I dont think that Berkowitz has ever said that he doesnt believe the peak oil thesis... to the contrary, he has said numerous times that he believes that energy is a finite resource for which demand is growing... Fairholme has a couple of very good energy guys who consult with them and I doubt there is a whole lot they are missing... but the fact that you as a layperson are putting more money into that sector to back up your strong (but possibly not fully informed) convictions is probably is an indication that everything (or close to everything) that could possibly happen with energy prices and outcomes is likely factored into the currently astronomic prices being paid for a lot of these companies... and if not, that margin of valuation error is sufficient enough to accept

But its not about what you as a layperson believe is going to happen in the future, its about valuation... and value managers' job is to sell when something gets close to their estimate of intrinsic value and seek out other opportunities in areas that have been crushed... Fairholme lightening up on energy will only be a bad idea if the areas in which they invest their significant profits wind up doing less well than energy does from here on... obviously they think that crushed health care companies have a lot more upside potential than energy producers at current price levels and they have plenty of company in the value investing community that agrees with them...

In reality, their views probably differ from your views on energy very little... the difference is that they hopefully have the knowledge and the insight to make appropriate valuation decisions as they have done since the inception of the fund... if you had a choice between an investment selling at close to its fair value versus something selling at 40% of its fair value, which one would you choose?

Ajw