One of the biggest collapses this year hasn’t been in stocks. Crude oil has lost half its value since it peaked at just under $150 a barrel in July. Today, a barrel of the black goo sells for just over $80.

Outstanding Investments co-editor Byron King says “it seems like the investment locomotive — energy, resources and related infrastructure — has derailed.”

Does this mean you should sell your resource stocks? Byron says selling now would leave a lot of value on the table. That’s because resource stocks are now priced well below their intrinsic value. This from Byron in Penny Sleuth:

Before you do anything precipitous — like sell your last stocks and stuff the cash into your mattress — let’s ask a few more questions.

If you sell out now, what price will you get? A low price, right? So if you sell now, you will leave a lot of value on the table.That is, most things in the world of energy and resources are underpriced compared with their intrinsic value.

I don’t care how bad the market looks just now (and it looks awful). Go out and try to find an oil field somewhere, or build an oil refinery, or find an ore deposit and build a mine. Can’t do it, can you?

So if you sell out now, just be aware that you will be getting a relatively low value. You will be leaving long-term value behind. If that’s what you want, then that’s what you ought to do. Just understand the point.

Which brings up the next set of issues. How badly do you need the money? How soon do you need it? How scared are you of further declines? How much risk can you handle, especially going forward? What kinds of reassurance do you need?

The markets are down. A lot of Elvises have left the building. And who is left to do the selling? Just you? Nope. Whatever you think, you are not alone. There are still a lot of people holding their shares. What do they know? And what is their reasoning to hang on?

Have You Lost Control?

From what I have seen, the biggest sellers — the market drivers who are taking the express elevator down to the subbasement — are people who have lost control of their money, if not their investment destiny.

People are selling to meet margin calls. The wildest sellers are traders who are just plain behind the eight ball.

It’s more than being scared by what is happening.

Heck, we’re all scared in some way or another. I wasn’t around in the 1930s, so I have no firsthand experience with the Great Depression. I know only what my parents and other relatives and friends told me. It was pretty bad for a lot of people.

But right now the serious sellers are people who cannot afford to be patient. A lot of the sellers in the energy and resource field are hedge funds. These firms are meeting redemption calls from investors who want out. The hedge funds just plain need cash. They have to sell. And a lot of those funds are throwing everything over the side, even the life rafts and the emergency rations.

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