From: "Robert Comer" 

One small niglet though, you said retirement funds are not buying oil
stocks, when in fact, they are buying a good deal of oil stock...

--
Bob Comer


"Gary Britt"  wrote in message
news:43a19e62$1{at}w3.nls.net...
>I don't doubt that.  They probably have a lot of utility stocks also.  They
> didn't buy either Exxon or the Utility stocks because they felt these
> industries were EXTRAORDINARILY profitable.
>
> Further, discussing any particular managed fund's investments are
> irrelevant
> to the point Lucy continues to  argue against.
>
> Its the totality of buying from ALL these managed funds and mutual funds,
> all of wall street, etc. that counts and was that too which I was
> referred.
>
> To restate my point to avoid possible confusion and diversion up some
> rabbit
> trail:  I said that if all the professional analysts with a heck of a lot
> more experience and expertise and resources than either I or Lucy have at
> our disposal believed the oil companies were making profits at
> extraordinarily high profit margins compared to other companies in which
> they could invest, then they and the market leaders they influence would
> collectively be buying enough oil company stocks to cause the oil
> companies
> stock  prices AND resulting price earnings ratios to rise above that of
> most
> corporations of only normal profit margin.
>
> Since the oil company stocks trade at a price earnings ratio of around 11
> times earnings, which is less than the price earnings ratio that the
> average
> company trades at, then obviously the collective judgment of wall street
> and
> wall street analysts is that oil company stocks are NOT stocks of
> extraordinarily profitable companies.
>
> Its simple, valid, and quite accurate.  For people confused by price
> earnings ratios think of it this way.  You are trying to decide which of
> two
> stocks to buy.  One stock earns money at the rate of $1.00 per share of
> stock outstanding and another company earns money at the rate of $2.00 per
> share of stock outstanding.  If other factors affecting this decision of
> which stock to buy are equal between the two companies, which company
> looks
> like the most attractive investment and most inherently valuable stock?
> Obviously the answer is the stock earning $2.00 for every share of stock
> outstanding.  As a result more people will bid to buy the stock from the
> company earning $2.00 for every share.  As a result of more demand for
> that
> stock its price will rise, and the way the market works the price of that
> stock will be pushed up until its price per share divided by its earnings
> per share is sufficiently higher than the price per share of the other
> stock
> divided by its $1.00 per share outstanding in earnings.  Once the price
> earnings ratio of the $2.00 earnings per share stock is enough higher than
> the price earnings ratio of the $1.00 stock investors will begin to think
> that maybe the $2.00 earnings per share stock is becoming overpriced/too
> expensive (even after taking into account the extra earnings profitability
> rates of that company) then these investors will stop buying the higher
> priced stock and start buying some other stock like the $1.00 per share
> earnings stocks.
>
> Therefore, its absolutely correct to state as I have that if the stock
> market's collective judgment were that oil companies were making profits
> at
> faster/bigger rates on sales and invested capital than other companies
> that
> the stocks of these oil companies would have their prices driven up high
> enough to cause their price earnings ratios to be driven up above the
> average for normally profitable companies.  Since this isn't happening.
> Obviously wall street doesn't think the oil companies are extra
> profitability or have above average net earnings on each dollar of sales.
>
> Anyone with more than a laymen's knowledge of how businesses accumulate
> value and how the stock markets work won't have trouble confirming the
> above.
>
> Gary
>
> Note that my statement above is not that oil company stocks aren't
> purchased
> and sold every day or aren't invested in by some.  My point is that the
> totality of the demand for these stocks by all of wall street is NOT
> sufficient to drive up oil company stock prices in a manner that results
> in
> a higher than average price earnings ratio.  Therefore, examples of any
> particular company or fund holding Exxon stocks is irrelevant to my point.
>
>
>
> "Robert Comer" 
wrote in message
> news:43a17556{at}w3.nls.net...
>> > Retirement systems invest for safety and not so much growth, and
>> > managed
>> > funds aren't buying oil stocks today.
>>
>> One of my 401K funds top investment is Exxon and Chevron is in the top
>> 10.
>>
>> --
>> Bob Comer
>>
>>
>> "Gary Britt"  wrote in message
>> news:43a0f67d{at}w3.nls.net...
>> > Retirement systems invest for safety and not so much growth, and
>> > managed
>> > funds aren't buying oil stocks today.
>> >
>> > Gary
>> >
>> > "Bill Lucy"  wrote in message
>> > news:MPG.1e0a8a81cc4a885e989779{at}news.barkto.com...
>> >> In article ,
>> >> jcuccia{at}bigfoot.com says...
>> >> > >Is that where major institutional investors are putting
>> >> > >their money today?
>> >> >
>> >> > Someone certainly put loads of money into oil stocks
over the past
> two
>> >> > years.
>> >>
>> >>
>> >> Most of the institutional investors (pension funds) have a goodly
>> >> portion of their equities in oil companies. For a long
while, the two
>> >> largest investments for the Retirement System were Exxon and Royal
> Dutch
>> >> Shell. I would be surprised if that wasn't true any longer.
>> >>
>> >
>> >
>>
>>
>
>

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