E.D. Hart
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Latest Comments149 Comments
Profiting from Risk Aversion
AS always, and extremely well written article with good analysis, theoretical explanation, and practical advice. Thank you.
The Dow's Lost Decade
If you could only own two stocks for the last decade or the next one, I would choose XTO, and UPL. And they are still cheap.
My thesis: natural gas stocks look like they have limited downside, and large upside. Google and Apple could trade sideways for years.
It isnt just the information economy its also the "we need to get off imported oil economy". That basic truth will not be going away and will only intensify.
It's a Great Time to Be a Value Investor
Its not far fetched--look at the Nikkeis decline of 39,000 in 1989 to today's 8800 or so (give or take). Ouch. Twenty years and a 77% decline.
Where is the markets pe now? Who Knows? Earnings predictions for the future are extremely uncertain. I am certain that in 5 years oil will be higher, and natural gas will be much higher.
I'm not so much a betting man as a hedging man. Hedge against extreme outcomes. One possible extreme outcome that I am hedging against is DOW 5000, Gold $5000. Its not probable, but it is possible.
Long: HGT, DVN, APA, SLW, GG.
The Biggest Bubble of Them All
Cutting taxes was a cheap political ploy to get elected. The tax cuts mostly expire in 2010. Gets bush in the door--but its poor policy, and cynical politics. Taxes HAVE TO be higher in the future. There is no other way--and Bushes spending gurantees this.
Its not like a credit card limit being raised at all--credit card holders don't have the ability to raise taxes, and credit card companies don't engage in cynical ploys to get elected.
Regarding the violence of Islam: Which Islam? There are many.
Compared to what? Christianity? Christians have been murderous hordes for millenia and it doesn't seem to bother us.
Iraq was the worst mistake a president could have made (except for getting caught with an intern--which is worse) and has brought us 3 trillion dollars closer to bankruptcy. For that 3 trillion he could have bought actual energy security, which would be actual national security--but instead it was sent up in flames.
Since when is lowering taxes the gold standard of effective economic policy. PEOPLE FORGET INFLATION. With the inflation that the Bush years unleash--we will all be wishing we had higher taxes, and lower inflation.
Inflation is a dishonest mans taxes.
Why Oil and Gold Are Headed Much Higher
Real inflation over the last 25 years is likely 2-3 times higher, based on shadowstats.com, and global monetary growth.
Thus, by my back of the envelope calculations, gold has quite a bit of catch up to do, and in real inflation terms, (not bogus government data) the price should be headed to north of $3500 per ounce.
Moreover, gold is perhaps the single most manipulated commodity by governments worldwide.
It is always in the interests of the gov. to encourage gold leasing, gold paper contracts short sales, and falsifying government reserve holdings.
Considerable evidence has been published to show this is exactly what is happening.
As the world comes to a new era of the unwinding of the great credit bubble of 1983 to 2008--metals and commodities will be primary beneficiaries.
In the short term, (two years) gold and other commodities may fall another 20%--but the bull market is intact for commodities, and gold.
Full disclosure: I don't own a concrete bunker, nor so I stockpile bottled water, ammunition, and old Soldiers of Fortune magazines.
How Does the Financial Crisis Affect the Peak Oil Thesis?
Also, dividends matter: If COSWF cuts its dividend from 1.25 per quarter to .75 per quarter, that still a $3.00 per year payout on a $22.00 security for a 13.6% yield. I can wait a very long time and get paid 13.6% to wait.
In short, prices are the lesser part of the equation (to a certain point--obviously if prices plunge to 50 dollars a barrel, then companies shut down production, and many of the big oil sands projects coming online need $80 to be marginal. )
Right now the downside looks very limited, and the upside looks very bright...but you might wait 3-5 years to play out.
Where We Go from Here: Best and Worst Cases
And we lack leadership to an incredible degree...
Therefore what should we expect?
Jim Rogers Speaks Out - Where Is He Putting His Money?
Sure, short term deflation, but the secular long term inflation trend is still intact.
Nation's Debt: It's Not Being Rescued, It's Being Moved Around
"Off budget" accounting ring any bells?
War will cost 50 billion and will be repaid from Iraqi oil funds sound familiar?
Not putting the war in the budget--thats ok!
well charge it and not include it in our budget.
Guess who the cheerleaders were selling us this mendacity?
Bush and the necon cabal.
Yes, blame congress, lots of blame to go around, but Bush spent his political capital on bankrupting our country, lying to us the entire way about the need to war, and the need to deregulate, the need to lower taxes.
War on terror was really the "war on truth".
Freemarkets are the solution to all the worlds problems (that and a huge military budget) ---and can only thrive unfettered by sissy regulations.
We loved it while credit flowed.
Never have so many have been fooled for so long.
Looking for a Silver Lining? Hedge Funds Now Opening to New Investors
Getting Ready for... Anything
The big questions are:
1) Are we headed for deflation, or inflation?
2) What asset classes do I need to be in to participate from the economy going forward?
3) What is the best way to participate in that asset class?
4) What risk management tools do I have in place?
Just a thought....
America Needs a Turnaround Plan
America Needs a Turnaround Plan
Raising Americas debt in 7/12 years from some 5 trillion to some 9 trillion as the Bush Administration has done will require raising taxes.
Period.
Get used to it. It may be in two or three years, or four years, but it is a forgone conclusion.
Can anyone seriously argue against this?
It has nothing to do with fairness either, it is simple math, and economics.
Eventually the costs of not taxing (much higher interest rates, and a continually declining dollar) will exceed the costs of taxing, and politicians will punt.
Do we have the courage to elect politicians to tell us the truth, or do we need Reaganesque talking points designed to make us feel better about our shining city on the hill?
Morning in America or ten minutes to midnite?
When the lights go out on the hill, we will have wished we paid more taxes.
Its not defeatist to admit reality.
The U.S. Economy After the Bailout
The Japanese are still digging out of their credit contraction, some twenty years later.
We are in for a similar decline, I fear.
Update: Crude Oil, Priced in Gold
Why must oil fall? There is no economic law that finite commodities in tight supply must revert to the mean. Particularly in a declining currency.
Hence the comparison to gold?
But gold is not a stable currency, and is also effected by some of the same forces driving oil. (inflation hedge).
If anything, as peak oil moves beyond the US fields which are in decline, to the Middle East, the supply/demand will become even tighter. Oil becomes more dear.
Longer term, prices must rise in stable currency. You could have just as easily written that Oil has much more to gain looking out to 2015 as demand marches upward, and production fails to keep up with demand.
The best minds (Maxwell, Goldman Sachs, Wulff) all point in the same direction--higher prices down the road.
But your comparison is not to a stable currency--but Gold--which is interesting, but is widely know to be a manipulated commodity.
You could have compared the price of oil in mangoes and rice and it would give you a different result, but still interesting.
I read the Forbes article:
"It was a perfect storm. The Federal Reserve was cutting interest rates and people were running away from the dollar as it lost value. Hedge funds, pension funds and mutual funds started pumping money into commodities because they were the safest place and the safest of them all was crude oil. There were too many dollars chasing too few physical assets. That's the bottom line."
I would not call it a perfect storm, but the perfect climate. We still have too many dollars chasing too few physical assets. Its the same climate.
The Forbes Article makes the case, in my mind, that we are at the early stages of a bull market in commodities. The dollars fundamanetals have only declined.
There is nothing to break the long term trend of a declining buck. There is nothing, long term, to break the oil supply/demand imbalance. (yes, demand destruction is baked in for short to medium term)
Therefore, oil will continue to be an inflation hedge.
Therefore, oil will continue to see so called "speculation"... from those protecting their declining dollars.
Nothing has changed in the long term picture. (albeit credit contraction could drive short to medium term contraction of money supply).
long term, nothing has changed, thats the bottom line.