And yet, none of the above could prevent RIG's price from collapsing when the leverage-fed oil buying frenzy subsided in 2008: Oil fell from $147 to about $32 per barrel. RIG's stock price plummeted almost in tandem, from about $163 to about $42, stopping-out all but the truly daring and/or the truly undiscerning.

Further, it's understandable if someone who lost money on Transocean would not want to re-establish a position. In other words, if the market could take down RIG's shares, given its backlog of work, what company is safe? It's a valid argument to avoid RIG.

Still, I would emphasize 'the matters of undeniable fact,' to borrow a phrase from the late, great Marlon Brando. RIG has the same successful, business model, day rates for deepwater rigs will likely average $640,000-$650,000, and how long will oil remain in the $50 per barrel range? If you believe oil will meander below $60 for a year or so, avoid RIG. If you agree that oil is headed up again within six months, RIG is for you. The First Call F2009 / F2010 EPS estimates for RIG are $13.44 / $13.22.

Stock Analysis: Transocean is a moderate-risk stock. Consider buying a 25% position in RIG now; then buy another 25% in three months, if U.S. and global economic conditions don't worsen substantially. Under any circumstance, don't buy more than 50% of your RIG position in the first half of 2009. Sell/Stop Loss if you were to buy shares in this company: $47.

Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX.