How any of you techies can buy and sell stocks like PSA just on...

How any of you techies can buy and sell stocks like PSA just on the basis of charts is beyond me. And the reason is simple there is not enough volume in PSA (or indeed in a lot of other stocks that chartists follow) to enable anyone to come to any conclusions about the stock simply based on charts (which are based on the actions of so few).

On stocks like AMP or SRP which trade in large volume and which I have on my watch list, then yes I can see some value in technical analysis. But on stocks like PSA with only 50k traded today I defy anyone to draw any sensible conclusions about the future direction of the stock based on the chart.

For me the healthy thing about Petsec is that while there is a small group of traders that try to move it up and down (including me from time to time) there is definitely a much larger group of investors who can see the value in natural gas and PSA's GOM performance and are content to wait for the fundamental revaluation of the stock.

In terms of profit, PSA is now ahead of where it was in 1996 when the stock was several multiples higher. So why is it not doing better today?

Part of the explanation is because at the time, ie in the mid 90s, it was a market darling and we all know when the market falls in love with stocks it will bid them up beyond sensible valuations.

On any rational valuation of the stock today it should be north of $2.00 but the market is very wary about stocks that have burned them in the past so PSA has to prove itself many times over before analysts will return to it.

That's good in the sense that the average joe with no past bad experience (like me!), can get on board cheaply and just wait for the media, brokers and tipsters to catch up.

And catch up they will. Petsec made $22.7 million profit in 2003 and will do even better in 2004. Sooner or later the market will recognise the value of the cash that is flowing into PSA coffers.

When PSA announced that its West Cameron fields had entered production the stock jumped some 30% and subsequently made gains of over 300% in 2003. Can it jump 200% in 2004 when Vermilion comes into production ? Of course it can.

At current levels PSA is a lay down misere.