Why Is Oil & Gas Leading The Market
We all saw the ones that got hit big time following the recent elections. Thats because construction are big ticket items and the likelihood of some big projects being pulled, scrapped or renegotiated is enough to adopt the sell first ask questions later strategy. Why oil and gas stocks were relatively unscathed? My two bob answers: a) It is so much easier to inflate contract value in construction jobs b) The ownership of oilfields, not exactly under the jurisdiction of certain ministries c) To develop oilfields, even if you give it to me free, is not profits, capital still has to be expended and returns are years down the road (same analogy if you were to inflate contract value) d) The most defining factor was that oil and gas prices were relatively depressed over the last 3-4 years (thankfully) which meant more belt tightening and cutbacks by companies than new projects While waiting for the construction big projects to settle down, it is only natural that oil and gas counters...