Published October 29th, 2006
in Investing - Metals and Investing - Energy.
I am probably starting to sound like a broken record, but this is some good stuff. 
Jim Rogers, the man who called the commodity boom seven years ago, ”This is a great time to invest in commodities ……. Supply of things like base metals, oil and rubber is crimped after years of underinvestment in mines and oilfields and farms, he says, so prices are heading up. And they will go up, with some transitory hiccups, well into the next decade and perhaps even the one following. Copper, zinc and oil have all at least doubled in the past three years. You’ll see more doublings in many more commodities.”
Rogers, author of Hot Commodities, says his optimism comes right out of the history books. The shortest commodity boom, which began in 1966, was 15 years, he says. The longest: 23 years. The current one: 7 years (forget the slump we’re in now). The long trend reflects this fact: Lots of commodities can’t be produced quickly. By the time miners or drillers or farmers realize that demand has outstripped supply, it’s too late.
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Published October 28th, 2006
in Economics.
Sometimes I wonder why I bother watching CNBC. I think that some of the guest believe that if they say something negative about anything - they will not be invited back. Two of my favorite guests are Peter Schiff and Nouriel Roubini. You can read Peter’s latest commentary at the link below. Roubini is a professor of economics at New York University. I knew that Larry Kudlow would invite him on the show after the latest GDP release. Kudlow and all of his buddies were laughing at Roubini a few days ago when he projected that GDP would be around 1.5% for the quarter. It came in at 1.6% - the slowest growth since first quarter 2003 and below the consensus of 2.0%.
Roubini forecasted 0.5% for the next quarterly release and once again they all laughed in disbelief. It doesn’t take a PhD in economics to realize that the slow down in real estate has and will hurt many people. Compare the size of your raises from the past five years with the ones of the previous five year period. Most will attest that wages are not increasing. Lifestyles have been maintained primarily by equity out refinancing. Unfortunately, the real estate slow down has turned off the home ATM spigot.
Don’t believe the hype. Prepare yourself for the road ahead. Companies are holding their highest levels of cash in history. If the economy was so great - wouldn’t they be finding opportunities to invest their war chests. There are two ways that you can prepare yourself. Either save now and invest later or invest now and invest more later. If you choose the former, learn as much as possible about real estate investing. Cash rich investors will have their pick of the litter in a few years. If you choose the latter, commodities are the place to be. There are many articles on this site on that topic.
Denial Is Not Just a River in Egypt
Published October 28th, 2006
in Portfolio - Updates (all).
The stock market could not overcome the disappointing GDP release and closed down on Friday, but fortunately it was not enough to ruin another positive week. With 10 more days before the mid-term elections, I am betting the “powers to be” will keep the market propped up. We need happy voters in the booths.
It was a great week in the commodity patch. Hopefully, my article “The Commodities Bull Market is Back” does not come back to bite me. However, with oil closing the week over $60 per barrel and Gold breaking the $600/oz psychological barrier it was much to be excited about.
Below are this week’s results of our regularly discussed stocks: Continue reading ‘Week in Review 10/27 - Stocks Fizzle on GDP Results’
Published October 28th, 2006
in Investing - General.
Goldman Sachs just made a mint on the Industrial & Commercial Bank of China’s initial public offering. This is far from the last of these opportunities. However, it is very difficult and far too risky for an individual to invest directly in China. As an individual investor, you may want to consider FXI. It is an ETF that tracks the FTSE/Xihhua China 25 Index. 35% of its weighting is in the financial services sector which will be the largest benefactor of US Investment Banking dollars.
FXI is a part of the BRIC portfolio that has been discussed on these pages many times. The results of the BRIC portfolio is updated each week in the Week in Review article.
Published October 28th, 2006
in Investing - General.
Does anyone know how much the Treasury Secretary job really pays? Hank Paulson, our most recently appointed Treasurer Secretary, resigned as CEO of Goldman Sachs to accept this appointment. In most companies the CEO is one of the highest paid people. I would assume since Paulson’s net worth is around $700 million dollars - he was not an exception.
On Friday, Goldman Sachs earned nearly $4 billion dollars on Industrial & Commercial Bank of China’s initial public offering. This windfall was the result of Paulson’s more than 70 visits to China. If he was still working for Goldman quite a bit of this would have made it into his pocket. You don’t build $700 million dollars in net worth by walking away from deals of this nature. Thus, this leaves me quite perplexed. Either Paulson is still on Goldman’s payroll or we are paying him way more than what is being reported.
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Just as I figured Mr. Paulson is no dummy. He may have taken a $38 million dollar pay cut by accepting the Treasurer Secretary job, but it looks like he may save nearly $100 million in taxes.
Loophole for Mr. Paulson
Published October 26th, 2006
in Investing - Metals and Investing - Energy.
In Ron Paul’s article from last week, he stated that he favored less taxes on everyone - rich, middle class and poor. The premise is that the money is much better utilized in our hands than by Congress. Our three options save, invest or spend - all benefit and drive our economy.
The impact on savings to an economy didn’t really hit me until I read an article on my favorite subject commodity investing. In reference to China and India’s commodity usage, it stated the best predictor of economic growth is it savings rate. China’s domestic saving rate is 40%. That statistic alone states that we are in for a long boom. The article also highlights some other indicators that suggest that China’s demand for commodities is in its infancy.
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Published October 26th, 2006
in Investing - Metals.
Article was updated on 11/6.
View Update
Published October 26th, 2006
in Women and Money.
Since some of my favorite people are women, I have been posting weekly articles that are specifically of value to them. I hope that they have been useful.
Before finding financial freedom, we will all work many jobs. If we must work - we might as well be paid the most possible. This week’s article is on salary negotiation tips for women.
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Published October 25th, 2006
in Economics.
Every good investor needs to be cognizant of interest rates and its direction. Today, the Fed held rates at 5.25% and issued a statement that will keep the markets guessing as to whether the next move is up or down.
Here is a pretty good article from the New York Times that discusses the statement accompanying the Fed’s decision.
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Published October 25th, 2006
in Real Estate.
I have written numerous times about the tremendous supply deficit in Natural Resources brought on by the industrialization of Emerging Markets like China and India. As these countries, build-out their infrastructure commodities such as copper, aluminum and zinc are required. Due to the fact, that it takes 3-5 years to bring these minerals to market; coupled with very little investment over the past decade; it is very difficult for mining companies to meet demand. High demand and low supply means higher prices. This is a trend that many people with profit from over the next 10 years. The old adage the trend is your friend has never been more true.
Personally, I am going to milk the commodity trend as long as possible, but I always have my eyes open for other trends. Up until recently real estate investing was the greatest no-brainer on earth. Everyone was buying and flipping real estate. However, like all good things - it must come to an end. Real Estate speculation has not ended, but it has slowed tremendously. So, should investors give up on real estate and plow all of the money into commodities. If you have the aptitude for trading stocks certainly, but if not search for niches to exploit in the real estate market.
One such niche is investing in student housing. I remember living in the dorms in college. The state of the bathrooms after a weekend of non-stop parties was simply disgusting. Today’s students don’t won’t to deal with such. They want nice accommodations with cable television and high-speed internet. Savvy real estate investors are satisfying their needs.
An Introductory Course in Student Housing Investing
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