Bookkeeping: Another Layer out of Energy Stocks
I'm a very long term bull on these guys, but enough is enough (some of these charts, esp. coal, are simply straight up) - taking another $4-$6K out of each position, and layering out. People seem to be throwing in the towel and taking for granted crude goes straight to $140-$150 at this point. If so, we are going to start seeing major demand destruction worldwide. (already happening in the US) Frankly this scenario reminds me a lot of fertilizer 3 weeks ago when everyone said it could only go up, and within a few days they began to sell off. While we cannot expect perfect timing, once a consensus is so heavily weighted to one side of the ledger of ever increasing prices, I begin to take the other side of that and get increasingly cautious.
- Coal: Mechel (MTL), Alpha Natural Resources (ANR), Consol Energy (CNX), Massey Energy (MEE), Arch Coal (ACI)
- Natural Gas: EOG Resources (EOG), Cabot Oil & Gas (COG), XTO Energy (XTO)
- Services: Core Laboratories (CLB), National Oilwell Varco (NOV)
- Exploration: Petrobras (PBR)
Continuing to bleed off the best parts of the portfolio might lead to some underperformance in the coming week(s) versus the markets, but I am ok with that. The #1 thing is actual performance (absolute returns) not performance versus the markets (relative returns) so by holding this in cash, we protect from any potential downside. As we trudge forward on the ever increasing slope upward, I'll be turning more cautious/protective.
This batch of sales generated roughly $50K of cash, or about 4.1% of the portfolio.
For an example of what the typical coal chart looks like ....
Long all names mentioned except Ultrashort Oil & Gas in fund; long Alpha Natural Resources, Mechel in personal account
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