Twin Butte Energy Ltd TBTEF

Value of fundamental analysis today

[amp7]

If oil prices could hold for more than a few days, nervous investors could be persuaded to buy.

As it is, analysing company fundamentals is like analysing the board feet of lumber in a large tree when there’s a raging forest fire on the other side of the hill. No one knows if the wind is going to shift and burn down the entire forest. It takes a long time for a forest to regrow.

Similarly, if Europe blows up, energy demand could stay weak for many years and current energy equity holders could end up sitting on dead money for a very long time. Majors would come in and pick up companies with juicy assets at a low price. Investors would never get their money back regardless of the company’s future prospects or how long one is prepared to hold.

IMHO, that’s the real risk one is taking by putting cash in any junior at this time; especially those with bite size juicy assets. The potential rewards are huge but so is the risk.