If you've been listening to the Chicken Littles of the investing world, you will already know that the sky is falling on the great energy boom. Say, have they ever been wrong before?

Oil and gas stocks are doomed, cry the bloodied and headless poultry on Bay Street.

The world is awash in oil and the crude price is headed back to $3 a barrel, they want you to believe. Their doomsday predictions are fuelled by a hedge-fund calamity. The fact that Calgary energy trader Brian Hunter squandered the lion's share of $6 billion US at Amaranth Advisors has the naysayers writing off natural gas as if it were the "dot-com" of '06.

Oilsands companies, the stars of the energy boom, are suddenly out of vogue, according to the headless poultry on Bay Street.

And, of course, oil-rich Alberta is headed for a rude economic downturn and those Alberta roughnecks who have been raking in more dough than Conrad Black's lawyers will soon be deserting the oilpatch and running back to Saskatoon to collect unemployment cheques, or to Corner Brook to catch a cod.

Or so the energy bears want you to believe.

Isn't it all hilarious watching those fund managers, who have avoided oil and gas stocks like the plague and missed one of the biggest-ever stock market parties, pat themselves on the back these days because their funds boast a monthly return of one per cent or something while most energy-weighted funds have been in the red?

David Driscoll, the anti-commodities money manager with Toron Capital Markets Inc. who has watched the doubling and tripling of large-cap oil and gas companies in recent years from the sidelines, was recently asked in a television interview about his penchant for shunning commodity stocks.

Like a schoolteacher scolding small children, he grinned, wagged a finger and expounded on the dangers of playing stocks with commodity risks.

An investment columnist with a national newspaper recently wrote a splashy piece on the "oil-free" investing zone and trumpeted those marginal monthly returns of Canadian equity funds with minimal holdings or zero holdings in oil and gas companies.

Personally, I would be wary of investing in a fund that eschews investments in oil and gas plays. If you haven't been in oil and gas stocks in recent years, you've been going to war without the heavy artillery. If you're eliminating a sector from your radar screen, aren't your odds of beating the market reduced?

According to the Globe and Mail's laughable "no oil for me, thanks" spread, Brandes Canadian Equity Fund, with a zero-per-cent weighting in oil and gas stocks (according to recent portfolio disclosure statements), boasted a return of 3.3 per cent in September (Brandes was only one of eight anti-energy funds featured by the Globe).

Well, talk about jaw-dropping, stop-the-presses material!

Perhaps we should break out the bubbly, gang! Party on Bay Street!

I imagine that Eric Sprott over at Sprott Asset Management must be squirming mightily over these critical monthly returns that show the oil-free Brandes Canadian Equity Fund edging the oil-soaked Sprott Canadian Equity fund 3.3 per cent to 3.2 per cent in September. Never mind that monthly returns are non-factors to the majority of investors.

For fear of letting the true facts get in the way of a juicy story angle, we won't even think about mentioning that Sprott's Canadian Equity fund, up to its eyeballs in oil, precious metals, uranium and coal, has an annualized three-year return of 32.6 per cent in statistics through August (only the Acuity Pooled Income Trust Fund, managed by Acuity Funds, has a better three-year return among Canadian equity funds with an annualized return of 33.5 per cent).

We certainly don't want to rain on this oil-bashing parade, so we also won't dare mention that the Brandes Canadian Equity Fund boasts a three-year annualized return of 4.9 per cent and a 0.2-per-cent return over the past 12 months.

The Sprott Canadian Equity Fund's one-year return of 40.1 per cent is even loftier than its three-year mark.

Of course, the reality is that Eric Sprott didn't get to be one of Canada's most successful stock-pickers over the long haul by fretting over short-term results. And it's a safe bet that the bulls who have made a killing on energy stocks are looking at the blood-letting in oil and gas stocks in recent months as a potential buying opportunity.

Only a fool would predict whether the energy bull market has run out of gas or not, but there are a couple of things you can be fairly certain about. Any fresh sabre-rattling out of Iran or other hotspots in the Middle East and oil will be heading higher.

And one cold snap is pretty much all it would take for natural gas to come back into favour and light a fire under those beaten-down natural gas stocks.

Bottom line: It may be a bit premature to write off this energy bull, particularly at a time when many are doing just that.

* THE STINGY PORTFOLIO MANAGER: When portfolio manager Keith Leslie underscores the importance of a low price/earnings ratio portfolio, he's not just whistling in the wind.

Leslie, a partner and vice-president at Calgary-based Hesperian Capital Management, is the lead manager of the Norrep Q Fund, which boasts one of the lowest, if not the lowest, P/Es in Canada for its TSX-based portfolio.

The top 10 holdings in Norrep Q have an astonishing average current P/E of 9.5 and only three of those stocks have P/Es that exceed 10. That's phenomenal considering that the P/E of the S&P/TSX Composite index has been trading in the 16.0 range.

The companies in the Norrep Q fund with the lowest P/Es are Teck Corp. (TCK.B) and Aur Resources (AUR), both at 7.4.

Rounding out the top 10 are Axia NetMedia (AXX), 8.1; Canaccord Capital (CCI), 8.3; Strongco Income Trust (SQP.UN), 9.0; Ing Canada (IIC), 9.4; Eurozinc Mining (EZM), 9.6; TD Bank (TD), 10.8; CIBC (CM), 11.7; and Indigo Books & Music (IDG), 13.6.

Of course, P/E ratios can be deceiving in analysing companies, but they can also be a useful tool and guideline for investors. Leslie, who focuses on quantitative analysis in his stock-picking, makes his debut this issue in the Edge's Pro's 3 Stars (see Page 12). His top three picks have an average P/E of 7.9, the lowest ever for the Pro's 3 Stars.

Incidentally, his boss, Hesperian president Randy Oliver, was the Edge's stock-picker of the year in 2005.

* SAGE WORDS: "If you get inside information from the president of the company, you will probably lose half your money. If you get it from the chairman of the board, you will lose all of your money. So stay away."

- Commodities trader Jim Rogers (quoted in The New Money Masters by John Train).

(Gyle Konotopetz can be reached at gyle@businessedge.ca)