More Metal ETFs and Indexes

Gold and other metals are poised to rise. Here's a few more recommendations for cashing in:

XAU: "The XAU is an index traded on the Philadelphia exchange. It consists of 11 precious metal mining companies."

HUI: "The AMEX Gold BUGS(Basket of Unhedged Gold Stocks)Index represents a portfolio of 14 major gold mining companies.The Index is designed to give investors significant exposure to near term movements in gold prices."

GDX: "Global Markets Vectors tracks the Amex Gold Miners Index, which includes a total of 37 large-, mid- and small-cap U.S. stocks and ADRs. It is heavily weighted with two Canadian firms, Barrick Gold at 14.45% of assets and Goldcorp at 9.45%, followed by Newmont Mining at 9.51%."

As the dollar continues to weaken and adjustable mortgage rates continue to reset (leading to more bad mortgage-backed securities), gold and other metals will continue to rise. And because mortgage-backed securities are illiquid, the bull market should be slow, long, and drawn out. Over time, a bubble could develop.

XAU ended trading at $158.26; HUI ended trading at $368.93; GDX ended trading at $42.99.

Sirius/XM Plan Gets Overhauled

In another attempt to attract the blessing of the FCC, satellite radio companies Sirius and XM have announced a new plan:

"'Our definition of the public interest,' Karmazin explained, 'is that [the merger] will result in more choice and lower prices for consumers.'"

The pricing plans announced Monday range from $6.99 per month for 50 channels from either Sirius or XM, to a $16.99 per month subscription, which would allow customers to keep their existing service and cherry-pick channels from the other provider's service.

For me, I'd be able to get the music channels I want and then add Howard Stern and the NFL. If I don't want to pay for the Martha Stewart channel, I don't have to. If I don't want to pay for the NHL or MLB channels, I don't have to. If I don't want twenty different rock channels, I don't necessarily have to pay for them all. How would this arrangement harm the consumer? The only problem would be the possibility that the existing customers would have to buy new radios:

"To subscribe to the “à la carte” plans, consumers would have to buy new radios."

I was under the impression that previously, this was one of the concerns of the FCC. And that could pose problems. I only paid $25 for my radio. I'd be happy to buy a new one; the lowered cost of my subscription plan would more than pay for it over a few months. Others have paid considerably more and that's where the problems would arise. As I said previously, I seriously doubt the merger will happen. But I have hope.

The Case for Ron Paul: Part One and Two

I think it’s important for us to examine where our true priorities are. The first thing I’d like to say is that, unless unusual circumstances come to pass, I’ll be voting for whoever the Democratic candidate is. That being said, I’d like to examine what the election in 2008 should ultimately be about.

The election in 08 is about the Iraq war. That’s been the biggest issue separating our Democratic leadership in the senate from the Republican leadership. While we’ve been fighting to redeploy our troops to Afghanistan and other more urgent areas, our Republican counterparts have been filibustering to protect their president and his Iraq war policies. Since we’ve held the congressional majority, we’ve been unable to pass meaningful legislation that would do so. Obviously, we need to get out of Iraq.

The election in 08 is about the Patriot Act. Since 9/11, the Patriot Act is the single most damaging piece of legislation to our nation. The Patriot Act is responsible for the telephone wiretaps, and the expanded ability of the Feds to conduct searches. The Patriot Act is responsible for stripping the people of the right of habeas corpus. The Patriot Act is the legislation that gives the government the right to access our library records (if you’re lucky enough to have a library). The Patriot Act is the law that allows increased monitoring of our internet ‘clicks’. And of course, the Patriot act allows for secret searches and searches without a warrant. But most importantly, the Patriot Act EXPANDS PRESIDENTIAL POWER.

If you’ve had the courage to read this thus far, then let me explain why I feel the way I do. There are four democratic presidential nominees who have voted in favor of the Iraq War, as well as the Patriot Act. These are individuals who should be admonished within our party. Biden, Clinton, Dodd, and Edwards all voted for the Patriot Act, as well as the authorization for force in Iraq.

The problem I have with these four candidates is that they didn’t have the conviction to turn down these laws. Either they were afraid of losing elections or they believed that the executive branch should have the authorities that these laws allowed for. So what happens when they become president? Does this mean that Hillary will fight to keep the powers that she voted to instill the president with? If you are afraid of 'big brother', would you be equally afraid of 'big sister'? Why should we trust Edwards or Biden or Dodd now? Since they're running for president, don't they have something to gain? Should we allow them to pander to us now when they wouldn't stand up for our beliefs four years ago? We have candidates in our own party running from president who have voted to EXPAND PRESIDENTIAL POWER. Am I the only one who sees a conflict of interest? This is a serious problem. We need a president who has exhibited the foresight to say “NO”. Imagine if we had a candidate in either party who was bold enough to say “NO” to his own party? A candidate who has never voted to EXPAND PRESIDENTIAL POWER…Would you vote for him if he were running for president?

Blindly following party lines is exactly the problem that has kept us from redeploying our troops out of Iraq. So why should we, as progressives, exhibit the same characteristics? Partisanship is the problem. Voting for the candidate based on party affiliation rather than qualifications and voting records is a serious blight on our democratic society.

Ron Paul is the antithesis of our current president; he’s further from the president and the Republican Party than some of our own candidates. Labels should mean nothing in this election. Issues should be paramount. That’s why I’ve been advocating for Ron Paul. He’s a serious long shot to win his party’s nomination, but if the unusual were to happen I would have to seriously consider his candidacy. Were he to run against certain Dem candidates, I wouldn’t think twice. I’m sick and tired of expanding presidential power and the war in Iraq to the point where I could be blinded to all other views. Labels are nothing; issues are everything.

************************************************************
Part Two:

I realize he has his shortfalls. But you must remember a few things:

(1) We're all but assured of having solid majorities in both houses of congress. If the war in Iraq persists through the 2008 election, it's guaranteed. Furthermore, we would have a president in the White House who believes that there are THREE equal branches of government. What you're thinking is that we'll have another Bush Republican in the White House issuing signing statements and claiming unrealistic executive privilege at every turn. If you examine Paul's record, you'll see extreme consistency. If Paul were president, we would be OUT OF IRAQ and there would be NO PATRIOT ACT.
Thus, if we had a stronghold on the congressional branch, we'd have a serious check on the White House.

(2) If Hillary is being truthful in her speeches, as president she'd keep residual forces in Iraq. If her voting record is truthful, she'd claim the same authorities as president that Bushie has. Why wouldn't she?

(3) Ron Paul is a firm believer in state's rights. When you transfer rights from the federal government to the state government you have a much purer form of democracy. Your vote means more at the state level than it does at the federal level, no? If we're not paying federal taxes, does that mean we don't have to pay state taxes? Does that mean we don't have to increase state taxes? Does that mean we won't have more money for state taxes?

(4) Number four ties into number three. Ron Paul is in favor of abolishing the Federal Reserve and returning to a gold standard. What that means is that our dollars would have intrinsic value. Each dollar would be worth a certain amount of gold. As our current system stands, our federal government is essentially a counterfeiter. Whenever it feels like expanding the money supply, it can. All it has to do is keep interest rates low and print more money. What happens when the money supply expands? It causes inflation. Inflation isn't a problem for those who are rich, and when I say rich, I mean top five percent income level. For the rest of us, it causes our money to become less valuable. At the same time, we have no hedge because we have a limited amount of dollars.

Recently, the stock market hit the 14,000 milestone. Have you wondered why that happened despite an ailing housing market, a massive credit bubble, and rising food and energy costs? It's because the FED has the ability to expand the money supply. That money has to go somewhere; thus, it enters the financial markets. Money entering the financial market will create upward pressure on prices (inflation), despite the fact that the fundamentals are poor. It's simple supply and demand. The money has to go somewhere. People will refute this argument by saying that quarterly profits are up, but the quarterly profits are only up among business to business transactions. Look at retail numbers (besides Walmart, where everyone will start to shop when they're poor). They're down. Way down.

So when I hear people talk about Ron Paul's bathtub being smaller than Grover's, I laugh. It's a view that's too simplistic and it's a view that buys into the corporate mindset.

Extremist views? Yes. Isn't that what America needs? Aren't we too complacent with the status quo?

Finally, I'd like to discuss the last reservation I have, which wasn't addressed in my diary, nor in the comments. That is, that his Supreme Court nominees will be conservatives. The views I just laid out before you, were they really conservative views? I realize he has a problem with homosexuals and I realize he might hold some prejudices. But do you really think that a man as honest as him, a man who respects ALL THREE branches of government, do you really think he'll nominate more Bushie candidates? Or do you think he'll nominate individuals who deserve to serve on the highest of courts? If you think otherwise, then please let's see some proof. Prove it with his voting record. Prove it with his public statements. If you can't do so, then you're just as partisan as the people you oppose.

I'm always willing to change my mind. All I want is evidence.

Jim Cramer Finally Gets the Memo

Mad money or just plain madness? Jim Cramer finally got the memo. I issued a couple memos a month ago. Had you sold/shorted when I told you to, you'd already be enjoying the following profits:

Beazer Homes: 31%
Lennar Homes: 19%
KB Homes: 17%
D.R. Horton: 9%
Standard Pacific Homes: 3%

Flash Memory Shortage?

Last Thursday I ran across some interesting news that could have good implications for savvy investors. It seems that the Apple iPhone and iPod accounts for a significant amount of NAND flash storage production:

"Apple's new red-hot iPhone and the company's line of iPod media players are expected to use a much as 25 percent of the world's NAND flash memory production in the current quarter of this year, according to new data from research firm DRAMexchange."

This news bodes well for manufacturers of flash memory chips. Producers of NAND memory include Micron (MU), STMicroelectronics (STM), and SanDisk (SNDK). These stocks are all on my watch list. I'll let you know if/when I think they could be a good buy. For now, the risk is too high.

Weekend Video - iTulip Rocks Edition

Three videos from the iTulip website. I wanted to call this the 'Zombie Financial Media Edition', but there are only two videos of that theme. So I decided to name it the 'iTulip Rocks Edition'. Thank god we have them around to tell it like it is! Leading it off is a commercial with Gary Coleman pushing loans. I actually saw it on cable at the beginning of the week in full. I noticed the 99.25 percent and sat for a minute. Forty-two payments of $216.55 is $9095.10...for a $2600 loan. And then I saw it on iTulip which forced me to put it up here. It's a symbol of the fact that financial education is more important than ANY other. Gary Coleman: King of Shame.

Gary Coleman Pushing Loans for Cash Call:



Zombie Financial Media: Fair Taxation on Wall Street:



Zombie Financial Media: Reporting on Subprime Fiasco

Jumping Ship on US Stocks

I'm jumping ship on some stock recommendations I've listed as "buys". This includes:

(1) AMN Healthcare - Stock symbol AHS
-Recommended on 6/25 at a price of $22.41
-Closed trading on 7/19 at a price of $21.48
-Net Loss of 4.14%

(2) Cross Country Health Care - Stock symbol CCRN
-Recommended on 6/25 at a price of $16.85
-Closed trading on 7/19 at a price of $17.26
-Net Gain of 2.43%

(3) Intel - Stock symbol INTC
-Recommended on 7/14 at a price of $25.97
-Closed trading on 7/19 at a price of $25.26
-Net Loss of 2.73%

(4) Hewlett Packard - Stock symbol HPQ
-Recommended on 7/14 at a price of $47.25
-Closed trading on 7/19 at a price of $48.40
-Net Gain of 2.43%

I'm keeping all metal ETFs, mining stocks, foreign ETFs, and GE for their alternative energy holdings. Also, I'm keeping sells on the banking and homebuilder stocks I've previously indicated. I'll be recommending more foreign ETFs and metal funds later this evening or tomorrow.

Why the change? I'll give you four reasons: here, here, here, and here. The fourth reason might be the most important. From the Market Oracle:

When this game is over and the music stops there will not be chairs for all players. There will be some winners and many losers. We believe the winners will be those investors that have aligned themselves to the natural resource sector and the many different ways to invest therein.

I don't quote the Market Oracle very often; in fact, this might be the first time. The reason? I seem to always agree with their positions. Two weeks ago, the Oracle had an article stating that the downside risk outweighed the potential gains in US stocks. Had I heeded their warnings, I wouldn't have lost face with Google. Although I gained a few percent with HP and Cross Country, I lost plenty more.

In addition, the Bloomberg stock option report also weighs heavily in my mind. If people are betting against the market at a two to one ratio, then the optimism has turned to pessimism. Consider the options report to be an investor confidence index that's turned south.

Therefore, I'm reducing my exposure to US stocks. The risk just isn't worth it.

Google Misses - Market to Drop Tomorrow

Look for a stock decline in trading tomorrow. It's almost guaranteed now that Google has missed analysts expectations for the second quarter:

"The Mountain View, Calif., Net giant made $3.56 a share on a non-GAAP basis. Net revenue, excluding the money Google shares with its advertising partners, was $2.72 billion."

"Analysts surveyed by Thomson Financial were looking for a $3.59-a-share profit on net revenue of $2.68 billion."

So there you have it. Revenue was up, profit was down. Google needs to retain that level of revenue while wrangling in costs. I expect Wall Street to overreact as they have in the past:

Indeed, bulls might well note that previous profit disappointments have provided good buying opportunities. When Google last missed a quarter back in January 2006, shares tumbled into the $370s in a 15% after-hours selloff.

I have learned a valuable lesson and hopefully, by observing me, you have too. Flip flopping on stocks (the way I did on Google) is generally not a good idea.

This should lead to a precipitous drop tomorrow among all stocks, or even act as a catalyst in bringing about the market correction. I haven't decided if I should close the recommendation or persist. I'll update this post later today with a recommendation on Google.

***********************************************************
Update 7/19/07 7:28 PM: Last I checked, Google was down seven percent in after hours trading. Since there are plenty of investors who don't have access to after hour trading networks, I think the stock will decline further tomorrow. Sell at the opening bell. To be fair, I will close my recommendation at the price that the stock opens with tomorrow.

Update 7/20/07 7:08 PM: Google opened at $511.90.

Fixing the Bond Market

When you don't like what you hear from one doctor, you get a second opinion. But how ethical is it to get a second opinion when you're talking about rating the creditworthiness of mortgage-backed securities? From Bloomberg:

"Moody's Investors Service has been excluded from rating 70 percent of new commercial mortgage-backed securities after toughening its guidelines. "

"'There's no doubt in my mind that it's because of the change' said Philipp, who included a chapter titled 'Rating Shopping is Alive and Well' in a report released today. 'Normally, we'd rate 75 percent of the issues, not 30 percent. I guess this is sort of like, no good deed goes unpunished.'''

Investors beware. You can put makeup on a pig, but it'll still be a pig.

Dow Drop Turns Into a Hiccup

The Dow dropped as much as a percent in early trading, before rebounding for a 0.38 percent loss. Over the last few weeks, we've had one trading day in which the market recedes from a subprime scare. In the previous weeks, the market has rebounded the following days. Last week, the market rebounded to post record highs. Will this week be the same? If the last half of the trading day is any indication, it could be.

One thing about trading today that made me scratch my head, is the minimal hit taken by Bear Stearns. If you'll recall yesterday, the company announced what the two troubled hedge funds were really worth: Zero, Point, Zero! Okay, actually one of the two funds is still worth nine cents on the dollar. But Bear Stearns didn't take the hit today. They lost less than half a percent. Goldman Sachs and JPMorgan, on the other hand, both lost two percent of their value; Citicorp lost one and a half percent; Merrill Lynch lost 3.25 percent.

The next two days should be telling as to what direction the market will turn. Will this be another hiccup, or the start of a correction period?

A Pure Play on the Brazilian Economy

After perusing The Street, I came across an article written by Jonas Elmerraji which discussed ETF investing in South America, as well as Latin America. In the piece, Jonas suggests an ETF tied directly to the Bovespa stock exchange in Sao Paolo, Brazil:

"The ETF mirrors the MSCI Brazil Indes, an index that was designed to measure Brazil's domestic market equity performance. What that means is that EWZ essentially tracks the performance of the hundreds of Brazilian companies that trade on the São Paulo Stock Exchange."

"The ETF is heavily weighted in Brazil's key economic areas -- materials...and energy...as well as quickly emerging service areas, such as financials."

I think the Brazilian ETF, EWZ, is a splendid pick. The fund has gained 88 percent since a year ago. This fact certainly doesn't take away from the fact that the economy is still growing at a breakneck pace; in fact I think it will continue to do so. Jonas explains:

"Brazil has the most powerful economy in Latin America. The country manufactures everything from sophisticated turbine aircraft to orange juice, and it has a well-established professional services sector."

"Of the four BRIC (Brazil, Russia, India, China) countries, Brazil arguably has the most developed economy."

Mr. Elmerraji also notes that Brazil's infrastructure is superior to the other BRIC countries. So if Brazil has the lead in infrastructure and is the most developed economy of the four, why hasn't it seen the kind of growth that the Chinese stock markets has seen over the past five or so years? I think the economy, as well as the Sao Paulo stock market, has a ways to go before its growth slows down; thus my recommendation of the EWZ. The fund closed trading on July 17, 2007 at $68.22.

Bear Stearns: WORTHLESS

It's being reported tonight that the riskier of the two Bear Stearns hedge funds is as good as worthless, while the other troubled fund is worth about NINE CENTS on the dollar. From the NY Times:

“'The preliminary estimates show there is effectively no value left for the investors in the Enhanced Leverage Fund and very little value left for the investors in the High-Grade Fund as of June 30, 2007,' according to the letter."

In a related story, Bloomberg reports that Goldman Sachs and JPMorgan are among a few bank who are unable to dump their debt:

"'The private equity firms, being very tough negotiators, are unlikely to let the banks off the hook,' said Martin Fridson, chief executive officer of high-yield research firm FridsonVision LLC in New York. 'They'll say that's your problem and that's why we're paying you: To take risk.'''

"'Those bonds are probably worth 94 cents on the dollar, or $43.5 million less than when they were sold on June 28', according to Justin Monteith, an analyst at high-yield research firm KDP Investment Advisors in Montpelier, Vermont."

I have a feeling that the faulty debt problems will be mostly contained within the banking industry. I can't see this affecting tech stocks very much, if at all. As for gold, these developments will only cause upward pressure on metal and metal stocks, especially if it gets bad enough for a federal bailout.

Investment banks beware. When the chickens come home to roost, the cock-fights will get bloody. Did you follow my advice? What about this? Are you covered?

(Edited 7/17/07 7:57 PM: edited to fix the NY Times link)

CNBC Double-Speak

Consider the following two headlines:

(1) Market Milestone: Pros Say Stock Rally Isn't Over

(2) Options Report: Investors Expect More Volatility in Market

Both headlines appeared on the CNBC website today; one is the antithesis of the other. So why is CNBC talking out of both sides of their mouth? Fair and balanced financial news? Are the waters in the stock market truly this murky?

Bull market's seem to last longer than the fundamentals would allow for. That is, in essence, the psychological influence on financial markets. With tech earnings up, the bull market could last for a few more weeks, or even a couple more months. However, the further it goes beyond the fundamentals, the harder the correction will be.

The options report says that people are buying twice as many put options as they are of call options. Put options allow you to sell stocks at a certain price, while call options allow you to buy stocks at a certain price.

I think CNBC is covering their a$$es. Talk out of both sides of your mouth and you can be right at least part of the time.

Here's a related post regarding the options report, first reported by Bloomberg.com.

Housing Market - No Bottom in Sight!

The homebuilder confidence index fell even further this month. From the NAHB:

"A surplus of unsold homes on the market, combined with ongoing concerns in the subprime mortgage arena and affordability issues associated with tightened lending standards and higher interest rates, continues to take a significant toll on builder confidence, according to the latest National Association of Home Builders/Wells Fargo Housing Market Index (HMI), released today. The HMI declined four points to 24 this month, which is its lowest level since January of 1991."

(An index level of 50 indicates that half of those polled have a favorable view.) The article continues with the claim that house sales should increase later this year, with a continued rebound into the start of next year. I say they're crazy. We've yet to see the spike in mortgage rate resets, which will increase the already high default rate. This, in turn, will flood an already bloated level of supply. Plus, lending restrictions are tightening and will continue to do so, stifling demand. And what happens when the Fed finally decides to take care of the inflation problem? Interest rates will increase, further dampening the demand for homes.

Today's report from the NAHB looks frighteningly similar to last months index. I see a continuing trend. Homebuilders should look forward to 2009. That's their best bet.

Kooky Kucinich, Cold Clinton, and Activist Al

Forbes.com recently published a few articles ranking presidential candidates based on Kookiness, Coldness, and Activism. The results were, as the title indicates, very predictable. What's interesting is the buzz being generated by Democratic presidential candidates. The number one position in each poll was held by a Democrat.

From Forbes:

"The top six slots in this category (activists) are all held by Democrats. Former New York Mayor Rudy Giuliani claims the honor of most activist Republican but is seventh overall."

The top six activist slots are held by Dems...Wow! In order after Gore comes Clinton, Obama, Kucinich, Edwards, and Richardson. At the bottom of the list is Fred Thompson (surprise surprise). But what do you expect from a failed senator turned actor?

At the top of the coldest list is Clinton. Newt Gingrich (who isn't really running), clocked in as the coldest Republican, followed by Romney. The bottom of the cold list should come as no surprise; the bottom two democratic candidates in terms of coldness are Obama and Richardson. The article draws parallels between low coldness and high appeal, which could indicate that Clinton's polling numbers are inflated. Fred Thompson and Rudy Giuliani are the least cold Republicans (and they have high appeal).

In terms of the most kooky-wacky, Kucinich wins in a land slide. (Is he running for president of the US or president of Middle earth??) What I find surprising is that Al Gore came in second, followed by Clinton and then Republican McCain. The way McCain's been acting recently, I'd have pegged him second or third. In my opinion Al Gore should be at the bottom of the list. Instead, Fred Thompson and Mike Bloomberg hold the bottom spots.

Does this mean that activism equals kooky-wacky?

Bloomberg.com: Put Options Indicate Pullback

According to stock option data compiled by the Bloomberg news service, the market could see a correction of between five and ten percent:

"Bets in the options market against the Standard & Poor's 500 Index have exceeded wagers it will rise by a 2-to-1 margin for a month, the longest since Bloomberg began compiling the data in 1995."

"That's seen as a warning sign the market is due for a decline of 5 to 10 percent after the S&P 500 rose to two records last week, say managers of almost $1 trillion at Morgan Stanley Global Wealth Management, National City Private Client Group and Russell Investment Group."

At current levels, a ten percent decline would knock the Dow down to around 12,555, while the S&P 500 would be at 1,394. It's certainly nothing devastating and it's definitely due. The current bull market has been one of the longest in history without a correction, thanks in part to the Federal Reserve pumping liquidity into the economy nonstop since the dot.com bust. Now, ten percent would be easy to swallow, but that's assuming it's only ten percent:

"The Leuthold Group, whose flagship fund has beaten 99 percent of similar funds over the last five years, expects the S&P 500 to slide as much as 19 percent by the end of the year."

Okay, now we're venturing into uncomfortable territory. A 19 percent pullback would leave the Dow at 11,300 and the S&P 1,255. These numbers would be a bit tougher to handle. Investor dollars would fly out of the country and unemployment rates would soar. Consumers, already hurting from the deflating housing market and the increasing gas costs, would spend even less. I think the sector with the most to lose is retail. I briefly mentioned the problems they're experiencing last week:

"Another sector that could feel the hurt is retail. Fewer homeowners refinancing mean less being spent at home depot or at the mall. We've already seen home depot's hurt. Bed Bath and Beyond has also lowered it's expectations in the last few weeks. The housing downturn might be blamed as the number one reason, but subprime is not far behind. And as the noose tightens around lending standards, the infusion of cash that has helped fuel earnings in retail will evaporate."

It's the housing market, and the tighter lending restrictions, and the rising food costs, and the rising energy costs. Individually they're containable; collectively they could do some damage.

Black Gold - Are You Profiting?

The price of oil has been riding high the last few weeks. And it could go higher:

"Crude oil prices soared to 11-month highs Friday on a new forecast that global oil demand will accelerate next year as supply remains tight."

"'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."

Since my recommendation one month ago, oil has increased by 9.5 percent. On June 14th, oil was trading at $67.69. Although historically high, if Philip Verleger is correct a $68 barrel of oil will look mighty cheap. And it's not just a lack of supply or an increase in demand; it's both. From Forbes:

"Scheduled summer North Sea maintenance lent support, while the unexpected closure of the Central Area Transmission System (CATS) stoked supply jitters. J-Block, a group of oilfields in the region, has been unable to produce oil or gas since July 1, when CATS was closed."

Maintenance issues are strangling supply, while increased growth in emerging economies such as Chindia are accelerating demand. I don't anticipate the price to subside any time soon. Hold onto your oil funds!

Solar Overvalued

Last week, I reported on the possible over valuation of solar energy stocks. First Solar (FSLR) was trading at 491 times earnings, while SunPower (SPWR) was trading at 182 times earnings. Quite inflated! In today's New York Times, comes a solar story with more evidence that the psychology of solar is trumping fundamentals:

"The trade association for the nuclear power industry recently asked 1,000 Americans what energy source they thought would be used most for generating electricity in 15 years. The top choice? Not nuclear plants, or coal or natural gas. The winner was the sun, cited by 27 percent of those polled."

"...some of the most ardent experts and investors say that moving this energy source from niche to mainstream — last year it provided less than 0.01 percent of the country’s electricity supply — is unlikely without significant technological breakthroughs. And given the current scale of research in private and government laboratories, that is not expected to happen anytime soon."

Even by the year 2030, the government expects solar energy to account for a tenth of a percent. Of course, plenty can change over that period, but the fact that most experts are pessimistic should hold plenty of weight.

The only question now is when will we see the correction in stock prices?

Chris Bancroft - Our Last Hope

Reuters is reporting that Chris Bancroft is trying his hardest to block the proposed takeover of Dow Jones by News Corp:

Christopher Bancroft has recently approached hedge funds, private equity firms and General Electric Co. , hoping to buy enough voting shares of Dow Jones to give him the power to thwart a sale, the paper reported on its Web site, citing people familiar with the matter.

Imagine if Rupert Murdoch controlled the Wall Street Journal. Oh sure, the Bancroft family has been negotiating to retain editorial control of the newspaper, but so did the Times newspaper of London. A lot of good that did. It doesn't matter what is negotiated. If Murdoch gets his hands on the WSJ, it will start to look more like the New York Post. Yuk!
In my opinion, Murdoch only wants the WSJ as another platform to challenge the NY Times. I can't find the story online, but I remember there being a piece in which Murdoch states that he wants more NY media so that he's better equipped to shout down the NY Times. The NY Times reports the facts and sometimes those facts don't jive with the reality uber-conservatives such as Murdoch would like there to be.
Murdoch would turn the Journal into a complete joke. As it is, every story should be taken with a grain of salt. Imagine the inaccuracies if Murdoch has his way.
If you don't believe me, check this out. I can't get through the movie without yelling at the screen. Dow Jones needs to say no to Murdoch or the business community needs to find another buyer, either collectively or individually. Where's George Soros when you need him?

Weekend Video - Knockout! Edition

ESPN's Friday Night Fight from June 29th was one of the best bouts I've seen in a long time. I tivo'd it on my computer and have watched it a few times now. I doubt I'll ever delete it. Who says you have to spend $60 on PPV for a great fight? The knockout leads off this week's weekend videos.

Darnell 'Ding-a-ling' Wilson Crushes Emmanuel Nwodo:

'Pretty Boy' Floyd Mayweather beats down Ndou:



Roy Jones Jr: "Look Mom, No Hands":