ENERGY PRICES DOWN

In one of my recent posts entitled, "If you can't beat 'em, join 'em" I recommended investing in energy companies as a hedge against rising utility and transportation prices. Shortly thereafter, one of the companies, Devon Energy rose almost 20% due to their partial ownership of a huge new discovery in the gulf which is estimated to increase our country's reserves almost 50%. This sounds almost too good to be true and may well be; however, it does serve to calm the markets in view of some of the predictions that we will be running out of oil. All of the stocks I spoke of in that post, including Devon Energy have since gone down substantially. but I make no apology. That's what a hedge does. Since I don't know the direction of energy prices, I buy these stocks to protect me if they continue to increase. If this happens, I pay more for my gasoline and utilities but benefit from increases in the prices of these stocks. If energy prices drop, I benefit by paying less for energy but the prices of the companies I buy will probably drop. I frown when I look at the value of the stocks I purchased but I smile when I fill up my truck. If I had known energy prices were in for a drop, I would not have bought these stocks but I didn't know. My position is that you can make bets on the direction of a given stock but there is no way you can know. Your only hope is that you will be right more than you are wrong.