I’ve been perplexed by the market these last couple weeks, so much that I’ve started wondering if what we’re seeing happen right now is actually for real.

Is this a complete melt down of our financial system that would cause a collapse of the stock market, or could this be the most golden of all buying opportunities?

By in large, I think the stock market will be ok, so long as the government doesn’t try and step in and strong arm a fix for this mess that stems well beyond the stock market.  So is this a buying opportunity then?  Yes, I think so.

I thought I was doing pretty well when I bought more Provident Energy (PVX: chart, web, Y!) last week at $7.30 per share.  I felt otherwise when the price dropped below $5 per share by the end of the week.

So what’s happening here?  Obviously there is a huge demand for cash by institutions.  Normal Joe investors like you and me don’t have the pull to chop 50% off the top of any stock, let alone the entire market.  Hedge funds and institutional investors do, however.

I think what we’re seeing is a demand for cash by lenders, which is forcing those who don’t have cash to find it quickly.  So you’re seeing a run on many stocks that isn’t completely justified.  At least not to the extent they’ve been beaten down.

Consequently, this has pulled the market cap down well below what is reasonable.  For normal Joe’s like you and me, this means that there are some golden buying opportunities out there right now in companies who carry little to no debt, and are going to do just fine given enough time.

So what about my Provident?  The yield is up around 22% as of the close last Friday, and it’s been years since it’s been this cheap.  Obviously PVX is tied to the oil and gas market, which has also been beaten to a pulp lately.

But we’re on the verge of winter, which should stabilize the price of natural gas and heating oil, and should provide some stability to the natural gas players, of which PVX is one.

Honestly, I’m in the stock for the dividend, as I suspect most are.  So far, they’re holding the line at $0.12 Canadian for the October distribution, and will report Q3 operating results on November 12th.

Tags: dividends | oil and gas | PVX | Stock Market

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