Wednesday, October 10, 2007

Charging Ahead

We again saw strong trading yesterday on the release of the Fed minutes, and also because of anticipation of positive earnings. This morning we saw a little halt in that pattern as some earnings came in a little light. Chevron(CVX) and Valero(VLO) issued profit warnings, citing decreased refining margins. This is of some concern to investors, but shouldn't come as much of a surprise. Oil companies have been reporting issues with refining most of this year. Most refineries in this country are falling apart and can't keep up with demand. This is why gasoline prices were high earlier this year when crude oil prices were still lower. It is also why I closed out positions in the two refining companies that I had this summer.

I read a positive report on property and casualty insurance company, written by Bloomberg, and reported through The Kirk Report. It says when there are credit issues these companies get beaten up, even when their exposure isn't much. Add that to a quiet hurricane season, and I think there should be some undervalued companies. I'm going to go ahead and add Travelers (TRV) to the portfolio here. I like where they're at valuation wise, and profits should come in ok.

You can read the Bloomberg article here.

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