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Rega: Wait 'n see on oil
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December 17, 1998: 7:57 a.m. ET
Portfolio manager says it'll take more than a war to boost outlook for oil companies
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NEW YORK (CNNfn) - How will the stock market react to U.S. military strikes in Iraq? So far, the response has been muted - some key Asian markets posted gains overnight and European equities have shown some hesitancy, but no panic. And though the price of oil spiked on Wednesday, crude was trading lower Thursday morning.
With $1.5 billion on the line, portfolio manager Michael Rega of Colonial Management Associates is keeping a close eye on developments in the Gulf. He told CNNfn's "Business Day" that he's taking a measured approach to the situation, particularly when it comes to oil stocks.
"My feeling on oil companies is a wait-and-see attitude," he said. "What you see right now is some of the large multinational companies cutting their capital expenditure budgets and those are the companies I'm investing in - the ones that actually do the drilling or run the rigs. And their earnings over the last six months or so have been decreased by 70 percent. So, there's going to be more than just a war action to increase their outlook."
In the past, military actions have caused a decline in consumer confidence, thereby eroding profits and undermining the market. But Rega says the markets are likely to remain stable for the time being.
"Unlike in 1990, right now there are no ground troops involved. Hopefully, we can keep it limited to what we saw last night," he said.
But should market volatility result, Rega said, he would "use that volatility to add to positions or establish current positions at attractive prices, and where some frenzy bids up stocks on the high side, we (would) use that as a selling opportunity." 
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