Clearly, oil got ahead of itself and has backed off in terms of price, but the fall in natural gas stocks is a bit more puzzling to me. All the talk about alternative energy has natural gas at its core. We have huge deposits of natural gas in the
Then I had to ask myself the final two questions. First, at some point in time when the global economies start growing again some time in the future, will oil and natural gas prices be higher than they are today? Yes. Second, is now a good time to either add to or start a new position in the natural gas stocks like XTO? I believe the answer is an unequivocal yes. Could these stocks go lower? Possibly, but for the long-term investor adding or entering into these stocks at these levels is a great bargain.
Someone once said that the best time to buy stocks was when there was “Blood in the Streets”. The decline in these stocks clearly has been a “Blood Bath” and nobody wants to talk about buying them at this level. I expect these companies to report great earnings and at these levels be trading at 6 to 8 times earnings or less. For the investor that has a long view now is the time to start committing capital. If you have $25,000 dollars, you want to invest in this assets class pick several stocks and commit 25% now, 25% in 30 days and 25% in 90 days and the last 25% of your money by year-end. I fully expect some short-term rallies and then retracement to higher lows. Watch for these higher lows as a possible signal to add to you positions.