Jim Cramer's Wall Street Confidential, 11/7/07: A Volat-Oil Sector

Recap of Jim Cramer’s comments on Wall Street Confidential, Wednesday November 7. Click on a stock ticker for more analysis:

Exxon (XOM), ConcoPhillips (COP), Chevron (CVX), Marathon (MRO), XTO Energy (XTO), Ultra Petroleum (UPL), Peabody Energy (BTU), and Arch (ACI)

"The oil trade has worked now for three years, and I see no sign of it diminishing," declared Cramer who noted that oil tends to be sold off dramatically on any small decline, and observed investors are trying to figure out a strategy for companies with excess capital but which don't have an increase in earnings. He added most buybacks in the oil sector are for real and noted the trend that when oil declines, a company can simply declare the worst is over and the sector will shoot back up again.

Cramer urged viewers to disregard negative views on trading, and said a buy and hold strategy will not work in this sector; "When the stocks are down, you buy them, and when [the] stocks are up, you sell them," he said. "I'm not going to just tell you to buy and hold here." He used Exxon as an example, which is down after a tepid quarter. Cramer cautioned he is not talking about oil service stocks, except for deepwater companies, COP, CVX and MRO are repeated trades. Along with oil, Cramer would trade coal and natural gas stocks, especially with winter approaching.

"It is no sin to trade," Cramer explained. "There is a perception in the media that any time you trade, you lose money, but that is so refuted by the vast majority of outperforming hedge funds." Although individuals are not hedge funds, "that doesn't mean that there are not individual trades that can work for retail," Cramer said.

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