THOUGHT FOR MONDAY 16 JUNE 2008
From top share author MALCOLM STACEY
Hello Crazy Share Thumpers,
What kind of a week can we expect now? Well, to be honest June is often a pretty poor month for share shifters, even in the very strong bull markets.
Too many traders become attracted by the delights of summer for a load of share buying to go on. So the market makers tend to lower prices to attract more custom, and so share prices fall.
But these are strange times. In my view, a lot of blue chip shares have been oversold, as sentiment is swayed by a feeling of doom and gloom, which should have run its course, but which is still bubbling on.
Of course, I may be wrong. I may be too optimstic. I often am. But maybe if shares have toppled in months when shares often do well, then maybe that old rule about 'going away in May' won't apply this time round.
My own feeling is that the market will fracture. Oil may continue to do well. The value of many big companies has fallen a bit, even though the price of crude is still going up.
This is because traders look to the future, and they don't see the ridiculous oil prices lasting for much longer. But if demand continues to rise - thanks to China and India and the like - maybe the price of crude will continue to go up.
As far as I can see those companies with big reserves of black stuff are sitting pretty. Thier profits will surely be well up next time - and the share prices are linked to profit.
There are quite a few oil and gas companies in the Footsie. Cairn Energy, BG. BP, Shell and Tullow are some of them. Nearly all their share prices have been shaved in the last few weeks, but not by very much. And perhaps now the price will rise again to old records - and beyond.
But I'm not so happy about other kinds of share. I don't know if banks will fall again, for example. Nor supermakrets or chain stores. Anything could happen here.
And I might even be wrong about oil. But I will continue to put money into black gold - for the time being. Rocking on.
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