Friday, March 11, 2005

Old Oil Memories

I've never had much luck investing in the oil companies. For example, in 1997 I purchased Diamond Offshore Drilling (DO) near the top. At that time analyst were reporting that oil drillers were in a secular growth phase. The deep driller rig rates were going through the roof. And you can guess what happened next. The Asian currency crisis erupted and the oil stocks just collapsed.

The recent run up in the oil companies brings back the old memories. It's very tempting to jump in and participate in this run up, but it feels like 1997 again. Just about everyone is bullish on the oils. I've learned my lesson before and I'll take a pass on the oils for now. I'm probably wrong, but history has a weird way of repeating itself.

No new trades yet, I'm still building up my small cash position (currently ~6% in cash).


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