a long shot.

These things are all opinions of course. Time will tell what the right plays were, but it's interesting discussing it in the meantime :).

Long MDR & COP
No position in VLO
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