Tags: Dorfman | Energy | Bulls | Bears

Dorfman: Buy Energy Stocks Before Bulls Return

Tuesday, 16 Feb 2010 09:41 AM

Some stock-market pundits reckon that the recent drop in the Dow is a sign that the stock surge that began last spring, is almost over, and the market is now entering a “mini bear market,” writes John Dorfman, chairman of Thunderstorm Capital, of Boston.

“The recent slump, in my view, was normal,” notes Dorfman in a recent column on Bloomberg News.

“The U.S. stock market historically has averaged at least three declines a year of 5 percent or more, and one fall of 10 percent or more. There will be a decline, perhaps even a mini bear market,” during the second and third quarters, he says.

Dorfman then expects the market to advance again after that.

"I think the rally will resume and run — with unpleasant interruptions, to be sure — through most of 2010, and possibly longer,” writes Dorfman.

“Investors go defensive during that six-month stretch by buying the kinds of stocks that usually hold up better in declining markets: consumer staples, healthcare, utilities and telecommunications stocks.”

Dorfman believes the first 40 percent or so of stock market gains in a new bull market come in a spurt before an economic recovery begins.

The remaining 60 percent of the gains usually occur more gradually and haltingly during the next year or two, as the economic recovery unfolds.

“Energy stocks usually do pretty well during the second stage of bull-market advances. Today, there are lots of energy companies I like,” writes Dorfman.

“One is Atwood Oceanics Inc., an oil and gas drilling contractor. Though the company is based in Houston, less than 5 percent of its revenue comes from the U.S. The bulk of its sales are from drilling in the Mediterranean and Black Seas as well as offshore sites in Asia and Australia.”

Not all market observers concur that a true bull market is in the offing.

Alan Abelson wrote in a recent Barron’s that “the bears have come out of hibernation.”

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Some stock-market pundits reckon that the recent drop in the Dow is a sign that the stock surge that began last spring, is almost over, and the market is now entering a mini bear market, writes John Dorfman, chairman of Thunderstorm Capital, of Boston. The recent slump,...
Dorfman,Energy,Bulls,Bears
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2010-41-16
Tuesday, 16 Feb 2010 09:41 AM
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