Isn't it funny how the market decides that oil is worth about $67 a barrel one day and then decides just a couple of days later that it's actually worth less than $63? The variables of trading and the opportunities that short-term price swings create for investors are both boon and bane -- it's great to get a second (or third or fourth) chance to pick up shares you might have missed before, but it's not so great to see your portfolio's value wither a bit on those inevitable corrections.

So what does that have to do with Foundation Coal (NYSE:FCL)? Although coal doesn't get quite the kind of popular press that oil does (CNBC isn't giving you minute-by-minute updates on the price of Powder River Basin coal), the sector has nevertheless had quite a run, and it's fair to wonder whether things have gotten ahead of themselves.

True, the fourth quarter was very good for Foundation Coal, as it was to some extent for companies such as Peabody (NYSE:BTU) and Massey (NYSE:MEE). Revenue at Foundation was up more than 30% (on a 9% increase in shipments and 20% increase in price realizations), and better profitability led to considerably better earnings for the quarter. Hey, it even turned in a free cash flow-positive fiscal year -- something not always easy to do in an industry with high capital demands.

The less-good news was that the company lowered its guidance for the next fiscal year relative to pre-existing analyst expectations. Now, it's true that inventory levels are still low (though a mild winter has helped) and that sulfur dioxide emission allowances are high. It's also true that many coal-mining operations are hard-pressed to increase production too much, and shipping problems with Burlington Northern (NYSE:BNI) and Union Pacific (NYSE:UNP) are still a concern.

But all the same, I still get a little twitchy when cyclical companies start guiding below expectations. After all, the way the cycle often works is that companies beat the numbers as the cycle swings up, but sooner or later, analysts get ahead of the curve (and some start spouting the "it's different this time" nonsense), and it's time to start facing the downslope.

I'm not suggesting or predicting that the good times are over for coal companies -- after all, most of them have locked in good prices for 2006. But I am suggesting that investors be cautious. After all, there are always plenty of fish in the investing seas.

For more Foolish thoughts on coal:

Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).