I'm not a big fan of low quality bonds, otherwise known as junk bonds. When I put money in bonds (via mutual funds), I do it for safety, so I'm usually in Treasuries or something similar, which have a very high degree of credit safety. I can't remember the last time I owned a junk bond fund, actually.
So with the housing thing really starting to come home to roost, with the whole mortgage/CDO market seemingly on the brink of disaster (or already in, according to some), and with credit spreads widening and the whiff of recession in the air... I decided it's time to start dipping into the junk bond waters.
I picked a fund (Pimco High Yield), and I'm dollar cost averaging in every month, probably for the next 12-18 months. At the same time, when I hear really, really awful economic/credit market news, I'll be throwing a little bit more in via extra payments.
The logic, basically:
Try to buy what everybody else is running from. But do so carefully.
Bloomberg: H&R Block May Close Loan Business as Losses Double.
Quote:
``The loan-originations market is in the midst of the most severe dislocation it has seen in years, maybe the most severe since the 1930s,'' Chief Executive Officer Mark Ernst said on a conference call with analysts. He said the credit markets are in ``turmoil.''
Bloomberg: U.S. Stock-Index Futures Retreat; Goldman, Merrill Decline.
Quote:
``We don't have a perfect idea of how deep or widespread the subprime issue will be,'' said John Forelli, who helps oversee $7 billion at Independence Investment LLC in Boston. ``Investment banks are caught in the crosshairs of this financial crisis.''
Update 08/31/07:
Reuters: Moody's president sees unprecedented illiquidity.
Quotes:
The credit market is experiencing an unprecedented loss of confidence due to the lack of transparency over where exposures lie rather than underlying credit quality problems, Moody's Investors Service President Brian Clarkson said on Thursday.
"I've been in the marketplace for 20 years ... what we're experiencing is an extreme lack of confidence and lack of liquidity. I have never seen this before," Clarkson told Reuters in an interview. "A lot of it has to do with transparency: it's not clear who owns what."
There are also questions over valuations of illiquid securities, he said, although not necessarily from a credit standpoint. Some structured vehicles -- such as the Cheyne Finance fund run by British hedge fund Cheyne Capital Management -- have been forced to sell assets due to losses even though the securities they hold have not been downgraded.
"It's not that a lot of the things people are holding aren't money good, they are. If you hold them to maturity they will pay interest and principal on a timely basis."
Thursday, August 30, 2007
Friday, August 10, 2007
Shift to neutral.
You know things are getting interesting when Erin Burnett paraphrases somebody's words from "a whole lot worse" to "a hell of a lot worse".
CNBC Video: Credit Contagion: End in Sight?
Although Ken Heebner sounds calm-ish, this thing appears to be spreading pretty quick, and the 'market neutral' funds blowing up trend has a bit of smell of the 'portfolio insurance' blowup of the crash of 1987.
CNBC Video: Credit Contagion: End in Sight?
Although Ken Heebner sounds calm-ish, this thing appears to be spreading pretty quick, and the 'market neutral' funds blowing up trend has a bit of smell of the 'portfolio insurance' blowup of the crash of 1987.
Tuesday, August 07, 2007
Is the worst over in housing?
Calculated Risk raises the question of whether the worst might be over in housing based on the BusinessWeek magazine indicator.
Even more promising, Trump Mortgage (I kid you not) has got Donald Trump up in arms over something. If only we could get a headline they are filing for bankruptcy; that, I guarantee you, would mark the bottom.
CNBC Video: Trump Dumps Mortgage Co.
Even more promising, Trump Mortgage (I kid you not) has got Donald Trump up in arms over something. If only we could get a headline they are filing for bankruptcy; that, I guarantee you, would mark the bottom.
CNBC Video: Trump Dumps Mortgage Co.
Monday, August 06, 2007
Jim Rogers on CNBC.
CNBC Video: Subprime Shockwave Hits Equities.
Jim Rogers on end of the debt bubble. He believes the Fed won't cut rates, but if it does, he believes inflation will get out of hand and the dollar will collapse.
Jim Rogers on end of the debt bubble. He believes the Fed won't cut rates, but if it does, he believes inflation will get out of hand and the dollar will collapse.
Saturday, August 04, 2007
Hot or Not?
Jim Cramer had a reputation for having a seriously volatile temper and nature when he was at his hedge fund. Thankfully, he had his wife to contain his baser instincts at a couple of important moments in market history. [He refers to her as "the Trading Goddess".]
So when you watch the first video below, in which Cramer basically explodes about the current market conditions, you have to wonder if you're watching Cramer unbound or instead seeing Cramer the actor hamming it up. And while I'm sure he's wound up, I also think it's an act. If you've seen Stop Trading with Cramer and Erin before, it's kind of the Laurel and Hardy show, with the straight [wo]man and the funny guy, and here the funny guy got a little too into the act. The second video is Cramer explaining himself in a calmer manner.
Is it really this hot? Yeah. All the craziness in the housing market that culminated in the last two hyperactive years is coming to roost in one or two hot weeks in August 2007.
Next week should be very interesting.
CNBC Video: Cramer: Bernanke, Wake Up.
CNBC Video: Cramer on Bear Stearns.
PS. Erin Burnett - hot.
So when you watch the first video below, in which Cramer basically explodes about the current market conditions, you have to wonder if you're watching Cramer unbound or instead seeing Cramer the actor hamming it up. And while I'm sure he's wound up, I also think it's an act. If you've seen Stop Trading with Cramer and Erin before, it's kind of the Laurel and Hardy show, with the straight [wo]man and the funny guy, and here the funny guy got a little too into the act. The second video is Cramer explaining himself in a calmer manner.
Is it really this hot? Yeah. All the craziness in the housing market that culminated in the last two hyperactive years is coming to roost in one or two hot weeks in August 2007.
Next week should be very interesting.
CNBC Video: Cramer: Bernanke, Wake Up.
CNBC Video: Cramer on Bear Stearns.
PS. Erin Burnett - hot.
Friday, August 03, 2007
What's the frequency, Kenneth?
CNBC Video: Mortgage Mess.
Kenneth Heebner, manager of the CGM funds, is up 30% this year in his Focus Fund, and believes that the mortgage mess in the US is isolated, and that it, combined with other factors, might end up being bullish for the economy. His reasoning: mortgage losses are contained in hedge funds and pension funds (gee, great), the ensuing mess might park the Fed in neutral or force it to reverse, and the global economy continues to do well. [Note: He says if he hears that large financial players are under stress his position would change, but so far there are no major financial players who appear to be in trouble.]
He's bullish on oil service, selective oil companies, infrastructure plays, and global mining; i.e. companies benefiting from the global boom and the tightness in supply of various commodities.
Kenneth Heebner, manager of the CGM funds, is up 30% this year in his Focus Fund, and believes that the mortgage mess in the US is isolated, and that it, combined with other factors, might end up being bullish for the economy. His reasoning: mortgage losses are contained in hedge funds and pension funds (gee, great), the ensuing mess might park the Fed in neutral or force it to reverse, and the global economy continues to do well. [Note: He says if he hears that large financial players are under stress his position would change, but so far there are no major financial players who appear to be in trouble.]
He's bullish on oil service, selective oil companies, infrastructure plays, and global mining; i.e. companies benefiting from the global boom and the tightness in supply of various commodities.
Thursday, August 02, 2007
Jim Rogers says what everybody's thinking.
Bloomberg: U.S. Housing Is one of History's `Biggest Bubbles,' Rogers Says.
Quotes:
``This was one of the biggest bubbles we've ever had in credit,'' Rogers, who predicted the start of the global commodities rally in 1999, said in an interview from Hong Kong. ``I have been and am still short the investment bankers in America. I'm also short homebuilders.''
....
``This is only time in world history when people were able to buy houses with no money down and in fact, in some cases, the builders gave them money for a down payment,'' Rogers said. ``So this bubble is the worst we've had in housing and it's going to be the worst we've had cleaning it out.''
------------------------------------------
I've been meaning to read the book Bubble Man, about Alan Greenspan, but I've got a few books to go before I get to it.
Quotes:
``This was one of the biggest bubbles we've ever had in credit,'' Rogers, who predicted the start of the global commodities rally in 1999, said in an interview from Hong Kong. ``I have been and am still short the investment bankers in America. I'm also short homebuilders.''
....
``This is only time in world history when people were able to buy houses with no money down and in fact, in some cases, the builders gave them money for a down payment,'' Rogers said. ``So this bubble is the worst we've had in housing and it's going to be the worst we've had cleaning it out.''
------------------------------------------
I've been meaning to read the book Bubble Man, about Alan Greenspan, but I've got a few books to go before I get to it.
Monday, July 23, 2007
Otis!
Okay, no guys named Otis [trying to stay with the Animal House theme of the month] that I could find had much to say about energy or oil. I did find a guy named Phil, which is kind of the white guy equivalent of Otis.
Also, a coupla Jeffs, a John, a Matthew, an Adam, and an Otter, er Peter, with the funniest headline of quite some time.
Investor's Business Daily: Oil Could Soar Past $100 On Demand, Some Argue.
Quotes:
"My line right now is that we're headed to triple-digit oil prices within three or four years and the first digit is not going to be a 1," said Philip Verleger, an economist who heads energy consultancy PK Verleger LLC.
He cited "huge" pent-up demand in China and the rest of Asia, lack of growth in production capacity and reduced investment in refineries amid local resistance to new sites, and worries about measures to fight global warming.
"We've created a situation where prices are going to go up a lot," said Verleger, a respected forecaster.
Bloomberg: $100 Oil May Be Months Away, Not Years, Say CIBC, Goldman.
Quotes:
Jeffrey Currie, a London-based commodity analyst at the world's biggest securities firm, says $95 crude is likely this year unless OPEC unexpectedly increases production, and declining inventories are raising the chances for $100 oil. Jeff Rubin at CIBC World Markets predicts $100 a barrel as soon as next year.
``We're only a headline of significance away from $100 oil,'' said John Kilduff, an analyst in the New York office of futures broker Man Financial Inc. ``The unrelenting pressure of increased demand has left the market a coiled spring.'' New disruptions of Nigerian or Iraqi supplies, or any military strike against Iran, might trigger the rise, Kilduff said in a July 20 interview.
....
``Ultimately, the key to the outlook going forward is when will Saudi Arabia ramp up production,'' he said in an interview. ``If you have a situation in which inventories globally get drawn to critically low levels, the volatility in this market is likely to explode, which significantly increases the probability of $100 oil.'' Oil might slip to $73.50 if OPEC were to start producing more now, he said.
....
The failure of near-record fuel prices to restrain global oil demand growth is what concerns Rubin, chief strategist at the brokerage unit of Canadian Imperial Bank of Commerce in Toronto.
``Prices have doubled, and demand is alive and well and accelerating,'' he said in a July 18 interview. ``The argument that rising prices would choke demand and bring increased output is falling to the wayside.''
....
The cost of finding and pumping oil is rising steadily, convincing analysts such as Rubin and Deutsche Bank AG chief energy economist Adam Sieminski that higher prices will last. Shortages of deepwater drilling ships and rigs has pushed daily rents to records, and the skilled workers needed to run rigs, weld pipes, pilot vessels, fix refineries and build oil-sands projects command ever-higher wages.
``Three years ago we were calling for $30 oil, then $35 and then $40 oil,'' said New York-based Sieminski, who last week raised his forecast for the average price of oil in 2010 to $60 a barrel from $45.
``I've gotten tired of increasing these forecasts in $5 increments,'' Sieminski said in an interview. ``Something has happened. Costs have continued to escalate, and the geopolitical situation has gotten worse.''
The $60-a-barrel forecast for 2010 is 15 percent higher than the average analyst forecast, Sieminski said. The projection probably will turn out to be too low, he said.
------
The most inadvertently hilarious headline I've seen in a while:
Bloomberg Video: Beutel of Cameron Hanover Doubts Oil Will Reach $80 This Week.
------
PS. Note that when the "Oil is going to $100" noise reaches a crescendo, we tend to peak and go down. So be vigilant.
Also, a coupla Jeffs, a John, a Matthew, an Adam, and an Otter, er Peter, with the funniest headline of quite some time.
Investor's Business Daily: Oil Could Soar Past $100 On Demand, Some Argue.
Quotes:
"My line right now is that we're headed to triple-digit oil prices within three or four years and the first digit is not going to be a 1," said Philip Verleger, an economist who heads energy consultancy PK Verleger LLC.
He cited "huge" pent-up demand in China and the rest of Asia, lack of growth in production capacity and reduced investment in refineries amid local resistance to new sites, and worries about measures to fight global warming.
"We've created a situation where prices are going to go up a lot," said Verleger, a respected forecaster.
Bloomberg: $100 Oil May Be Months Away, Not Years, Say CIBC, Goldman.
Quotes:
Jeffrey Currie, a London-based commodity analyst at the world's biggest securities firm, says $95 crude is likely this year unless OPEC unexpectedly increases production, and declining inventories are raising the chances for $100 oil. Jeff Rubin at CIBC World Markets predicts $100 a barrel as soon as next year.
``We're only a headline of significance away from $100 oil,'' said John Kilduff, an analyst in the New York office of futures broker Man Financial Inc. ``The unrelenting pressure of increased demand has left the market a coiled spring.'' New disruptions of Nigerian or Iraqi supplies, or any military strike against Iran, might trigger the rise, Kilduff said in a July 20 interview.
....
``Ultimately, the key to the outlook going forward is when will Saudi Arabia ramp up production,'' he said in an interview. ``If you have a situation in which inventories globally get drawn to critically low levels, the volatility in this market is likely to explode, which significantly increases the probability of $100 oil.'' Oil might slip to $73.50 if OPEC were to start producing more now, he said.
....
The failure of near-record fuel prices to restrain global oil demand growth is what concerns Rubin, chief strategist at the brokerage unit of Canadian Imperial Bank of Commerce in Toronto.
``Prices have doubled, and demand is alive and well and accelerating,'' he said in a July 18 interview. ``The argument that rising prices would choke demand and bring increased output is falling to the wayside.''
....
The cost of finding and pumping oil is rising steadily, convincing analysts such as Rubin and Deutsche Bank AG chief energy economist Adam Sieminski that higher prices will last. Shortages of deepwater drilling ships and rigs has pushed daily rents to records, and the skilled workers needed to run rigs, weld pipes, pilot vessels, fix refineries and build oil-sands projects command ever-higher wages.
``Three years ago we were calling for $30 oil, then $35 and then $40 oil,'' said New York-based Sieminski, who last week raised his forecast for the average price of oil in 2010 to $60 a barrel from $45.
``I've gotten tired of increasing these forecasts in $5 increments,'' Sieminski said in an interview. ``Something has happened. Costs have continued to escalate, and the geopolitical situation has gotten worse.''
The $60-a-barrel forecast for 2010 is 15 percent higher than the average analyst forecast, Sieminski said. The projection probably will turn out to be too low, he said.
------
The most inadvertently hilarious headline I've seen in a while:
Bloomberg Video: Beutel of Cameron Hanover Doubts Oil Will Reach $80 This Week.
------
PS. Note that when the "Oil is going to $100" noise reaches a crescendo, we tend to peak and go down. So be vigilant.
Monday, July 16, 2007
Toga! Toga!
[Okay, so you don't get the title. Party on.. Dorfman.. Animal House. Yes, the jokes are obscure and a little dopey, but I've been blogging on energy stocks for 2 and a half years now and I've got to do something to amuse myself.]
NY SUN: Energy Party Is Far From Over.
Quotes:
Mr. Gaines, a former crack institutional energy analyst, a one-time adviser to Carl Icahn in his hostile energy takeover attempts, and no stranger to this column because of his consistent stock-picking prowess, reckons that if you equate energy shares to the human life cycle, the stock group is probably only in its 20s.
Energy fundamentals remain very positive, he notes. "It's Economics 101; you've got growing demand and diminishing supply," Mr. Gaines says. "American production is not being replaced. We, as well as China and India, have an insatiable oil appetite. America still doesn't have a viable energy policy, and given current conditions, the terror and supply disruption premium of about $15 a barrel is not about to disappear any time soon."
In recent years, we've seen forecasts of $100-a-barrel oil from the likes of Goldman Sachs, Merrill Lynch, and Boone Pickens. Mr. Gaines, currently CEO of Dune Energy, a Houston-based oil and gas producer, figures that the elusive triple-digit target is likely to become a reality over the next 12 months. Oil closed Friday at around $73.93 a barrel.
Given the surge in energy stocks, Mr. Gaines, who is said to have a personal equities portfolio in excess of $100 million, about 90% of which is in the energy sector, has easily been one of the best stockpickers in this column. Three of his current favorites, each of which he owns, are Allis-Chalmers Energy, Chesapeake Energy, and Comstock Resources. He views all three as potential 25% to 50% gainers over the next 12 months.
NY SUN: Energy Party Is Far From Over.
Quotes:
Mr. Gaines, a former crack institutional energy analyst, a one-time adviser to Carl Icahn in his hostile energy takeover attempts, and no stranger to this column because of his consistent stock-picking prowess, reckons that if you equate energy shares to the human life cycle, the stock group is probably only in its 20s.
Energy fundamentals remain very positive, he notes. "It's Economics 101; you've got growing demand and diminishing supply," Mr. Gaines says. "American production is not being replaced. We, as well as China and India, have an insatiable oil appetite. America still doesn't have a viable energy policy, and given current conditions, the terror and supply disruption premium of about $15 a barrel is not about to disappear any time soon."
In recent years, we've seen forecasts of $100-a-barrel oil from the likes of Goldman Sachs, Merrill Lynch, and Boone Pickens. Mr. Gaines, currently CEO of Dune Energy, a Houston-based oil and gas producer, figures that the elusive triple-digit target is likely to become a reality over the next 12 months. Oil closed Friday at around $73.93 a barrel.
Given the surge in energy stocks, Mr. Gaines, who is said to have a personal equities portfolio in excess of $100 million, about 90% of which is in the energy sector, has easily been one of the best stockpickers in this column. Three of his current favorites, each of which he owns, are Allis-Chalmers Energy, Chesapeake Energy, and Comstock Resources. He views all three as potential 25% to 50% gainers over the next 12 months.
Party on, Boone.
[Note to the WSJ: Page A2?]
WSJ: Potential Energy Crunch May Bring Other Fuels to Fore.
Quotes:
World oil and gas supplies from conventional sources are unlikely to keep up with rising global demand over the next 25 years, the U.S. petroleum industry says in a draft report of a study commissioned by the government.
In the draft report, oil-industry leaders acknowledge the world will need to develop all the supplemental sources of energy it can -- ranging from biofuels to nuclear power to oil extracted by unconventional means from the oil sands of Canada -- to meet soaring demand. The surge in demand is expected to arise from rapid economic growth in such fast-developing countries as China and India, as well as mounting consumption in the U.S., the world's biggest energy market.
The findings suggest that, far from being temporary, high energy prices are likely for decades to come.
WSJ: Potential Energy Crunch May Bring Other Fuels to Fore.
Quotes:
World oil and gas supplies from conventional sources are unlikely to keep up with rising global demand over the next 25 years, the U.S. petroleum industry says in a draft report of a study commissioned by the government.
In the draft report, oil-industry leaders acknowledge the world will need to develop all the supplemental sources of energy it can -- ranging from biofuels to nuclear power to oil extracted by unconventional means from the oil sands of Canada -- to meet soaring demand. The surge in demand is expected to arise from rapid economic growth in such fast-developing countries as China and India, as well as mounting consumption in the U.S., the world's biggest energy market.
The findings suggest that, far from being temporary, high energy prices are likely for decades to come.
Saturday, July 14, 2007
Oh my God.
Joe Kernen utters the above priceless quote when Boone Pickens first appears on the screen and it's apparent the interview is being conducted with Mr. Pickens in gym attire and with his foot up on his desk.
I'm not sure what exactly that suggests; a man of 78 and still on top of his game having a bit of fun, or a ton of hubris from a guy who's been right so long he's getting cocky. I think the former. [At least he didn't end with "Party on, dude".]
Predictions: $80 by next May, but first possibly a dip to the high sixties due to an excess of oil around right now. He suggests people not be short oil.
CNBC TV: Oil May Dip Slightly, But Will Hit $80 by Next May: Pickens.
Quotes:
"What I see from the producers’ side is that the Saudis, the Russians -- all the producers -- want a higher price for oil and what they’re searching for is how much can the market stand, how much can the world economy stand on price. They’ll keep pushing it on up as far as it will go.”
Pickens shorted natural gas last year because there was “too much gas” -- and said the action “made our day.”
“We got a late start to the summer this year, so gas is still suffering,” Pickens said. “I think gas will suffer on into 2008. All those things will clear up with time. A few months in a commodity market going down or up just scares hell out of everybody… You need to look at it on a longer-term basis than that. At the same time, if you’ve got your neck stuck out in a commodity market, you can lose a lot of money real quick.”
I'm not sure what exactly that suggests; a man of 78 and still on top of his game having a bit of fun, or a ton of hubris from a guy who's been right so long he's getting cocky. I think the former. [At least he didn't end with "Party on, dude".]
Predictions: $80 by next May, but first possibly a dip to the high sixties due to an excess of oil around right now. He suggests people not be short oil.
CNBC TV: Oil May Dip Slightly, But Will Hit $80 by Next May: Pickens.
Quotes:
"What I see from the producers’ side is that the Saudis, the Russians -- all the producers -- want a higher price for oil and what they’re searching for is how much can the market stand, how much can the world economy stand on price. They’ll keep pushing it on up as far as it will go.”
Pickens shorted natural gas last year because there was “too much gas” -- and said the action “made our day.”
“We got a late start to the summer this year, so gas is still suffering,” Pickens said. “I think gas will suffer on into 2008. All those things will clear up with time. A few months in a commodity market going down or up just scares hell out of everybody… You need to look at it on a longer-term basis than that. At the same time, if you’ve got your neck stuck out in a commodity market, you can lose a lot of money real quick.”
Monday, June 25, 2007
Slightly Off Topic: Carpe Diem.
Newark Advocate: Risk avoidance should not be the overriding concern in politics, life
Quotes:
A week earlier at my son's high school graduation, a different speaker, the colorful entrepreneur and oil man T. Boone Pickens, told of his own boom-and-bust years and said he'd learned as much from failing as succeeding. Now approaching 80, Pickens said he'd trade places with any 18-year-old graduate, giving up all his wealth, all the planes, all the fame and accolades for another shot at life's promise. He sounded eminently and passionately believable.
Quotes:
A week earlier at my son's high school graduation, a different speaker, the colorful entrepreneur and oil man T. Boone Pickens, told of his own boom-and-bust years and said he'd learned as much from failing as succeeding. Now approaching 80, Pickens said he'd trade places with any 18-year-old graduate, giving up all his wealth, all the planes, all the fame and accolades for another shot at life's promise. He sounded eminently and passionately believable.
Sunday, June 24, 2007
Party on, Lakshman.
It's always a good time to check in with the Economic Cycle Research Institute to see how their economic indicators are doing. Pretty good, it turns out.
Party on, Boone.
ECRI: "US Cyclical Outlook" Updated
Quotes:
20-June-2007
(ECRI) - ECRI released its U.S. Cyclical Outlook to professional subscribers today.
U.S. economic fundamentals are less risky than many apprehend. In fact, our leading indexes suggest that inflation will remain restrained as growth firms.
Today's release also includes a detailed analysis of U.S. inflation suggesting that the recent adjustment in the bond market is a recognition of an upcoming firming in economic growth, not an upswing in inflation.
Party on, Boone.
ECRI: "US Cyclical Outlook" Updated
Quotes:
20-June-2007
(ECRI) - ECRI released its U.S. Cyclical Outlook to professional subscribers today.
U.S. economic fundamentals are less risky than many apprehend. In fact, our leading indexes suggest that inflation will remain restrained as growth firms.
Today's release also includes a detailed analysis of U.S. inflation suggesting that the recent adjustment in the bond market is a recognition of an upcoming firming in economic growth, not an upswing in inflation.
Friday, June 22, 2007
The difference.
WSJ: Robust Oil Demand Fuels Prices. [$]
Quote:
Last year's high was reached as Israel battled Hezbollah in Lebanon and amid fears of a showdown between Iran and the West. "The difference this year is that you are reaching $70 a barrel on fundamentals" of oil supply and demand, said Jan Stuart, energy economist at UBS Securities LLC. "Demand is growing faster. Supply is not keeping up. Inventories are trending lower, not higher."
Quote:
Last year's high was reached as Israel battled Hezbollah in Lebanon and amid fears of a showdown between Iran and the West. "The difference this year is that you are reaching $70 a barrel on fundamentals" of oil supply and demand, said Jan Stuart, energy economist at UBS Securities LLC. "Demand is growing faster. Supply is not keeping up. Inventories are trending lower, not higher."
Thursday, May 24, 2007
CNBC on the case.
Some stuff worth checking out on CNBC.com today:
CNBC: Profiting on Energy.
CNBC: Oil Prices Stay Above $65 on Iran, Gasoline Concerns.
Quotes:
Oil prices have more than trebled since the start of 2002 and hit a record $78.40 in July 2006. But the world economy has continued on a growth path. The president of one of the world's top oil trading houses said he believed prices were nearing the point of demand destruction, however.
"My view is that we are pretty close to demand destruction -- we are within 10-20% where we see reduced demand rates of growth," said Ian Taylor, president of Swiss-based Vitol Group, at a conference in Singapore.
CNBC: Profiting on Energy.
CNBC: Oil Prices Stay Above $65 on Iran, Gasoline Concerns.
Quotes:
Oil prices have more than trebled since the start of 2002 and hit a record $78.40 in July 2006. But the world economy has continued on a growth path. The president of one of the world's top oil trading houses said he believed prices were nearing the point of demand destruction, however.
"My view is that we are pretty close to demand destruction -- we are within 10-20% where we see reduced demand rates of growth," said Ian Taylor, president of Swiss-based Vitol Group, at a conference in Singapore.
Sunday, May 20, 2007
So many breakouts, so little time..
I was flipping through a number of charts earlier, and, no surprise, there are lots of strong looking charts in the energy area, including the XLE and OIH ETFs. A few months ago, someone asked me to highlight more trades, but I'm hesitant to do that for various reasons. Highlight some ideas, yes. Suggest trades, no. [BTW: Nice move on HUSKF so far, $71 to $83, and I still like it.]
These are the stocks that look appealing to me, some of which I already own:
SWN
DNR
OXY
CVX
GSF
ECA
TDW
MRO
PBR
IMO
SWN, OXY and IMO are particularly appealing to me at the moment, and, since I don't own those, I may be adding them, depending on how they trade.
These are the stocks that look appealing to me, some of which I already own:
SWN
DNR
OXY
CVX
GSF
ECA
TDW
MRO
PBR
IMO
SWN, OXY and IMO are particularly appealing to me at the moment, and, since I don't own those, I may be adding them, depending on how they trade.
Sunday, May 06, 2007
No bubble here folks, move along.
I was in the library yesterday, and I happened upon a magazine I had never seen before, Better Investing, which caters to investment clubs. Flipping through it, I didn't think much of it, frankly. [My personal investment favorites are Barron's, Investor's Business Daily, with a dollop of Smart Money and the Wall Street Journal.] I'm not big on investment clubs either, as the group think aspect of it is the kind of thing I really like to stay away from, particularly with investing. Being a bit of a pain in the ass contrarian, I'm sure I'd get cashed out after not too long anyway.
The April 2007 issue of Better Investing had an interesting article though, a list of the "most popular and widely held stocks among investment clubs and their members nationwide as of early 2007". Not surprisingly, most of the names on the list were names that are pretty familiar to all of us, sort of a mega cap Peter Lynch type list. What I was really surprised by was how many energy names showed up on this list.
So go ahead, take a guess. Of the top 50 stocks, how many would you guess are energy names?
4 or 5 might be a reasonable guess, considering that roughly 10% of the market is energy. But since energy isn't sexy, [you can't go down to the mall and buy Ultra Petroleum jeans, and Grant Prideco doesn't yet make hip replacements], you might low ball it, and say 3. Or, you might go the other way and say "Hey, energy has been going gangbusters for 3-4 years now, and with CNBC having a hot line to Peak Oil Burgermeister Boone Pickens, I'm sure they have 6+."
The answer, as usual: It depends.
If you go by the magazine's main ranking, number of clubs holding the stock, there is exactly... one. Top 50 stocks, one is energy! I was amazed.
Exxon Mobil, the largest cap stock in the world, the best run oil major, the company reporting the most profits of any company in history, is, amusingly, number 14.
If you instead go by the secondary metric, the total value of clubs' holdings, then you get all of two energy stocks. Exxon Mobil at 7, and ConocoPhillips at 33. [Ranked by number of clubs holding it, COP is 79.]
Needless to say, I walked out of the library with a big grin on my face as I thought about how much buying these folks still have to do in the energy sector.
For reference:
Top 10 Stocks, ranked by # of funds holding:
Home Depot
GE
Walgreens
Lowe's
Microsoft
Aflac
Johnson and Johnson
Styker
Bed, Bath and Beyond
Pfizer
Energy stocks on the list:
Stock / Ranked by # of funds / Ranked by total value:
XOM 14 7
BP 63 59
CVX 69 63
VLO 71 71
COP 79 33
BTU 82 80
XTO 89 88
SLB 113
APA 116
CHK 121
BHP 128
HLX 140
NBR 144
DVN 153
SFY 156
SU 170
JOYG 177
KMP 196
Notes: After the top 100, they no longer provided the value rank. VLO, COP, BTU, XTO were noted as new to the Top 100 list and XOM and COP were noted to have advanced 5 or more positions since 2006, so the tide is changing. Note that many of the stocks widely owned by these investment clubs have staff dedicated to encouraging/marketing long term ownership of their stock, which is somewhat less prevalent (in my opinion) among energy stocks. But hey, they're probably a little busy right now.
The April 2007 issue of Better Investing had an interesting article though, a list of the "most popular and widely held stocks among investment clubs and their members nationwide as of early 2007". Not surprisingly, most of the names on the list were names that are pretty familiar to all of us, sort of a mega cap Peter Lynch type list. What I was really surprised by was how many energy names showed up on this list.
So go ahead, take a guess. Of the top 50 stocks, how many would you guess are energy names?
4 or 5 might be a reasonable guess, considering that roughly 10% of the market is energy. But since energy isn't sexy, [you can't go down to the mall and buy Ultra Petroleum jeans, and Grant Prideco doesn't yet make hip replacements], you might low ball it, and say 3. Or, you might go the other way and say "Hey, energy has been going gangbusters for 3-4 years now, and with CNBC having a hot line to Peak Oil Burgermeister Boone Pickens, I'm sure they have 6+."
The answer, as usual: It depends.
If you go by the magazine's main ranking, number of clubs holding the stock, there is exactly... one. Top 50 stocks, one is energy! I was amazed.
Exxon Mobil, the largest cap stock in the world, the best run oil major, the company reporting the most profits of any company in history, is, amusingly, number 14.
If you instead go by the secondary metric, the total value of clubs' holdings, then you get all of two energy stocks. Exxon Mobil at 7, and ConocoPhillips at 33. [Ranked by number of clubs holding it, COP is 79.]
Needless to say, I walked out of the library with a big grin on my face as I thought about how much buying these folks still have to do in the energy sector.
For reference:
Top 10 Stocks, ranked by # of funds holding:
Home Depot
GE
Walgreens
Lowe's
Microsoft
Aflac
Johnson and Johnson
Styker
Bed, Bath and Beyond
Pfizer
Energy stocks on the list:
Stock / Ranked by # of funds / Ranked by total value:
XOM 14 7
BP 63 59
CVX 69 63
VLO 71 71
COP 79 33
BTU 82 80
XTO 89 88
SLB 113
APA 116
CHK 121
BHP 128
HLX 140
NBR 144
DVN 153
SFY 156
SU 170
JOYG 177
KMP 196
Notes: After the top 100, they no longer provided the value rank. VLO, COP, BTU, XTO were noted as new to the Top 100 list and XOM and COP were noted to have advanced 5 or more positions since 2006, so the tide is changing. Note that many of the stocks widely owned by these investment clubs have staff dedicated to encouraging/marketing long term ownership of their stock, which is somewhat less prevalent (in my opinion) among energy stocks. But hey, they're probably a little busy right now.
Monday, April 30, 2007
Boone Pickens in L.A.
Bloomberg Video: Boone Pickens.
From last week. Yeah, I know, I'm a slacker. But it's not like the energy issue is going anywhere.
As I first watched this video, I was distracted and rather amused by the parade of generally high end cars passing by in the background, particularly the BMW 7 Series that nearly backs into another car behind it. Los Angeles, for anybody who's never been there, is a serious car town, and you literally are what you drive. The fun part is that along with an amazing array of the world's more expensive models, you'll also see a lot of older cars, many of them in relatively good condition and driven daily. The roads in LA are pretty gentle and the weather is supportive, so you'll see everything from old Volkswagon Beetles and BMW 2002s to 80's Japanese cars that would have rusted away in other areas, oh, circa 20 years ago.
The other bit of amusement in this video is the fountain running in the background. Ah, how nice it is to forget in LA that, technically, you're living in the desert.
Generally this interview covers familiar ground, but a couple of interesting data points come out: Mr. Pickens believes that the Chevron/Devon Gulf of Mexico deepwater discovery, Jack, will probably not be economical to produce, as it is too deep and had to be fractured to produce just 6,000 barrels a day. Additionally, he says that the breakeven point of Suncor's oil sands production is around $22 a barrel. [I had thought it was closer to $35 a barrel.] Suncor is his biggest single stock position.
Another interview with Mr. Pickens from the LA Times:
LA Times: A future with less oil and more hard choices.
From last week. Yeah, I know, I'm a slacker. But it's not like the energy issue is going anywhere.
As I first watched this video, I was distracted and rather amused by the parade of generally high end cars passing by in the background, particularly the BMW 7 Series that nearly backs into another car behind it. Los Angeles, for anybody who's never been there, is a serious car town, and you literally are what you drive. The fun part is that along with an amazing array of the world's more expensive models, you'll also see a lot of older cars, many of them in relatively good condition and driven daily. The roads in LA are pretty gentle and the weather is supportive, so you'll see everything from old Volkswagon Beetles and BMW 2002s to 80's Japanese cars that would have rusted away in other areas, oh, circa 20 years ago.
The other bit of amusement in this video is the fountain running in the background. Ah, how nice it is to forget in LA that, technically, you're living in the desert.
Generally this interview covers familiar ground, but a couple of interesting data points come out: Mr. Pickens believes that the Chevron/Devon Gulf of Mexico deepwater discovery, Jack, will probably not be economical to produce, as it is too deep and had to be fractured to produce just 6,000 barrels a day. Additionally, he says that the breakeven point of Suncor's oil sands production is around $22 a barrel. [I had thought it was closer to $35 a barrel.] Suncor is his biggest single stock position.
Another interview with Mr. Pickens from the LA Times:
LA Times: A future with less oil and more hard choices.
Sunday, April 29, 2007
US: We have a weak[-ening] dollar policy.
That's what I'm hearing here.
Reuters: U.S. Treasury's Kimmitt declines dollar comment.
Quotes:
U.S. Treasury Deputy Secretary Robert Kimmitt said he would not comment on the weakness of the U.S. dollar on Saturday after the currency slid to a record low against the euro on Friday.
Kimmitt told reporters that only his boss, U.S. Treasury Secretary Hank Paulson, makes comments on the dollar on behalf of the U.S. Treasury.
"There is only one person who can speak about the dollar... I will leave it there," he said at a conference in Brussels.
The euro pushed over $1.3680, the highest level since the launch of the common European currency in 1999, after a report showed the U.S. economy grew by just 1.3 percent in the first quarter of the year.
"We have made it quite clear to the Chinese that they need to move quicker on their currency, to move to (an) underlying market valuation based on fundamental economic principles," he said during a debate at the conference.
But a weak dollar could put a little juice in our exports as we try to stave off this:
Reuters: Fed's Yellen says U.S. economic downturn possible.
Quotes:
There is the potential for a downturn in the U.S. economy that could have ripple effects around the world, San Francisco Federal Reserve President Janet Yellen said on Saturday.
The U.S. economy grew modestly in the first quarter but should accelerate in the second half of the year, she said in a speech to the American Academy of Arts and Sciences and the American Philosophical Society.
Enumerating the top current risks to stable economic conditions around the world, she said that in the U.S. economy "there is potential for a downturn that could have major spillover effects around the globe." The United States contributes roughly 25 percent to world economic output, she noted.
The U.S. economy expanded at a sluggish 1.3 percent in the first quarter of 2007, the Commerce Department said on Friday, reflecting declines in the housing market and a pickup in inflation. It was the fourth consecutive quarter of sub-par growth in the world's largest economy.
Reuters: U.S. Treasury's Kimmitt declines dollar comment.
Quotes:
U.S. Treasury Deputy Secretary Robert Kimmitt said he would not comment on the weakness of the U.S. dollar on Saturday after the currency slid to a record low against the euro on Friday.
Kimmitt told reporters that only his boss, U.S. Treasury Secretary Hank Paulson, makes comments on the dollar on behalf of the U.S. Treasury.
"There is only one person who can speak about the dollar... I will leave it there," he said at a conference in Brussels.
The euro pushed over $1.3680, the highest level since the launch of the common European currency in 1999, after a report showed the U.S. economy grew by just 1.3 percent in the first quarter of the year.
"We have made it quite clear to the Chinese that they need to move quicker on their currency, to move to (an) underlying market valuation based on fundamental economic principles," he said during a debate at the conference.
But a weak dollar could put a little juice in our exports as we try to stave off this:
Reuters: Fed's Yellen says U.S. economic downturn possible.
Quotes:
There is the potential for a downturn in the U.S. economy that could have ripple effects around the world, San Francisco Federal Reserve President Janet Yellen said on Saturday.
The U.S. economy grew modestly in the first quarter but should accelerate in the second half of the year, she said in a speech to the American Academy of Arts and Sciences and the American Philosophical Society.
Enumerating the top current risks to stable economic conditions around the world, she said that in the U.S. economy "there is potential for a downturn that could have major spillover effects around the globe." The United States contributes roughly 25 percent to world economic output, she noted.
The U.S. economy expanded at a sluggish 1.3 percent in the first quarter of 2007, the Commerce Department said on Friday, reflecting declines in the housing market and a pickup in inflation. It was the fourth consecutive quarter of sub-par growth in the world's largest economy.
Wednesday, April 25, 2007
Henry Groppe: Got oil?
National Post: Sands are shifting for oil supply.
Quotes:
The world continues to run rapidly out of oil and natural gas, which points to dramatically higher prices in a handful of years.
That was the message from Henry Groppe, a lanky Texan who advises oil companies and investors around the world about the world of prices. His firm, Groppe, Long & Littell, is based in Houston and was founded after he did stints as a chemical engineer for Saudi Arabia's Aramco, Dow Chemical, Monsanto and Texaco.
"The fundamentals always prevail, which is that the minute you start producing, you are depleting your resource," he told an audience of investors last week at a conference sponsored by Calgary's Pengrowth Energy Trust.
He showed production curves in the North Sea and Mexico that are catastrophically sudden in terms of their declines.
"This has a huge impact on the economies of Britain and Mexico," he said. "Britain became an oil importer this year for the first time in decades."
Oil production worldwide peaked months ago, but figures and prices don't reflect that yet because the production of liquids stripped from natural gas has been filling the gap, he said.
But that potential is peaking, too, which means that "in several years" the world will enter a new era of higher prices.
"The only question is how high will prices have to go before there is a decline in usage?" he said. Price hikes will mean the freeing up of less viable supplies, but there are limits economically and geologically to this, too, given current technology.
"Do we ever run out? Well, 40 years ago we ran out of US$2 a barrel oil; then 25 years ago we ran out of US$10 to US$12 a barrel oil and recently we ran out of US$40 to US$45 a barrel oil," he joked.
Current prices in the US$60- range make oilsands and Venezuela's tar sands viable, and prices will continue rising, he forecasted.
"The issue for the United States is that it uses one-quarter of the world's energy [oil, gas, coal] but has only 5% of the world's population," he said. "As realities intrude and consumption goes from 80 million barrels a day to 120 million [in 10 years], you will see a major shift in all financial and energy markets."
Quotes:
The world continues to run rapidly out of oil and natural gas, which points to dramatically higher prices in a handful of years.
That was the message from Henry Groppe, a lanky Texan who advises oil companies and investors around the world about the world of prices. His firm, Groppe, Long & Littell, is based in Houston and was founded after he did stints as a chemical engineer for Saudi Arabia's Aramco, Dow Chemical, Monsanto and Texaco.
"The fundamentals always prevail, which is that the minute you start producing, you are depleting your resource," he told an audience of investors last week at a conference sponsored by Calgary's Pengrowth Energy Trust.
He showed production curves in the North Sea and Mexico that are catastrophically sudden in terms of their declines.
"This has a huge impact on the economies of Britain and Mexico," he said. "Britain became an oil importer this year for the first time in decades."
Oil production worldwide peaked months ago, but figures and prices don't reflect that yet because the production of liquids stripped from natural gas has been filling the gap, he said.
But that potential is peaking, too, which means that "in several years" the world will enter a new era of higher prices.
"The only question is how high will prices have to go before there is a decline in usage?" he said. Price hikes will mean the freeing up of less viable supplies, but there are limits economically and geologically to this, too, given current technology.
"Do we ever run out? Well, 40 years ago we ran out of US$2 a barrel oil; then 25 years ago we ran out of US$10 to US$12 a barrel oil and recently we ran out of US$40 to US$45 a barrel oil," he joked.
Current prices in the US$60- range make oilsands and Venezuela's tar sands viable, and prices will continue rising, he forecasted.
"The issue for the United States is that it uses one-quarter of the world's energy [oil, gas, coal] but has only 5% of the world's population," he said. "As realities intrude and consumption goes from 80 million barrels a day to 120 million [in 10 years], you will see a major shift in all financial and energy markets."
Sunday, April 22, 2007
Once More, with Feeling!
Excellent interview with Boone Pickens on EVWorld from earlier this month. I highlight select pieces, but it's worth reading the entire article.
EVWorld: Straight Talk from T. Boone Pickens.
Quotes:
"You take 30 billion barrels out of the world's reserve base and we have not replaced 30 billion barrels since 1985. You're talking about twenty years. You keep drawing down on the world reserve base... and it is happening because you can't find big oil fields anymore. They're just not out there to find."
....
No one has ever asked why we [Americans] use five times as much oil as the rest of the world, he pointed out. "That question is going to be asked more and more. There's no question, but we are going to have to reduce our energy [consumption]."
Queried by Kleindienst what he would do if he were the next energy secretary -- and Pickens joked that he'd insist on being called 'czar' -- he replied that the country is going to need every renewable energy source it can muster, including wind power, which while he's not a fan of the big turbines for esthetic reasons, he is now re-invested in it after an earlier abortive venture in the business.
"Wind is going to be a big deal," he commented. "You're going to have solar, you're going to have wind. You're going to have biodiesel. You name it, you've got it," he drawled. He also said that as energy 'czar' he'd raise the price of gasoline, working to establish a common, worldwide price for gasoline, just as there is a largely global price of oil. He said people who want their SUVs will be able to have them, but it's going to cost a lot to run them.
....
In discussing how the conference attendees can help influence Congress, Pickens responded, "I can tell you that the problems are going to come so fast and the price of gasoline is going to go up so fast here within the next twelve months, they are going to start catching on real quick that you're going to have to do everything you can to cover the base, and you're also going to realize that the supply [of oil] is so tight...
"Matt Simmons, a very, very bright guy that knows a lot more about this business than I do, and Matt Simmons last week sent me an.. email that said the [petroleum supply] system is so tight now. He said that storage is down... inventories around the world are coming down so fast now... everything is getting so tight... that you're going to see oil priced above $80 a barrel [this year]. And he said that if you had some kind of hiccup in the system it could go to $100 faster than a hot knife through butter.
"And I believe that and I think that when that happens, this thing is going to get so serious so fast that you're going to get the help out of Washington. You're going to have these politicians running for president, they're going to start talking about, 'We're going to have to do this, this and this, and all of it is going to help us, us, us in this room. I really believe that's going to happen."
EVWorld: Straight Talk from T. Boone Pickens.
Quotes:
"You take 30 billion barrels out of the world's reserve base and we have not replaced 30 billion barrels since 1985. You're talking about twenty years. You keep drawing down on the world reserve base... and it is happening because you can't find big oil fields anymore. They're just not out there to find."
....
No one has ever asked why we [Americans] use five times as much oil as the rest of the world, he pointed out. "That question is going to be asked more and more. There's no question, but we are going to have to reduce our energy [consumption]."
Queried by Kleindienst what he would do if he were the next energy secretary -- and Pickens joked that he'd insist on being called 'czar' -- he replied that the country is going to need every renewable energy source it can muster, including wind power, which while he's not a fan of the big turbines for esthetic reasons, he is now re-invested in it after an earlier abortive venture in the business.
"Wind is going to be a big deal," he commented. "You're going to have solar, you're going to have wind. You're going to have biodiesel. You name it, you've got it," he drawled. He also said that as energy 'czar' he'd raise the price of gasoline, working to establish a common, worldwide price for gasoline, just as there is a largely global price of oil. He said people who want their SUVs will be able to have them, but it's going to cost a lot to run them.
....
In discussing how the conference attendees can help influence Congress, Pickens responded, "I can tell you that the problems are going to come so fast and the price of gasoline is going to go up so fast here within the next twelve months, they are going to start catching on real quick that you're going to have to do everything you can to cover the base, and you're also going to realize that the supply [of oil] is so tight...
"Matt Simmons, a very, very bright guy that knows a lot more about this business than I do, and Matt Simmons last week sent me an.. email that said the [petroleum supply] system is so tight now. He said that storage is down... inventories around the world are coming down so fast now... everything is getting so tight... that you're going to see oil priced above $80 a barrel [this year]. And he said that if you had some kind of hiccup in the system it could go to $100 faster than a hot knife through butter.
"And I believe that and I think that when that happens, this thing is going to get so serious so fast that you're going to get the help out of Washington. You're going to have these politicians running for president, they're going to start talking about, 'We're going to have to do this, this and this, and all of it is going to help us, us, us in this room. I really believe that's going to happen."
Sunday, April 15, 2007
Peter Thiel on Bloomberg.
Bloomberg: Peter Thiel.
To summarize Peter Thiel's views in this interview:
- Continues to believe that ultimately we have a hard landing in housing/consumer led recession in the US due to the aftermath of the housing bubble, though obviously this is taking longer to play out than he thought (he's not alone there - I'm guilty too).
- Bullish on the dollar; believes that the Fed will be unable to lower rates as it has to try to contain inflation and that the dollar is undervalued versus other currencies (references the British pound in particular).
- Bullish on oil, Canadian oil sands stocks (Opti Canada, Nexen, Encana), and oil service companies (Schlumberger).
- Believes China will be a great growth story for the next 20 years, but has no investments there and isn't interested in them as the market is overvalued and the stocks available to invest in are losing money. Believes the best way to invest is via multinationals that export there.
The interviewer raises an interesting question: Could a rise in US exports, and the concurrent stimulation to the US economy that would come from that perhaps head off a looming recession? With the dollar weakening, there is some support to this theory, as a weak dollar gives foreigners more purchasing power in US goods, it also boosts US multinationals foreign earnings when translated back into dollars.
Interestingly, we're not really hearing much squawking on the dollar from the Treasury secretary (ala how they used to roll out John Snow with his "we've got a strong dollar policy" line - boy was that guy a terrible actor). So I'm wondering if perhaps they're looking the other way on the dollar with exactly that idea. After all, a US recession isn't good for anybody, Chinese, Germans or Saudis.
Thankfully, I didn't start a blog on currency trading so this is less of a concern to me, and I personally never trade currencies. [Peter Thiel, on the other hand, was once a currency trader.]
To summarize Peter Thiel's views in this interview:
- Continues to believe that ultimately we have a hard landing in housing/consumer led recession in the US due to the aftermath of the housing bubble, though obviously this is taking longer to play out than he thought (he's not alone there - I'm guilty too).
- Bullish on the dollar; believes that the Fed will be unable to lower rates as it has to try to contain inflation and that the dollar is undervalued versus other currencies (references the British pound in particular).
- Bullish on oil, Canadian oil sands stocks (Opti Canada, Nexen, Encana), and oil service companies (Schlumberger).
- Believes China will be a great growth story for the next 20 years, but has no investments there and isn't interested in them as the market is overvalued and the stocks available to invest in are losing money. Believes the best way to invest is via multinationals that export there.
The interviewer raises an interesting question: Could a rise in US exports, and the concurrent stimulation to the US economy that would come from that perhaps head off a looming recession? With the dollar weakening, there is some support to this theory, as a weak dollar gives foreigners more purchasing power in US goods, it also boosts US multinationals foreign earnings when translated back into dollars.
Interestingly, we're not really hearing much squawking on the dollar from the Treasury secretary (ala how they used to roll out John Snow with his "we've got a strong dollar policy" line - boy was that guy a terrible actor). So I'm wondering if perhaps they're looking the other way on the dollar with exactly that idea. After all, a US recession isn't good for anybody, Chinese, Germans or Saudis.
Thankfully, I didn't start a blog on currency trading so this is less of a concern to me, and I personally never trade currencies. [Peter Thiel, on the other hand, was once a currency trader.]
Thursday, April 12, 2007
Stay long. And short.
Refiners, natural gas, solar, uranium... the bull looks like it's back.
CNBC: Pickens Tells CNBC Oil Is Heading Higher.
Short the homebuilders? You've got company.
Reuters: Rogers shorts U.S. builders, eyes more losses.
CNBC: Pickens Tells CNBC Oil Is Heading Higher.
Short the homebuilders? You've got company.
Reuters: Rogers shorts U.S. builders, eyes more losses.
Monday, April 09, 2007
Warren Buffett: Ich bin ein Peak Oiler.
Right scenerio, wrong guys maybe. Ah, so let's try again..
Warren Buffett and Matthew Simmons walk into a bar...
Berkshire Hathaway disclosed over the weekend that it had acquired a circa $3 billion stake in railroad Burlington Northern Santa Fe, and then this morning CNBC reported that there are two other railroads that Berkshire is investing substantial amounts in, to the tune of around $700 million each.
Now, if you take a look at the charts of the various railroad stocks (BNI, UNP, CSX, NSC), you will see that Mr. Buffett isn't exactly acquiring these stocks at rock bottom prices. In terms of historical valuations, they don't look all that cheap either. This is clearly not a prototypical Warren Buffett investment, at least at first glance. But for some reason, Mr. Buffett wanted the railroad industry and he wanted in in a hurry.
The news media is mainly playing this up with the "Warren Buffett believes in the American economy" angle. I think they're all wet.
Now, while I'm sure there is more than one angle to this investment for him, I would wager a large amount of money that as he is more and more aware of the energy challenges the world has, he thus is investing in the cheapest form of long haul shipping that reaches most areas of the country. For one thing, the rails transport much of the coal that's shipped around the country, for another, they are shipping around grains and much of the ethanol (which, in theory, we will see more of in the future). Finally, shipping items by rail verus truck is immensely more efficient, I've read something up to 10 times more efficient.
So while people puzzle over why Mr. Buffett is going gangbusters over the rails, I submit that the following quote from Matthew Simmons has a lot to do with it:
Foreign Policy: Matthew Simmons on Softening Oil Peak Impact.
FP: If you were the secretary of energy right now, what policies would you recommend to President Bush?
MS: If we restructure the way we use fuels, we might be able to get along very well with oil in decline. The single-most energy inefficient way we use oil is large trucks delivering goods over large distances. If you take all the goods that are trucked more than, say, 50 miles, onto railroad tracks, depending on the length of travel, you’d use between 3 to 10 times less energy. If you put them on a marine vessel, it’s even more efficient. So forget about just-in-time inventory. Once you get the large trucks off the road, you make a tremendous dent in traffic congestion, which is public enemy one through five on passenger car fuel efficiency.
P.S. Don't forget his investments in ConocoPhillips, wind power, and ideas about nuclear energy.
Warren Buffett and Matthew Simmons walk into a bar...
Berkshire Hathaway disclosed over the weekend that it had acquired a circa $3 billion stake in railroad Burlington Northern Santa Fe, and then this morning CNBC reported that there are two other railroads that Berkshire is investing substantial amounts in, to the tune of around $700 million each.
Now, if you take a look at the charts of the various railroad stocks (BNI, UNP, CSX, NSC), you will see that Mr. Buffett isn't exactly acquiring these stocks at rock bottom prices. In terms of historical valuations, they don't look all that cheap either. This is clearly not a prototypical Warren Buffett investment, at least at first glance. But for some reason, Mr. Buffett wanted the railroad industry and he wanted in in a hurry.
The news media is mainly playing this up with the "Warren Buffett believes in the American economy" angle. I think they're all wet.
Now, while I'm sure there is more than one angle to this investment for him, I would wager a large amount of money that as he is more and more aware of the energy challenges the world has, he thus is investing in the cheapest form of long haul shipping that reaches most areas of the country. For one thing, the rails transport much of the coal that's shipped around the country, for another, they are shipping around grains and much of the ethanol (which, in theory, we will see more of in the future). Finally, shipping items by rail verus truck is immensely more efficient, I've read something up to 10 times more efficient.
So while people puzzle over why Mr. Buffett is going gangbusters over the rails, I submit that the following quote from Matthew Simmons has a lot to do with it:
Foreign Policy: Matthew Simmons on Softening Oil Peak Impact.
FP: If you were the secretary of energy right now, what policies would you recommend to President Bush?
MS: If we restructure the way we use fuels, we might be able to get along very well with oil in decline. The single-most energy inefficient way we use oil is large trucks delivering goods over large distances. If you take all the goods that are trucked more than, say, 50 miles, onto railroad tracks, depending on the length of travel, you’d use between 3 to 10 times less energy. If you put them on a marine vessel, it’s even more efficient. So forget about just-in-time inventory. Once you get the large trucks off the road, you make a tremendous dent in traffic congestion, which is public enemy one through five on passenger car fuel efficiency.
P.S. Don't forget his investments in ConocoPhillips, wind power, and ideas about nuclear energy.
Thursday, April 05, 2007
Warren Buffett, Boone Pickens, and William Greehey walk into a bar...
How'd you like to be a fly on that wall?
I don't know if these guys have ever gotten together, I'm not even sure if they all drink (Boone Pickens and William, ahem, Greehey, I'm going to go out on a limb and suggest these guys have probably both had a drink or three before), but we can try to imagine the conversation they might have together.
Warren Buffett, CEO of Berkshire Hathaway and one of America's greatest investors (if not the greatest), would probably talk about how he likes to buy companies with compelling businesses and strong, intelligent management at undervalued prices, and with his eye firmly on the long term. He might explain how he is seeking to diversify overseas these days, particularly since he has questions about the US dollar and deficits, and though he generally avoids 'commodity' businesses, has invested in the past few years in oil companies ConocoPhillips and Chinese oil major PetroChina.
Boone Pickens, CEO of hedge fund BP Capital, and perhaps the most famous proponent of peak oil in the financial world, would probably talk of his strong belief in peak oil and that we are right now at the production peak, his high regard for natural gas and Canadian oil sands, and his large stakes in Canadian oil sands producer Suncor, refiners Tesoro and Valero, and deepwater driller Transocean.
William Greehey, former CEO of Valero and architect of it's amazing rise, might then finish up with his current view of the refinery business, which is that with everybody focused on getting the last drop of gasoline out of the barrel, the asphalt side has been neglected and is going to become quite tight in 2007.
What company might they all three agree on?
ConocoPhillips, maybe, though Boone Pickens is not a huge fan of the majors as they struggle in keeping up with the ever faster treadmill of declining reserves.
[Update - It occured to me later that maybe I ought to look at BP Capital's recent filings to see if, in fact, they owned COP, and er, sure, enough, COP is the only one of the majors they do own. Oops. So I guess Boone does like COP. The other interesting thing that stood out to me from looking at his holdings was just how much Denbury Resources (DNR) BP Capital holds. Wow, they are way overweighting that one. They have some large CO2 resources and they buy old oil fields on the cheap and CO2 flood them to recover more oil.]
My vote for a play they all might find interesting: Canadian energy company Husky Energy (HUSKF or HSE.TO).
Why?
1.) Major natural gas discovery in the South China Sea.
2.) Sizable oil sands holdings in Canada.
3.) Major refiner of asphalt in Western Canada.
(Details here.)
35% of Husky is owned by Hutchison Whampoa, a Hong Kong conglomerate/holding company. There is some speculation that a Chinese company will purchase a Canadian producer to get a significant piece of the oil sands. I have no idea if Hutchison wants to sell, but I would rather not see that happen with Husky. (Frankly, I'd rather not see it happen with any of my holdings there.) Instead, I'd just like to collect my dividends over time and let current management keep running the joint, they've been doing a rather fine job.
Note: None of the above referenced investors has, as far as I know, ever actually suggested Husky as an investment. I'm just... speculating.
I don't know if these guys have ever gotten together, I'm not even sure if they all drink (Boone Pickens and William, ahem, Greehey, I'm going to go out on a limb and suggest these guys have probably both had a drink or three before), but we can try to imagine the conversation they might have together.
Warren Buffett, CEO of Berkshire Hathaway and one of America's greatest investors (if not the greatest), would probably talk about how he likes to buy companies with compelling businesses and strong, intelligent management at undervalued prices, and with his eye firmly on the long term. He might explain how he is seeking to diversify overseas these days, particularly since he has questions about the US dollar and deficits, and though he generally avoids 'commodity' businesses, has invested in the past few years in oil companies ConocoPhillips and Chinese oil major PetroChina.
Boone Pickens, CEO of hedge fund BP Capital, and perhaps the most famous proponent of peak oil in the financial world, would probably talk of his strong belief in peak oil and that we are right now at the production peak, his high regard for natural gas and Canadian oil sands, and his large stakes in Canadian oil sands producer Suncor, refiners Tesoro and Valero, and deepwater driller Transocean.
William Greehey, former CEO of Valero and architect of it's amazing rise, might then finish up with his current view of the refinery business, which is that with everybody focused on getting the last drop of gasoline out of the barrel, the asphalt side has been neglected and is going to become quite tight in 2007.
What company might they all three agree on?
ConocoPhillips, maybe, though Boone Pickens is not a huge fan of the majors as they struggle in keeping up with the ever faster treadmill of declining reserves.
[Update - It occured to me later that maybe I ought to look at BP Capital's recent filings to see if, in fact, they owned COP, and er, sure, enough, COP is the only one of the majors they do own. Oops. So I guess Boone does like COP. The other interesting thing that stood out to me from looking at his holdings was just how much Denbury Resources (DNR) BP Capital holds. Wow, they are way overweighting that one. They have some large CO2 resources and they buy old oil fields on the cheap and CO2 flood them to recover more oil.]
My vote for a play they all might find interesting: Canadian energy company Husky Energy (HUSKF or HSE.TO).
Why?
1.) Major natural gas discovery in the South China Sea.
2.) Sizable oil sands holdings in Canada.
3.) Major refiner of asphalt in Western Canada.
(Details here.)
35% of Husky is owned by Hutchison Whampoa, a Hong Kong conglomerate/holding company. There is some speculation that a Chinese company will purchase a Canadian producer to get a significant piece of the oil sands. I have no idea if Hutchison wants to sell, but I would rather not see that happen with Husky. (Frankly, I'd rather not see it happen with any of my holdings there.) Instead, I'd just like to collect my dividends over time and let current management keep running the joint, they've been doing a rather fine job.
Note: None of the above referenced investors has, as far as I know, ever actually suggested Husky as an investment. I'm just... speculating.
Sunday, April 01, 2007
The One Minute Peak Oil Investor.
Because the markets are my main hobby, in my off-blog life as a civilian I often wind up talking to people about stocks, investments, and energy. And although the concept of 'peak oil' has now gotten fairly widespread coverage, I still find many people aren't familiar with the concept. I'm not going to try to explain it in this post [I believe the most easily read book that explains the concept well is 'Hubbert's Peak: The Impending World Oil Shortage' by Kenneth Deffeyes].
In terms specifically of investments, many of the people I talk to also seem to be carrying a lot of cash (an outgrowth of their bad experiences in the bear market of 2000-2002). When I bring up the topic of how much energy people have in their portfolios, most don't know, or assume they have an average range (probably a reasonable assumption). Sometimes I get around to suggesting an energy stock or two that people might want to take a look at, and the usual reaction is fairly unenthusiastic. Energy just does not seem very sexy to most folks, I guess, certainly not as sexy as a nice tech play. Some people also say basically, "I just don't have the money, and don't want to sell what I have to make room."
Ok, understood, but given the world that we have today, with questions about long term energy supplies (both in terms of location and quantity), emerging markets and their demands on commodities, inflation, and a potentially declining dollar, I think most people should try to be gaining exposure to energy over time.
So here is my answer to this:
I believe an appealing way to gain additional exposure to energy in an inexpensive, low risk way is to use the Automatic Asset Builder program (essentially a dollar cost averaging program - invest a fixed amount every month to buy more on dips, less on spikes) at T. Rowe Price into their New Era Fund, which can be funded with as little as $50 a month. The New Era fund is focused around natural resources and has a healthy serving of energy. The manager (Charles Ober) amusingly is not a peak oil believer, nonetheless, his fund charter forces him to stay heavily invested in natural resources. The fund has returned about 30% per year over the past 3 years, so it's done a reasonable job of capturing the upside. If you take the time to read the article below, you'll learn also Mr. Ober is a believer in wind energy and is making investments in the sector.
Kiplinger.com: Oil Boom Runs Out of Gas.
T. Rowe Price: New Era Fund
In terms specifically of investments, many of the people I talk to also seem to be carrying a lot of cash (an outgrowth of their bad experiences in the bear market of 2000-2002). When I bring up the topic of how much energy people have in their portfolios, most don't know, or assume they have an average range (probably a reasonable assumption). Sometimes I get around to suggesting an energy stock or two that people might want to take a look at, and the usual reaction is fairly unenthusiastic. Energy just does not seem very sexy to most folks, I guess, certainly not as sexy as a nice tech play. Some people also say basically, "I just don't have the money, and don't want to sell what I have to make room."
Ok, understood, but given the world that we have today, with questions about long term energy supplies (both in terms of location and quantity), emerging markets and their demands on commodities, inflation, and a potentially declining dollar, I think most people should try to be gaining exposure to energy over time.
So here is my answer to this:
I believe an appealing way to gain additional exposure to energy in an inexpensive, low risk way is to use the Automatic Asset Builder program (essentially a dollar cost averaging program - invest a fixed amount every month to buy more on dips, less on spikes) at T. Rowe Price into their New Era Fund, which can be funded with as little as $50 a month. The New Era fund is focused around natural resources and has a healthy serving of energy. The manager (Charles Ober) amusingly is not a peak oil believer, nonetheless, his fund charter forces him to stay heavily invested in natural resources. The fund has returned about 30% per year over the past 3 years, so it's done a reasonable job of capturing the upside. If you take the time to read the article below, you'll learn also Mr. Ober is a believer in wind energy and is making investments in the sector.
Kiplinger.com: Oil Boom Runs Out of Gas.
T. Rowe Price: New Era Fund
Friday, March 30, 2007
V-SUV Day - Friday, March 30, 2007.
GM testing the waters on bringing high mileage mini-cars to the US.
BusinessWeek: GM VP: Considering Efficient Mini Car.
Quotes:
General Motors Corp. GM's top global product planner said Friday the company is taking a serious look at bringing low-cost mini cars to the U.S. market capable of achieving as high as 50 miles per gallon of gasoline and breaking ground in a virtually nonexistent segment in the world's biggest auto market.
GM Group Vice President John Smith said the auto maker is still in very early stages of investigating the U.S. market's appetite for mini cars. Such vehicles are significantly smaller than sub-compact cars currently sold in the region by several players. GM sells a Chevrolet Aveo sub-compact car in the U.S., but nothing smaller.
BusinessWeek: GM VP: Considering Efficient Mini Car.
Quotes:
General Motors Corp. GM's top global product planner said Friday the company is taking a serious look at bringing low-cost mini cars to the U.S. market capable of achieving as high as 50 miles per gallon of gasoline and breaking ground in a virtually nonexistent segment in the world's biggest auto market.
GM Group Vice President John Smith said the auto maker is still in very early stages of investigating the U.S. market's appetite for mini cars. Such vehicles are significantly smaller than sub-compact cars currently sold in the region by several players. GM sells a Chevrolet Aveo sub-compact car in the U.S., but nothing smaller.
Thursday, March 29, 2007
Rounding up The Usual Suspects.
Jim Rogers, Boone Pickens, and Matthew Simmons all popping up today and, each in his own way, intentionally or not, stoking the bull market in oil that's re-exerting itself. Although the economy's looking funky, so far there's no sign of it in gasoline demand.
Has oil got it's mojo back? It certainly looks like it. $75 before $55, Boone Pickens says, and that looks reasonable.
Bloomberg: Jim Rogers.
CNBC: Pickens Tells CNBC: Fundamentals Pushing Up Oil, Not Politics
CNBC: Oil Supply Shock.
Has oil got it's mojo back? It certainly looks like it. $75 before $55, Boone Pickens says, and that looks reasonable.
Bloomberg: Jim Rogers.
CNBC: Pickens Tells CNBC: Fundamentals Pushing Up Oil, Not Politics
CNBC: Oil Supply Shock.
Friday, March 23, 2007
On the homebuilders in 2007: A-B-S.
Glengarry Glen Ross:
Moss: What's your name?
Blake: *&^% YOU, that's my name!! You know why, Mister? 'Cause you drove a Hyundai to get here tonight, I drove a eighty thousand dollar BMW. That's my name!!
....
Because only one thing counts in this life! Get them to sign on the line which is dotted! You hear me, you &^%$#@ &*$%&$&?
(Blake flips over a blackboard which has two sets of letters on it: ABC, and AIDA.)
Blake: A-B-C. A-always, B-be, C-closing. Always be closing! Always be closing!!
....
Moss: You're such a hero, you're so rich. Why you coming down here and waste your time on a bunch of bums?
(Blake sits and takes off his gold watch)
Blake: You see this watch? You see this watch?
Moss: Yeah.
Blake: That watch cost more than your car. I made $970,000 last year. How much you make? You see, pal, that's who I am. And you're nothing. Nice guy? I don't give a ^&$@.
....
I can go out there tonight with the materials you got, make myself fifteen thousand dollars! Tonight! In two hours! Can you? Can you? Go and do likewise! A-I-D-A!! Get mad! You sons of bitches! Get mad!! You know what it takes to sell real estate?
(He pulls something out of his briefcase)
Blake: It takes brass balls to sell real estate.
-----------------------------------
And on the homebuilders in 2007, I say:
A-B-S!
A-always, B-be, S-shorting.
Always be shorting!
Always be shorting!!
I'm being slightly tongue in cheek here, but I imagine that there were scenes in the real estate/mortgage business over the past few years that had some interesting parallels with the above scene.
What a mess. And they really jammed 'em in at the end, didn't they?
Still probably some meat on the bone on the short side, I think, and Centex is a particular 'favorite' of mine; Florida, California, up and down the coasts, what more exposure could you ask for?
Scary reading:
The Economist: Cracks in the Facade.
And the always great blog that covers the housing mess: Calculated Risk.
Moss: What's your name?
Blake: *&^% YOU, that's my name!! You know why, Mister? 'Cause you drove a Hyundai to get here tonight, I drove a eighty thousand dollar BMW. That's my name!!
....
Because only one thing counts in this life! Get them to sign on the line which is dotted! You hear me, you &^%$#@ &*$%&$&?
(Blake flips over a blackboard which has two sets of letters on it: ABC, and AIDA.)
Blake: A-B-C. A-always, B-be, C-closing. Always be closing! Always be closing!!
....
Moss: You're such a hero, you're so rich. Why you coming down here and waste your time on a bunch of bums?
(Blake sits and takes off his gold watch)
Blake: You see this watch? You see this watch?
Moss: Yeah.
Blake: That watch cost more than your car. I made $970,000 last year. How much you make? You see, pal, that's who I am. And you're nothing. Nice guy? I don't give a ^&$@.
....
I can go out there tonight with the materials you got, make myself fifteen thousand dollars! Tonight! In two hours! Can you? Can you? Go and do likewise! A-I-D-A!! Get mad! You sons of bitches! Get mad!! You know what it takes to sell real estate?
(He pulls something out of his briefcase)
Blake: It takes brass balls to sell real estate.
-----------------------------------
And on the homebuilders in 2007, I say:
A-B-S!
A-always, B-be, S-shorting.
Always be shorting!
Always be shorting!!
I'm being slightly tongue in cheek here, but I imagine that there were scenes in the real estate/mortgage business over the past few years that had some interesting parallels with the above scene.
What a mess. And they really jammed 'em in at the end, didn't they?
Still probably some meat on the bone on the short side, I think, and Centex is a particular 'favorite' of mine; Florida, California, up and down the coasts, what more exposure could you ask for?
Scary reading:
The Economist: Cracks in the Facade.
And the always great blog that covers the housing mess: Calculated Risk.
Saturday, March 17, 2007
An Inconvenient Investment.
Gonna have a little trouble explaining this one to the kids, but hey, if Soros can buy Halliburton and keep a straight face..
Green Car Congress: Study: Warming Causing Decline in Global Crop Production
Thoughts: DBA, CNH, TNH, DE, ADM, MON.
Most are extended, buy on pullbacks that bounce off trendlines.
Green Car Congress: Study: Warming Causing Decline in Global Crop Production
Thoughts: DBA, CNH, TNH, DE, ADM, MON.
Most are extended, buy on pullbacks that bounce off trendlines.
Thursday, March 15, 2007
Jim Rogers: Get the heck out of emerging markets.
There are no two ways about what Jim Rogers is saying here. Will he be right? Probably. Keep in mind, he recognizes things before others do, but he tends to be a little early.
Reuters: Top investor warns of Russia stock bubble.
Reuters: Top investor sees U.S. property crash.
Quotes:
"This is the end of the liquidity party," said Rogers. "Some emerging markets will go down 80 percent, some will go down 50 percent. Some will most probably collapse."
He says he'll still hold Chinese stocks though.
Reuters: Top investor warns of Russia stock bubble.
Reuters: Top investor sees U.S. property crash.
Quotes:
"This is the end of the liquidity party," said Rogers. "Some emerging markets will go down 80 percent, some will go down 50 percent. Some will most probably collapse."
He says he'll still hold Chinese stocks though.
Thursday, March 01, 2007
A warning shot.
CNBC: Jim Rogers on Commodity Moves.
Summary: Jim Rogers believes the sell off on Tuesday was a warning shot, and that there is further to fall as we are overdue for a stronger correction; he points out that there are gigantic amounts of liquidity in the system and believes something is going to happen to change that, and then lots of things are going to unravel. In terms of problem signs, he highlights housing starts, autos, the yield curve, sub-prime debt, and margin debt at an all time high. He suggests raising cash, selling short, or buying currencies other than the dollar, and he is bullish on agricultural commodities, utilities, and - strangely enough - airlines. [Not mentioned here, but Air China is a pick of his, but let it stabilize first.]
CNBC: Making Fast Money.
Summary: Jeff Macke says hold off on buying, and wants to buy higher risk, later; suggests waiting for the other shoe to drop, as he believes this is the first part of a multi-tier sell off, and is looking to buy towards the end of March. Tim Strazzini likes the semiconductors after we turn. Eric Bolling likes gold, oil, refiners, and foreign currencies (highlights FXE ETF). Guy Adami also says hold off, looking to buy Apple, South Korea and Taiwan ETFs when we bottom.
CNBC: U.S. Hits Record For Energy Demand.
Summary: Lest we forget our primary focus, US oil demand in the past 4 weeks was huge. Traders are keeping an eye on the macro picture (the economy) though, because oil demand should be affected if the economy deterioriates.
My own thoughts:
I think there is more work to be done on the downside. I also like agricultural commodities and Apple. My sector screen highlights SMH (semiconductors) as Tim Strazzini mentions. I am personally skeptical on this, but usually I hold my nose and trade this screen. Usually.
Summary: Jim Rogers believes the sell off on Tuesday was a warning shot, and that there is further to fall as we are overdue for a stronger correction; he points out that there are gigantic amounts of liquidity in the system and believes something is going to happen to change that, and then lots of things are going to unravel. In terms of problem signs, he highlights housing starts, autos, the yield curve, sub-prime debt, and margin debt at an all time high. He suggests raising cash, selling short, or buying currencies other than the dollar, and he is bullish on agricultural commodities, utilities, and - strangely enough - airlines. [Not mentioned here, but Air China is a pick of his, but let it stabilize first.]
CNBC: Making Fast Money.
Summary: Jeff Macke says hold off on buying, and wants to buy higher risk, later; suggests waiting for the other shoe to drop, as he believes this is the first part of a multi-tier sell off, and is looking to buy towards the end of March. Tim Strazzini likes the semiconductors after we turn. Eric Bolling likes gold, oil, refiners, and foreign currencies (highlights FXE ETF). Guy Adami also says hold off, looking to buy Apple, South Korea and Taiwan ETFs when we bottom.
CNBC: U.S. Hits Record For Energy Demand.
Summary: Lest we forget our primary focus, US oil demand in the past 4 weeks was huge. Traders are keeping an eye on the macro picture (the economy) though, because oil demand should be affected if the economy deterioriates.
My own thoughts:
I think there is more work to be done on the downside. I also like agricultural commodities and Apple. My sector screen highlights SMH (semiconductors) as Tim Strazzini mentions. I am personally skeptical on this, but usually I hold my nose and trade this screen. Usually.
Wednesday, February 28, 2007
So many experts, so little time.
A round up of the more interesting insights today.
CNBC Video: Stephen Schork on Energy.
Summary: Sees oil trading in a range of $55 to $65. If we go above $65, he feels we will likely quickly move to $70, and he believes $65+ oil is serious trouble for the economy; he believes the slowdown in GDP growth we saw at the end of last year was a lagged effect of the highs (~$78) we saw in oil prices last summer.
CNBC Video: Hugh Moore on the slowdown.
Summary: Continues to believe the US enters a recession in late 07 or early 08, also believes we are about halfway through the aftermath of the housing bubble.
Bloomberg TV: Jim Rogers on China's market.
Summary: China's fall is not unexpected, as China's investors were in a mania/bubble. He's not selling in China, but he's not buying either, it's run up too much. The US is probably in a recession, or will be soon, and stock markets will decline. Housing and autos in the US are already in recession. He believes this is the way stock markets begin a decline, with marginal markets, like China and emerging markets going first.
Bloomberg TV: Marc Faber on the overvaluation of all markets.
Summary: All markets are extremely extended, overbought, not particularly attractive in terms of valuations, and vulnerable to some type of disappointment. He points out that this is not a dramatic decline in historical terms, for example in 1987 the Dow Jones fell 21% in one day, other markets have fallen 30% in one week. We haven't had any corrections in the US in a long time, so everybody's leaning in the same direction. We're seeing liquidity being withdrawn in the US sub-prime market, in the Indian stock market, and this could continue like a financial bushfire. Suggests caution/raising cash, since we can't tell the difference between a crash, a bear market, or a correction yet; then check back in 3 months time.
CNBC Video: Saut & Sowerby debate the future.
Bloomberg TV: Robert Shiller on housing.
Bloomberg TV: Boone Pickens on oil.
Summary: Likes deepwater drillers, sees a shortage of deepwater equipment, believes (but sounds less confident than before) that we see $70 oil this year, it's also possible we go higher given the right (or wrong..) events, believes there will be more consolidation in the energy sector; his firm, BP Capital, has positions in Suncor, Valero, EOG; his major worry is a worldwide recession, which his analysts are keeping a very close eye out for.
CNBC Video: Stephen Schork on Energy.
Summary: Sees oil trading in a range of $55 to $65. If we go above $65, he feels we will likely quickly move to $70, and he believes $65+ oil is serious trouble for the economy; he believes the slowdown in GDP growth we saw at the end of last year was a lagged effect of the highs (~$78) we saw in oil prices last summer.
CNBC Video: Hugh Moore on the slowdown.
Summary: Continues to believe the US enters a recession in late 07 or early 08, also believes we are about halfway through the aftermath of the housing bubble.
Bloomberg TV: Jim Rogers on China's market.
Summary: China's fall is not unexpected, as China's investors were in a mania/bubble. He's not selling in China, but he's not buying either, it's run up too much. The US is probably in a recession, or will be soon, and stock markets will decline. Housing and autos in the US are already in recession. He believes this is the way stock markets begin a decline, with marginal markets, like China and emerging markets going first.
Bloomberg TV: Marc Faber on the overvaluation of all markets.
Summary: All markets are extremely extended, overbought, not particularly attractive in terms of valuations, and vulnerable to some type of disappointment. He points out that this is not a dramatic decline in historical terms, for example in 1987 the Dow Jones fell 21% in one day, other markets have fallen 30% in one week. We haven't had any corrections in the US in a long time, so everybody's leaning in the same direction. We're seeing liquidity being withdrawn in the US sub-prime market, in the Indian stock market, and this could continue like a financial bushfire. Suggests caution/raising cash, since we can't tell the difference between a crash, a bear market, or a correction yet; then check back in 3 months time.
CNBC Video: Saut & Sowerby debate the future.
Bloomberg TV: Robert Shiller on housing.
Bloomberg TV: Boone Pickens on oil.
Summary: Likes deepwater drillers, sees a shortage of deepwater equipment, believes (but sounds less confident than before) that we see $70 oil this year, it's also possible we go higher given the right (or wrong..) events, believes there will be more consolidation in the energy sector; his firm, BP Capital, has positions in Suncor, Valero, EOG; his major worry is a worldwide recession, which his analysts are keeping a very close eye out for.
Friday, February 23, 2007
Housing: The Worst is Yet to Come.
Richard Manoogian, the chairman and CEO of Masco, a company intimately involved in homebuilding, is guest host on CNBC this morning and he stated his view on housing pretty clearly: the housing situation is worse than most people realize and the worst is yet to come.
Does this eventually take it's toll on the rest of the economy? It seems likely to me.
CNBC: The Worst is Yet to Come.
Does this eventually take it's toll on the rest of the economy? It seems likely to me.
CNBC: The Worst is Yet to Come.
Wednesday, February 21, 2007
Some follow up on earlier posts.
On the idea of having some exposure to agricultural commodities via, for example, the DBA ETF as a play on the ethanol boondoggle and the vagaries of the weather:
Bloomberg: Corn Farms Replace New York Lofts as Hottest Property.
Quotes:
Marc Faber, a Hong Kong-based investor who manages about $300 million, says one of his favorite stocks is Cresud SA, a landowner in Argentina's Pampas region. The shares jumped 63 percent last year. Farmland is ``very inexpensive in a world of inflated asset prices,'' he said in an interview Feb. 4 from Bermuda.
....
Farm Bulls
Jim Rogers, the hedge fund manager who predicted the start of the commodity rally in 1999, said global warming will hinder crops and has advised purchasing farmland for at least a decade.
``Because of the disruptions, agricultural prices will go through the roof,'' he told reporters in Melbourne on Feb. 7. ``I am extremely bullish on agriculture.''
Australian crop production is the worst in 20 years due to an extensive and lengthy drought. The article suggests that rice production will be down 90%, as rice is an extremely water intensive crop.
A hotter summer this year in the American mid-west? That's all we need.
------
On Apple, the iPhone looks like a gamechanger and the demand appears to be there:
CNBC: iPhone Outlook.
------
The housing 'hangover' rolls on:
Bloomberg: Housing `Hangover' Kills Jobs as Spending Wanes; More Cuts Loom.
Quotes:
Housing and related industries account for about 23 percent of the economy, according to the center.
....
``The fallout in the early 1990s was much worse than what we've seen so far, but this downturn is not over,'' said Puryear, the head of real estate research for the unit of St. Petersburg, Florida-based Raymond James Financial Inc. ``The full impact hasn't hit yet.''
-----
First Marc Faber said he sees a strong correction in the near future, now former hedge fund manager Michael Steinhardt is concerned the rally may be over sooner rather than later.
Bloomberg: Corn Farms Replace New York Lofts as Hottest Property.
Quotes:
Marc Faber, a Hong Kong-based investor who manages about $300 million, says one of his favorite stocks is Cresud SA, a landowner in Argentina's Pampas region. The shares jumped 63 percent last year. Farmland is ``very inexpensive in a world of inflated asset prices,'' he said in an interview Feb. 4 from Bermuda.
....
Farm Bulls
Jim Rogers, the hedge fund manager who predicted the start of the commodity rally in 1999, said global warming will hinder crops and has advised purchasing farmland for at least a decade.
``Because of the disruptions, agricultural prices will go through the roof,'' he told reporters in Melbourne on Feb. 7. ``I am extremely bullish on agriculture.''
Australian crop production is the worst in 20 years due to an extensive and lengthy drought. The article suggests that rice production will be down 90%, as rice is an extremely water intensive crop.
A hotter summer this year in the American mid-west? That's all we need.
------
On Apple, the iPhone looks like a gamechanger and the demand appears to be there:
CNBC: iPhone Outlook.
------
The housing 'hangover' rolls on:
Bloomberg: Housing `Hangover' Kills Jobs as Spending Wanes; More Cuts Loom.
Quotes:
Housing and related industries account for about 23 percent of the economy, according to the center.
....
``The fallout in the early 1990s was much worse than what we've seen so far, but this downturn is not over,'' said Puryear, the head of real estate research for the unit of St. Petersburg, Florida-based Raymond James Financial Inc. ``The full impact hasn't hit yet.''
-----
First Marc Faber said he sees a strong correction in the near future, now former hedge fund manager Michael Steinhardt is concerned the rally may be over sooner rather than later.
Monday, February 12, 2007
I'm with Art.
Art Smith, the head of John S. Herold, an energy research firm, was interviewed in Barron's this weekend, and it turns out he agrees with me on everything. [Okay, okay, so I agree with him on everything, calm down.] If you're into investing in the energy sector, I recommend buying a copy and reading the entire interview, but the highlights have been summarized in a post on Seeking Alpha.
Seeking Alpha Energy Stocks: Barron's: Oil Guru Art Smith's Picks for 2007.
My own summary:
- Big oil is struggling with exploration for various reasons, they will eventually have to step up to the plate to increase their reserves, most likely by takeovers of mid-size companies.
- Buy companies with large North American natural gas reserves. They are cheap and the natural gas situation in North America appears headed for a squeeze.
- Buy Canadian oil sands companies for their long term assets and relative lack of political risk.
In terms of specific stock recommendations, the Seeking Alpha post highlights Mr. Smith's stock picks. My favorites of that list are NXY, CNQ, APC, CHK, SU. Mr. Smith also highlights NXY and SU as likely to be taken over. NXY I think is a goner, highly likely to be acquired at some point, but I am skeptical of the idea that SU will be bought, due mostly to the fact that the price would be too high for any acquirer except somebody who desperately needs oil sands assets. (Think BP.) I think APC is also a good takeover candidate, once it finishes tidying up after it's recent purchases of Kerr-Mcgee and Western Gas Resources.
Seeking Alpha Energy Stocks: Barron's: Oil Guru Art Smith's Picks for 2007.
My own summary:
- Big oil is struggling with exploration for various reasons, they will eventually have to step up to the plate to increase their reserves, most likely by takeovers of mid-size companies.
- Buy companies with large North American natural gas reserves. They are cheap and the natural gas situation in North America appears headed for a squeeze.
- Buy Canadian oil sands companies for their long term assets and relative lack of political risk.
In terms of specific stock recommendations, the Seeking Alpha post highlights Mr. Smith's stock picks. My favorites of that list are NXY, CNQ, APC, CHK, SU. Mr. Smith also highlights NXY and SU as likely to be taken over. NXY I think is a goner, highly likely to be acquired at some point, but I am skeptical of the idea that SU will be bought, due mostly to the fact that the price would be too high for any acquirer except somebody who desperately needs oil sands assets. (Think BP.) I think APC is also a good takeover candidate, once it finishes tidying up after it's recent purchases of Kerr-Mcgee and Western Gas Resources.
Wednesday, February 07, 2007
Nelly on sub-prime mortgage losses accelerating.
It's getting hot in here, so write off all those loans.
Near the end of the recent US housingbubble enthusiasm, loan standards appear to have gone out the window. Now, the most vulnerable of those loans, in the sub-prime arena, are going bad at an increasingly faster pace. Combine this news with the warning from the CEO of JP Morgan, and I'd say you build a pretty good case for the housing market not yet having bottomed and for further interesting times ahead.
Although there is no way to predict exactly how this could play out, the general rule when you start to smell something burning in the financial markets is to reduce risk, make sure your bets are spread around, and not be afraid to let a little cash pile up.
Bloomberg: HSBC to Boost Loan-Loss Provisions on Bad Mortgages.
Quotes:
HSBC Holdings Plc, Europe's biggest bank, said it's setting aside 20 percent more than analysts estimated for loan losses in 2006 because the company's U.S. mortgage business is deteriorating.
....
Home loans to risky borrowers in the U.S. are going bad faster than HSBC expected just two months ago, the London-based company said yesterday in an e-mailed statement.
....
Home loans to borrowers with poor credit ratings or large debt burdens are defaulting at a faster rate than during the U.S. recession six years ago, according to calculations by Friedman Billings Ramsay Group Inc.
``The impact of slowing house price growth is being reflected in accelerated delinquency trends across the U.S. sub-prime mortgage market,'' HSBC said in the statement. ``It is clear that the level of loan-impairment provisions to be accounted for as at the end of 2006 in respect of Mortgage Services operations will be higher than is reflected in current market estimates.''
Near the end of the recent US housing
Although there is no way to predict exactly how this could play out, the general rule when you start to smell something burning in the financial markets is to reduce risk, make sure your bets are spread around, and not be afraid to let a little cash pile up.
Bloomberg: HSBC to Boost Loan-Loss Provisions on Bad Mortgages.
Quotes:
HSBC Holdings Plc, Europe's biggest bank, said it's setting aside 20 percent more than analysts estimated for loan losses in 2006 because the company's U.S. mortgage business is deteriorating.
....
Home loans to risky borrowers in the U.S. are going bad faster than HSBC expected just two months ago, the London-based company said yesterday in an e-mailed statement.
....
Home loans to borrowers with poor credit ratings or large debt burdens are defaulting at a faster rate than during the U.S. recession six years ago, according to calculations by Friedman Billings Ramsay Group Inc.
``The impact of slowing house price growth is being reflected in accelerated delinquency trends across the U.S. sub-prime mortgage market,'' HSBC said in the statement. ``It is clear that the level of loan-impairment provisions to be accounted for as at the end of 2006 in respect of Mortgage Services operations will be higher than is reflected in current market estimates.''
Tuesday, February 06, 2007
Chesapeake's Winter Call.
It looked like a pretty bad call when people were strolling around in shorts and sandals in New York City in mid December and many (probably most) analysts were suggesting another warm winter, but now Chesapeake Energy's weather team is looking pretty smart with their calls (notes here and here) for a more normal (i.e. cold) winter in 2007. Other natural gas stocks are looking stronger (XTO, COG for example), but CHK ought to be getting a bit more credit here, I think. The market feels CHK has been a bit too busy with deals and financings though.
Bloomberg: Crude Oil Rises as Cold Temperatures Signal Higher U.S. Demand.
Quotes:
Temperatures fell to 10 degrees Fahrenheit (minus 12 Celsius) in Boston overnight on Feb. 4-5, when 22 degrees is the normal low at this time of year, Michael Palmerino, a forecaster at Lexington, Massachusetts-based Meteorlogix LLC said yesterday.
``It will stay below normal and much below normal for the next week to 10 days,'' Palmerino said. ``It will take time for the weather pattern to change and for the cold air mass to retreat back into Canada.''
-------------------------------------------------------
Disclosure: I own CHK and XTO; not an endorsement.
Bloomberg: Crude Oil Rises as Cold Temperatures Signal Higher U.S. Demand.
Quotes:
Temperatures fell to 10 degrees Fahrenheit (minus 12 Celsius) in Boston overnight on Feb. 4-5, when 22 degrees is the normal low at this time of year, Michael Palmerino, a forecaster at Lexington, Massachusetts-based Meteorlogix LLC said yesterday.
``It will stay below normal and much below normal for the next week to 10 days,'' Palmerino said. ``It will take time for the weather pattern to change and for the cold air mass to retreat back into Canada.''
-------------------------------------------------------
Disclosure: I own CHK and XTO; not an endorsement.
Wednesday, January 31, 2007
The three most important things to know today.
In no particular order:
1.) China stocks are getting jiggy, too jiggy. When you see stocks move like that, you have to get nervous. Even the biggest China bull of all, Jim Rogers, is warning that investors might be in a hysterical state of mind. You never know when or exactly how one of these bubbles deflates, but deflate eventually they do. If you plan to put money there, you may want to hold off and see if you can come in after the panic.
2.) There are more funky noises coming out of the US subprime housing arena. On the other hand, there are people saying the housing market has bottomed. I think that's a premature call, and we need to see how this subprime issue plays out before we can make that call. And note the first line of the article from MarketWatch:
Rising defaults in some of the riskiest home loans offered by J.P. Morgan Chase & Co. signal a recession may be looming, Jamie Dimon, the bank's chief executive said Tuesday.
3.) Finally, it's funny how the Jack discovery by Chevron and Devon (coming to gas station near you in about, oh, 6 or so years, maybe) was huge news and the fact that one of the world's largest old fields, Cantarell of Mexico (and one very important to us) is seeing fairly steep production declines is not quite as important. While the oil market is seemingly (if you watch CNBC) focused on the weather and minute by minute updates of commentary (often conflicting) coming out of Saudi Arabia and OPEC, this news is actually more important.
1.) China stocks are getting jiggy, too jiggy. When you see stocks move like that, you have to get nervous. Even the biggest China bull of all, Jim Rogers, is warning that investors might be in a hysterical state of mind. You never know when or exactly how one of these bubbles deflates, but deflate eventually they do. If you plan to put money there, you may want to hold off and see if you can come in after the panic.
2.) There are more funky noises coming out of the US subprime housing arena. On the other hand, there are people saying the housing market has bottomed. I think that's a premature call, and we need to see how this subprime issue plays out before we can make that call. And note the first line of the article from MarketWatch:
Rising defaults in some of the riskiest home loans offered by J.P. Morgan Chase & Co. signal a recession may be looming, Jamie Dimon, the bank's chief executive said Tuesday.
3.) Finally, it's funny how the Jack discovery by Chevron and Devon (coming to gas station near you in about, oh, 6 or so years, maybe) was huge news and the fact that one of the world's largest old fields, Cantarell of Mexico (and one very important to us) is seeing fairly steep production declines is not quite as important. While the oil market is seemingly (if you watch CNBC) focused on the weather and minute by minute updates of commentary (often conflicting) coming out of Saudi Arabia and OPEC, this news is actually more important.
Monday, January 29, 2007
Jim Cramer says "tomato", we say "tomato".
If you've watched Jim Cramer on CNBC's MadMoney show, you probably have already come to realize that the man has some form of Investing Attention Deficit Disorder. One week he loves a particular theme, a month later he hates it. Appropriately, his nickname is "The Reverend Jim of the Church of What's Working Now". And that is what I believe Jim Cramer is best watched for, to get a view of where the main focus on Wall Street is right at the moment.
In this interview, he says he doesn't subscribe to peak oil theory, but that the cheap, easy to get oil is gone and we will have to pay higher prices for oil going forward for what's left, which is in difficult, hard to find places. I can't tell exactly from this interview if Jim does not believe that there will be a peak at some point and then a downtrend in global production due to depletion, or if he just thinks that point is still a long way off. It seems to be the later.
[That's okay Jim. That's how it starts. You'll get there.]
His stocks picks here run along the lines of service companies that help find and retrieve oil from far off or deep places (think Transocean/RIG), while he does not embrace stocks with high fixed costs like the Canadian tar sands producers, coal, etc.
I disagree with Jim there, because the Canadian tar sands producers will do well in the higher priced oil environment he envisions, where they can enjoy high prices without the risks of needing to find the oil, develop the infrastructure to extract and transport it, negotiate with sometimes hostile foreign governments etc.
TheStreet.com TV: Jim Cramer on Peak Oil.
Quotes:
"We're not running out of oil at all. We're just running out of oil that is easy to find and easy to get at. There are vast reservoirs, vast, far more than we need for multiple years. It's just not where we want it. So I don't subscribe to Peak Oil theory. What I do subscribe to is the cost of oil is going to be so much higher that the cost of oil is never going to come back below $40 ever again."
In this interview, he says he doesn't subscribe to peak oil theory, but that the cheap, easy to get oil is gone and we will have to pay higher prices for oil going forward for what's left, which is in difficult, hard to find places. I can't tell exactly from this interview if Jim does not believe that there will be a peak at some point and then a downtrend in global production due to depletion, or if he just thinks that point is still a long way off. It seems to be the later.
[That's okay Jim. That's how it starts. You'll get there.]
His stocks picks here run along the lines of service companies that help find and retrieve oil from far off or deep places (think Transocean/RIG), while he does not embrace stocks with high fixed costs like the Canadian tar sands producers, coal, etc.
I disagree with Jim there, because the Canadian tar sands producers will do well in the higher priced oil environment he envisions, where they can enjoy high prices without the risks of needing to find the oil, develop the infrastructure to extract and transport it, negotiate with sometimes hostile foreign governments etc.
TheStreet.com TV: Jim Cramer on Peak Oil.
Quotes:
"We're not running out of oil at all. We're just running out of oil that is easy to find and easy to get at. There are vast reservoirs, vast, far more than we need for multiple years. It's just not where we want it. So I don't subscribe to Peak Oil theory. What I do subscribe to is the cost of oil is going to be so much higher that the cost of oil is never going to come back below $40 ever again."
Friday, January 26, 2007
Coming Soon: Peak Extra Light Olive Oil.
This post isn't about crude oil, peak oil, investing, or any of those things, and, as far as I know, this isn't even a market that Boone Pickens is trying to corner, say, like long dated oil futures or water rights in Texas. (But give him a few weeks..)
No, instead, this post is about weight loss, and a wacky, extraordinarily simple method that I came across recently and have been having a good experience with. I wouldn't normally pass on something like this, but it is so simple and appears to be so effective I'm frankly astounded. And like everybody else with a sedentary job and not quite enough time for exercise, Icould should lose a few pounds.
It's called the Shangri-La Diet, and a wonderfully short book on it was just released. You don't really need to buy the book though, all the pertinent details are out on the web, and the basic concept can be explained in a couple of sentences.
Before I explain the diet though, let's introduce the author: Seth Roberts is an Associate Professor of Psychology at the University of California, Berkeley, with a penchant for self experimentation and some rather novel ideas. You can read some fascinating findings he made by experimenting on himself in the realms of sleep, mood, health and weight in this paper available on eScholarship.
So, more about the diet.
From the introduction to the book:
'Shangri-La? Odd name for a diet. Name of a spa, maybe. I chose it partly because Shangri-La, James Hilton's fictional Himalayan community, was a place of great peace and tranquility; and this diet puts people at peace with food. Within days after starting it, all sorts of food-related struggles (irresistible cravings, too many food-related thoughts, uncontrollable night eating) usually go away. Another reason for the name was that Shangri-La was meant to be a near perfect place and - not to boast - this is a diet with many advantages. It is simple, powerful, and does not require deprivation.'
Hyperbole? From my experience, no. [And for the record, no, I have never bought any bridges in Brooklyn.]
There is no calorie counting involved, no 'off limits' foods, no jogging, no strange Infomercial contraptions destined for a dark corner of your basement, no questionable pills, no meetings, and no expensive, cardboard tasting pre-packaged meals. None of that. (HURRAY!)
Just these very simple instructions:
Once or twice a day, depending on how much you want to lose, you should take in roughly 150 flavorless calories (either sugar or fat) and allow your body 2 hours to absorb them without any other foods/flavors.
Specifically, you either take one-two tablespoons of flavorless oil, either extra light (Note: not extra virgin, extra LIGHT) olive oil (referred to as 'ELOO' in his book) or canola oil, or 1-3 tablespoon fulls of ordinary table sugar mixed in water. You must take this on it's own, and you cannot eat anything for one hour before or after. Nothing. Plain water is okay though.
By ingesting these flavorless calories you are resetting your body weight set point, lowering it. It sounds... nuts. (Prompting no craving with me, by the way. Ice cream.. Nothing. Come up with a food - I dare you. I won't crave it.) If you want more detail on the concept, follow the links below or take a look at the book.
If your experience is similar to mine (and the author of the diet, and other people on line) you will notice after a few days that your food fullness meter has reset itself a few notches lower and you will magically (and effortlessly!) find yourself eating less at meals. Your between meal cravings go away also. And the weight will start to come off.
It is, in a word - mind boggling. Okay, in two words. Which is why I thought I'd take the time to share it.
You can read more details about this diet at the links below:
Website of the author, Seth Roberts.
Science behind the diet.
An interview with the author (mp3 format).
The Wikipedia entry (You may want to review the cons in the footnotes).
A detailed explanation from Calorie Lab.
Another blogger comments on his experience with the diet.
The book, The Shangri-La Diet at Amazon.
Anyway, back to our regularly scheduled programming..
----------------------------------------------------------------
Update: I meant to add this when I did the original post but I forgot, so I'm adding it a little later. In my experience, I also need to avoid coffee for several hours before the oil. If I have coffee say 2 hours before, it seems to send my blood sugar bouncing around at just the wrong moments and negate much of the effect. This is particularly noticeable at the beginning, I think.
No, instead, this post is about weight loss, and a wacky, extraordinarily simple method that I came across recently and have been having a good experience with. I wouldn't normally pass on something like this, but it is so simple and appears to be so effective I'm frankly astounded. And like everybody else with a sedentary job and not quite enough time for exercise, I
It's called the Shangri-La Diet, and a wonderfully short book on it was just released. You don't really need to buy the book though, all the pertinent details are out on the web, and the basic concept can be explained in a couple of sentences.
Before I explain the diet though, let's introduce the author: Seth Roberts is an Associate Professor of Psychology at the University of California, Berkeley, with a penchant for self experimentation and some rather novel ideas. You can read some fascinating findings he made by experimenting on himself in the realms of sleep, mood, health and weight in this paper available on eScholarship.
So, more about the diet.
From the introduction to the book:
'Shangri-La? Odd name for a diet. Name of a spa, maybe. I chose it partly because Shangri-La, James Hilton's fictional Himalayan community, was a place of great peace and tranquility; and this diet puts people at peace with food. Within days after starting it, all sorts of food-related struggles (irresistible cravings, too many food-related thoughts, uncontrollable night eating) usually go away. Another reason for the name was that Shangri-La was meant to be a near perfect place and - not to boast - this is a diet with many advantages. It is simple, powerful, and does not require deprivation.'
Hyperbole? From my experience, no. [And for the record, no, I have never bought any bridges in Brooklyn.]
There is no calorie counting involved, no 'off limits' foods, no jogging, no strange Infomercial contraptions destined for a dark corner of your basement, no questionable pills, no meetings, and no expensive, cardboard tasting pre-packaged meals. None of that. (HURRAY!)
Just these very simple instructions:
Once or twice a day, depending on how much you want to lose, you should take in roughly 150 flavorless calories (either sugar or fat) and allow your body 2 hours to absorb them without any other foods/flavors.
Specifically, you either take one-two tablespoons of flavorless oil, either extra light (Note: not extra virgin, extra LIGHT) olive oil (referred to as 'ELOO' in his book) or canola oil, or 1-3 tablespoon fulls of ordinary table sugar mixed in water. You must take this on it's own, and you cannot eat anything for one hour before or after. Nothing. Plain water is okay though.
By ingesting these flavorless calories you are resetting your body weight set point, lowering it. It sounds... nuts. (Prompting no craving with me, by the way. Ice cream.. Nothing. Come up with a food - I dare you. I won't crave it.) If you want more detail on the concept, follow the links below or take a look at the book.
If your experience is similar to mine (and the author of the diet, and other people on line) you will notice after a few days that your food fullness meter has reset itself a few notches lower and you will magically (and effortlessly!) find yourself eating less at meals. Your between meal cravings go away also. And the weight will start to come off.
It is, in a word - mind boggling. Okay, in two words. Which is why I thought I'd take the time to share it.
You can read more details about this diet at the links below:
Website of the author, Seth Roberts.
Science behind the diet.
An interview with the author (mp3 format).
The Wikipedia entry (You may want to review the cons in the footnotes).
A detailed explanation from Calorie Lab.
Another blogger comments on his experience with the diet.
The book, The Shangri-La Diet at Amazon.
Anyway, back to our regularly scheduled programming..
----------------------------------------------------------------
Update: I meant to add this when I did the original post but I forgot, so I'm adding it a little later. In my experience, I also need to avoid coffee for several hours before the oil. If I have coffee say 2 hours before, it seems to send my blood sugar bouncing around at just the wrong moments and negate much of the effect. This is particularly noticeable at the beginning, I think.
Tuesday, January 23, 2007
Thank you for burning hydrocarbons.
This is kind of an obvious thought, but with President Bush set to probably talk more tonight about energy independence, and with the vagaries of the climate at the moment, the Powershares Deutsche Bank Agriculture ETF (symbol: DBA) may be a good thing to take a hard (soft?) look at. (More info here.) This ETF is composed of wheat, corn, soybean and sugar futures contracts, and sugar and corn (mainly corn here) are used in the production of ethanol.
On top of the bio-fuels aspect, you have the interesting vagaries of the climate lately that may have an impact on crop production. Australia, for example, is experiencing a long drought that in 2006 impacted their wheat production. Australia is the world's #3 exporter of wheat. They have now gotten more rain in one week in some areas than they did all last year, so things may be easing. But unusual temperature and precipitation patterns can have an impact on crop production.
On a slightly different topic, though the beginning of winter went MIA, lately it has been coldish across much of the USA, and natural gas has been moving as a result. Additionally, El Nino suppressed hurricanes in 2006 and may now be dissipating.
On top of the bio-fuels aspect, you have the interesting vagaries of the climate lately that may have an impact on crop production. Australia, for example, is experiencing a long drought that in 2006 impacted their wheat production. Australia is the world's #3 exporter of wheat. They have now gotten more rain in one week in some areas than they did all last year, so things may be easing. But unusual temperature and precipitation patterns can have an impact on crop production.
On a slightly different topic, though the beginning of winter went MIA, lately it has been coldish across much of the USA, and natural gas has been moving as a result. Additionally, El Nino suppressed hurricanes in 2006 and may now be dissipating.
Sunday, January 21, 2007
Kenneth Deffeyes channels Gordon Gekko.
The point is, ladies and gentleman, that greed, for lack of a better word, is good. Greed is right, greed works. Greed clarifies, cuts through, and captures the essence of the evolutionary spirit. Greed, in all of its forms; greed for life, for money, for love, knowledge has marked the upward surge of mankind. And greed, you mark my words, will not only save Teldar Paper, but that other malfunctioning corporation called the USA. Thank you very much.
Gordon Gekko, Wall Street.
Surely one of the most memorable movie quotes ever, who can forget Michael Douglas giving that immortal speech. The magic of Hollywood...
Ah, okay, back to business. So what's the connection between that quote and Kenneth Deffeyes? Well, nothing directly, but I got a little nervous when I read the latest update from Kenneth Deffeyes and he's plugging energy stocks like a cheap, two-bit, um... blogger.
Call me old fashioned, but I prefer my academics to stay in the mystical realm of theories, research, higher ed, learning and the occasional socialist utopian rant. When I see academics talking money and stocks and sounding all Wall Streetish, I get dizzy, start having visions of LTCM, and start worrying that we've all gone to one side of the boat again.
However, we already took a pummeling this month, and hey, it's not like they interviewed him in Playboy for Chrissakes. So I'm gonna go with letting this one pass.
Beyond Oil: Update, End of 2006.
Quotes:
I could, and did, arrange my own non-sucker bet by investing in several oil and natural gas stocks on a scale larger than $1000. It worked out quite well, thank you, although I have to grit my teeth during the downswings in price: Grit, grind, crunch.
As I was writing this, a statement from the Saudi Minister of Petroleum was reported by Forbes, the International Herald Tribune, and the Washington Post. He announced that Saudi Arabia will increase its oil production from 9 million barrels per day to 12.5 million barrels per day by the year 2009. I hope they succeed. Meanwhile, it keeps the other investors complacent while I buy some bargain oil stocks.
I enjoy talking with financial firms about the oil problem. It is gratifying that many in the financial community took an early interest in the consequences of a downturn in world oil production. One of the nicest compliments that I received was in Tokyo. A fellow told me that he read Hubbert's Peak five years ago, believed it, and told me that he "made a hell of a lot of money." I wasn't quick enough to ask how many zeros were in a "hell of a lot of money," but he heads the largest hedge fund in Asia.
I'm not in the business of recommending individual stocks. That requires far too much homework; I don't have the patience. Recognition is growing slowly that the world oil situation is approaching a crisis. But whenever the price of gasoline goes down, a lot of people think that the problem has disappeared.
-------------------------------------------------------------------------
He also points out that May 2005 is so far showing up as the peak in conventional oil production according to EIA statistics, which isn't far from his prediction of December 2005. I take that with a grain of salt since the data is murky, subject to revision, and nobody really knows the complete story about current production. If we peaked back then, then this fall to $50 is an overreaction on the downside and we should have a strong move upwards later this year (basically, Boone Pickens' position).
I'm leaning towards the peak still being in front of us somewhere, mostly because I think we will see some wild price moves in oil prices around the peak, and especially by a year or two out. Wackier even than what we've seen so far, I think.
Gordon Gekko, Wall Street.
Surely one of the most memorable movie quotes ever, who can forget Michael Douglas giving that immortal speech. The magic of Hollywood...
Ah, okay, back to business. So what's the connection between that quote and Kenneth Deffeyes? Well, nothing directly, but I got a little nervous when I read the latest update from Kenneth Deffeyes and he's plugging energy stocks like a cheap, two-bit, um... blogger.
Call me old fashioned, but I prefer my academics to stay in the mystical realm of theories, research, higher ed, learning and the occasional socialist utopian rant. When I see academics talking money and stocks and sounding all Wall Streetish, I get dizzy, start having visions of LTCM, and start worrying that we've all gone to one side of the boat again.
However, we already took a pummeling this month, and hey, it's not like they interviewed him in Playboy for Chrissakes. So I'm gonna go with letting this one pass.
Beyond Oil: Update, End of 2006.
Quotes:
I could, and did, arrange my own non-sucker bet by investing in several oil and natural gas stocks on a scale larger than $1000. It worked out quite well, thank you, although I have to grit my teeth during the downswings in price: Grit, grind, crunch.
As I was writing this, a statement from the Saudi Minister of Petroleum was reported by Forbes, the International Herald Tribune, and the Washington Post. He announced that Saudi Arabia will increase its oil production from 9 million barrels per day to 12.5 million barrels per day by the year 2009. I hope they succeed. Meanwhile, it keeps the other investors complacent while I buy some bargain oil stocks.
I enjoy talking with financial firms about the oil problem. It is gratifying that many in the financial community took an early interest in the consequences of a downturn in world oil production. One of the nicest compliments that I received was in Tokyo. A fellow told me that he read Hubbert's Peak five years ago, believed it, and told me that he "made a hell of a lot of money." I wasn't quick enough to ask how many zeros were in a "hell of a lot of money," but he heads the largest hedge fund in Asia.
I'm not in the business of recommending individual stocks. That requires far too much homework; I don't have the patience. Recognition is growing slowly that the world oil situation is approaching a crisis. But whenever the price of gasoline goes down, a lot of people think that the problem has disappeared.
-------------------------------------------------------------------------
He also points out that May 2005 is so far showing up as the peak in conventional oil production according to EIA statistics, which isn't far from his prediction of December 2005. I take that with a grain of salt since the data is murky, subject to revision, and nobody really knows the complete story about current production. If we peaked back then, then this fall to $50 is an overreaction on the downside and we should have a strong move upwards later this year (basically, Boone Pickens' position).
I'm leaning towards the peak still being in front of us somewhere, mostly because I think we will see some wild price moves in oil prices around the peak, and especially by a year or two out. Wackier even than what we've seen so far, I think.
Wednesday, January 17, 2007
Let the beatings, er, healings begin.
Every bull market has it's popular, cult like figures, and the most prominent one of this oil bull market is Boone Pickens. The bull market in oil dates a long way now, all the way back to 1998 when crude bottomed around $12 or so, and all bull markets get a little ahead of themselves and are subject to corrections.
We hit around $78 last year, and have fallen now down to around $50ish. The crude bears are out and strutting their stuff. Peter Beutel projects $20 crude in a couple of years. [I hear he's going to be interviewed in Playboy next month.. Nah, just kidding.]
Like the public marketplaces of yore, the markets of our day serve as a focal point for the public. Oil prices are now way, way down at $50~, and all kinds of sacrosanct technical trends have been broken.
The oil bulls are on the run!
For the offense of violating a trend, the market demands a sacrifice!
Something public.
Burn a witch, maybe?
Even better - bring out the oil bull and give him a public lashing!
Obligingly, the media dragged Boone Pickens out today [out of his workout, no less] and dropped hints he'd been massacred in the recent selloff (Sample quotes: 'The sharp drop in crude-oil prices is goring T. Boone Pickens, one of the biggest bulls in the energy market.', 'We've seen a huge drop, more than 16% just in the first few weeks of this brand new year. A lot of people have been talking about that steep drop, and kinda wondering what that's meant for you, because you've been bullish for so long. There've been a lot of rumors out there in the market...").
Burn the witch, they cried! Get the oil bull!
This, I believe, is healthy.
Let the healing begin.
CNBC: Boone Pickens on Oil Prices.
WSJ: Energy Bull Keeps the Faith. [$]
PS. Boone Pickens says oil will average $70 this year and would find a floor around $48. My amateur seat of the pants impression suggests to me $45 would be a floor and closer to $60ish a good average through what I think of as a consolidation phase.
We hit around $78 last year, and have fallen now down to around $50ish. The crude bears are out and strutting their stuff. Peter Beutel projects $20 crude in a couple of years. [I hear he's going to be interviewed in Playboy next month.. Nah, just kidding.]
Like the public marketplaces of yore, the markets of our day serve as a focal point for the public. Oil prices are now way, way down at $50~, and all kinds of sacrosanct technical trends have been broken.
The oil bulls are on the run!
For the offense of violating a trend, the market demands a sacrifice!
Something public.
Burn a witch, maybe?
Even better - bring out the oil bull and give him a public lashing!
Obligingly, the media dragged Boone Pickens out today [out of his workout, no less] and dropped hints he'd been massacred in the recent selloff (Sample quotes: 'The sharp drop in crude-oil prices is goring T. Boone Pickens, one of the biggest bulls in the energy market.', 'We've seen a huge drop, more than 16% just in the first few weeks of this brand new year. A lot of people have been talking about that steep drop, and kinda wondering what that's meant for you, because you've been bullish for so long. There've been a lot of rumors out there in the market...").
Burn the witch, they cried! Get the oil bull!
This, I believe, is healthy.
Let the healing begin.
CNBC: Boone Pickens on Oil Prices.
WSJ: Energy Bull Keeps the Faith. [$]
PS. Boone Pickens says oil will average $70 this year and would find a floor around $48. My amateur seat of the pants impression suggests to me $45 would be a floor and closer to $60ish a good average through what I think of as a consolidation phase.
Saturday, January 13, 2007
The best quote I've seen in a while.
The Wall Street Journal: Rare Bears. [$]
Quote:
"With hedge funds and the pressure they're under to perform, we're getting this Texas Hold'em poker style of investing: all-in or all-out," he says.
[Quote from Vinny Catalano, chief investment strategist of Blue Marble Research.]
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I don't think hedge funds are the only guilty parties here, but they are probably a little more guilty than other folks.
Anticipating these moves can make you money though. Clearly, so far in 2007, energy is out and tech is in.
Quote:
"With hedge funds and the pressure they're under to perform, we're getting this Texas Hold'em poker style of investing: all-in or all-out," he says.
[Quote from Vinny Catalano, chief investment strategist of Blue Marble Research.]
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I don't think hedge funds are the only guilty parties here, but they are probably a little more guilty than other folks.
Anticipating these moves can make you money though. Clearly, so far in 2007, energy is out and tech is in.
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