Do you think this is a good time to start an initial long-term investment in Energy and Energy Services?

If answering, please answer why or why not.

The planet's appetite for energy will continue to grow as more and more economies move into the 21st century. This will be partially offset by more efficient uses of energy and renewable sources, but consumption will grow. As such, long term this should be a god investment. It probably makes sense to distribute your investment among various energy options including oil, natural gas, coal, nuclear for the shorter term. And renewables such as wind, hydroelectric, geothermal, tidal, solar, fuel cells for the longer term. My current portfolio includes Marathon Oil (MRO) oil & gas, Zoltek (ZOLT) carbon fibers used in wind and soon to be used in cars to make them lighter and more fuel efficient, Composite Technologies (CPTC) wind & power transmission, and Plug Power (PLUG) fuel cells. Lots of other choices out there, but these are mine.

Energy still seems a bit overpriced. Oil is certainly too high to buy and it will come back. Other forms of energy may be better, but it's still safer to wait for a bit. Overpriced combined with possible recession is a definate signal to wait. Check again in about a month and things will likely to be 15-20% lower.

If you are looking for long-term anyway, there is no need to be impatient. Wait a while and you will definately see another panic sell-off soon, and you can pick it up at bargain prices and start making money right away.

If you are referring to oil services, there are pockets of potential. My favorite is the offshore oil drilling and exploration industry, which is trading anywhere between 20% and 30% below its highs. Of course, if oil prices decline, you will be able to get these stocks cheaper. If you are looking to establish a long-term investment, it couldn't hurt to buy a little now, and some more later if it is going to go lower. Recent talks of lower oil prices have dragged oil stocks lower. In fact, oil stocks are down between two and three times what the price of oil is, during the same period. If you are concerned about dealing with short-term losses, you could wait, but given that oil is up $3.50 (4%) today, it appears that some people are betting that the economy will avoid a recession. I currently own DO, ESV, HERO, NE, and RIG, which are all in the offshore drilling industry. However, I have hedged this position with a substantial position in CAL, which should theoretically have an inverse relationship to the oil industry, as it benefits from lower oil prices, since oil prices hit $100. If you can deal with short-term ups and downs, now is definitely an interesting time, and it appears that a lot of oil service companies are trading below fair value, and present great long-term potential returns. If you cannot deal with short-term ups and downs, wait until we start to get some indications that the economy is going to improve, although, I cannot guarantee that oil services will still remain at these levels. I'd encourage you to consider picking some companies in the sector that are not heavily influenced by the price of oil, and maybe put a little bit of money to work, to establish a small initial position, soon. Then, you can add at every five or ten percent decline in the stock prices (or any other scale that you feel comfortable), which will, in essence, give you a very attractive cost basis for the long-run. Basically, you have to consider where the price of oil will go if you are concerned with the short-term movements, which is contingent on the odds of us entering a recession. If you find that oil prices will stabilize or increase, then oil service companies could present some great opportunity. Just my opinion, I hope it helps!

Best of luck!

Brendan Prewitt

I think the big oil companies are prety pricey. Drilling firms are way low though. I like the idea of putting some money into drillers.