-- Posted Thursday, 27 April 2006 | Digg This Article
Does our ferocity not derive from the fact that our instincts are all too interested in other people? If we attended more to ourselves and became the center, the object of our murderous inclinations, the sum of our intolerances would diminish.
E. M. Cioran 1911-, Rumanian-born French Philosopher
Iran keeps acting more and more defiant each time the US together with its Western allies hint that sanctions may on the table soon. They have tested several new missiles and torpedoes that can take out an Aegis war ship; at this moment in time there is no defence against these missiles due to their ultra high velocities. Today Israeli Intelligence announced that Iran received a missile shipment from Korea with a range of over 2500 km, which puts most of Europe within their range Full Story.
Several articles were published about Iran testing two missiles several weeks ago and how they could destroy anyway warship or submarine because of their extreme speed. What was buried in the articles and probably the most important piece of information was that the second Missile/Torpedo was tested in the Straits of Hormuz; the very narrow passage way for over 60% of the world’s oil. We suspect the Iranians are making plans to attack this strait if the US should decide to militarily strike them. The damage from the closing of the straits could reach in the billions of dollars and cause an immediate huge spike in the price of oil. If Iran had to shut down the straits and then turn down its oil spigots the shock to the world could be huge. Such a move would cause huge price spikes across the board in almost the entire commodities sector.
Elsewhere it appears that Chavez wants to completely control the oil industry in Venezuela; he aggressively took over two fields and it appears that this might be jut the beginning of a new trend. When one looks at the full picture there appears to be problems from every corner as far as oil supplies are concerned. The US is not on friendly terms with several of the world’s top oil producers (Iran, Venezuela, Nigeria and now even Russia).
Over confidence among retirees.
The majority of American workers think they are going to be able to retire comfortably even though most of them are not saving half of what they think they will need. According to the Employee Benefit Research Institute's annual retirement confidence survey 68 percent of workers are confident that they will have adequate funds to retire comfortably; this figure is up about 3 percentage points from the 2005 survey. Full Story
Most of them admit that they have not even saved 25,000 and so it’s mind boggling to think how these fools arrive at the conclusion that everything will be fine when they stop working. Even among workers over 55 over 4 in 10 don’t even have 25,000 saved. This once again illustrates quite clearly that most people are living in an illusory world and are doing absolutely nothing to prepare for tomorrow. The concept is live large today and worry about tomorrow-another day. We have been banging the table for a long time now and advising all of you to live 1-2 standards below your means and then to tuck this money away. One day you will sit back and marvel at how such a simple concept could have prevented so many from total ruin.
Financial Literacy
A recent survey revealed that most high school seniors answered 52.4% of a 30 question financial survey correctly. It was up by a whopping 0.2% from 2 years ago but down about 4.6% from the 1997 results.
Only 14.2% answered that stocks would be the best way to invest money over an 18-year period; this was the lowest percentage in the survey’s history. It appears that the kids today are going from dumb to retarded. Makes on think of the movie dumb and dumber.
What’s even more amazing and interesting is that high school seniors that took a class in money management actually fared worse then those who did not take one. This goes to illustrate our point that education today is the equivalent of taking arsenic slowly and that most money managers know even less then those that hire them.
In another survey involving 1000 adults only 57% knew as they phrased it “quite a bit” or a “great deal” about managing their finances and retirement savings. Hum it appears that their knowledge is not that much greater then that of their kids. Full Story
If you have children make sure you spend time educating them on two concepts; no other business has produced more millionaires in the world then the Stock Market and the Real Estate sector; both are cyclical so one has to know when to buy and when to sell. But with practise and paying attention to history and learning the basic of trend analysis one can increase ones odds of winning significantly. One simple rule for investing in the markets is to buy when everyone is running. For real estate buy when everyone hates this sector and when it’s cheaper to buy then to rent.
Coal
Utilities have very low inventory levels of Coal and with the increase in natural gas prices it just a matter of time before these utilities start to fire up all their coal plants. However that’s when the problem will start because inventory levels are so low and this could create a stampede for new supplies, which could have a huge impact on the price of coal. It’s for this reason we have taken one position in this sector (its already doing pretty well) and we might add even more positions down the line.
Farm construction Machinery
It has been slowly but surely climbing up in sector strength and now it suddenly bolted to the number 4 position. This is yet another sign that the grains sector of the commodity markets which has not really experienced a bull market is getting ready to explode upwards. All inter related sectors such as Agricultural chemicals; fertilisers, machinery etc are going to experience a nice move up. We suggested several months ago that taking positions in ADM would be a good move for risk takers; since then it has appreciated about 50% and those who bought options are sitting on spectacular gains.
Railroads
For a long time these chaps had absolutely no pricing power but now that the demand for coal and other commodities is going up they are once again fully in control of the situation. In fact right now these chaps have been constantly raising the rates and tacking on fuel surcharges almost every time the cost of diesel goes up; this was something they would not have been able to do a few years ago. We are looking for one or two beaten down plays here that make sense to take a position in. Risk takers could buy long-term call options on some of the other highfliers in this sector when they experience a nice pull back.
The real meaning of enlightenment is to gaze with undimmed eyes on all darkness
Nikos Kazantzakis 1883-1957, Greek Writer
-- Posted Thursday, 27 April 2006 | Digg This Article
