Energy Sector....

Oil prices seem to me to be at the high end, and likely to decline as the economy slows, possibly into a recession. While demand growth from China and India will help, I don't think they are at the point where they can compensate for a slowdown in the U.S. Consider selling to raise cash, or, since options premiums are high, writing covered calls. 2008 is a good year to realize capital gains anyway, since tax rates are likely to go up next year with a change in administration.

Natural gas companies are probably a somewhat better play, but even there industrial demand is a high proportion of demand compared to residential and can be expected to drop as the economy slows. In general, natural gas appears to be well-supplied....no hurricanes last year, and a relatively normal winter so far.

Hedge where you can (as above), companies with a pipeline component for example can be held, these include El Paso (EP), Williams Brothers (WMB), and Questar (STR). In addition, partnerships such as Enterprise Production Partners (EPD) and Kinder Morgan (KMP) aren't really affected by prices, and both yield over 6%.