Wall Street is full of some of the dumbest people I've ever known in my life. The latest example is how they're all in a frenzy proclaiming the energy and commodities "bubble" has burst. Oh, and include bubble-vision CNBC on that list too. And let's not forget all our incompetent leaders, Democrat and Republican alike, in Washington, D.C.
What a bunch of morons.
All any of them can talk about is when everything will go back to "normal" so they can all buy their precious financial companies again. Is this the bottom in financials? Is this the bottom in financials? Is this the bottom in financials? That's all they ever talk about.
However, in order to get rich in investing someone has to lose money for someone to make money, and I'm more than willing to take their money. Besides, it's always easier to take money from stupid people!
The energy and commodities bull market is several years old now and still has a long, long, long ways to go.
An "expert" on TV today proclaimed that oil may be entering a bear market because it has dropped 20+% from its highs and a 20% decline qualifies as a bear market.
Quoting Baron Rothschild's famous quote, "Buy when there is blood in the streets.", Chris Pulplava has penned an excellent article called
There Has Been Blood! which points out:
The significant run up in energy shares off the May lows into June was most certainly a bit extended as most energy shares were fairly overbought and a correction was to be expected. The carnage that fell out was swift and sharp, but not extraordinary as far as energy shares go. For example, there have been nine double-digit corrections in the Amex Oil Index (XOI) since the start of 2005, with the current correction marking the second 20%+ correction (2007 correction nearly marked a third) in the past three and a half years. However, the end of the correction is likely at hand as energy shares are deeply oversold.
The constant parade of clowns on CNBC rarely ever see the forest for all the trees. Peak Oil evangelist Matt Simmons put together a
great PDF for the 2008 Energy Investor Conference that everyone should read.
He included a great quote from Sheikh Rashid bin Saeed Al Maktoum (1912-1990), former Prime Minister of the United Arab Emirates and ruler of Dubai:
"My grandfather rode on a camel, my father rode in a car, I ride in a jet, my children will ride in cars, my grandchildren will ride on camels."
In case you've been getting your energy news from the idiocy coming out of Obama's campaign speeches, and sometimes even John McCain, world-wide peak oil was reached in May 2005. What that means is that production has fallen, is currently plateauing a little bit, but longer-term will continue to go down
FOREVER. Meaning that we can "Drill, Drill, Drill!!!", as CNBC's Larry Kudlow insists on yelling over and over and over, and WE SHOULD, but the new oil supplies will never outpace the depletion rate of existing sources.
For everyone alive today on Planet Earth, May 2005 will most likely be the most important date and turning point of our entire lives.
EVERYTHING will be affected by Peak Oil.
Does anyone in Washington, D.C. or on Wall Street really understand this or even care? No.
As multi-billionaire Bill Gross, Managing Director for the world's largest Bond Fund (PIMCO), has stated:
It’s Sunday afternoon at the Coliseum folks, and all good fun, but the hordes are crossing the Alps and headed for modern day Rome – better educated, harder working, and willing to sacrifice today for a better tomorrow. Can it be any wonder that an estimated 1% of America’s wealth migrates into foreign hands every year? We, as a people, are overweight, poorly educated, overindulged, and imbued with such a sense of self importance on a geopolitical scale, that our allies are dropping like flies. “Yes we can?†Well, if so, then the “we†is the critical element, not the leader that will be chosen in November. Let’s get off the couch and shape up – physically, intellectually, and institutionally – and begin to make some informed choices about our future. Lincoln didn’t say it, but might have agreed, that the worst part about being fooled is fooling yourself, and as a nation, we’ve been doing a pretty good job of that for a long time now.
Bill goes on to talk about how our government's inflation numbers are outright lies. Unless you are one of many with their head in the sand, this should not be new news to you. The government fabricates numbers with "hedonic adjustments", their official term for it (You know what hedonism is, right?), but Wall Street still hasn't figured it out yet. You can read Bill's newsletter
here for a full explanation. Here was his conclusion:
What are the investment ramifications? With global headline inflation now at 7% there is a need for new global investment solutions, a role that PIMCO is more than willing (and able) to provide. In this role we would suggest: 1) Treasury bonds are obviously not to be favored because of their negative (unreal) real yields. 2) U.S. TIPS, while affording headline CPI protection, risk the delusion of an artificially low inflation number as well. 3) On the other hand, commodity-based assets as well as foreign equities whose P/Es are better grounded with local CPI and nominal bond yield comparisons should be excellent candidates. 4) These assets should in turn be denominated in currencies that demonstrate authentic real growth and inflation rates, that while high, at least are credible. 5) Developing, BRIC-like economies are obvious choices for investment dollars.
Investment success depends on an ability to anticipate the herd, ride with it for a substantial period of time, and then begin to reorient portfolios for a changing world. Today’s world, including its inflation rate, is changing. Being fooled some of the time is no sin, but being fooled all of the time is intolerable. Join me in lobbying for change in U.S. leadership, the attitude of its citizenry, and (to the point of this Outlook) the market’s assumption of low relative U.S. inflation in comparison to our global competitors.
Bill Gross
Investment Outlook: Hmmmmm?
Labels: commodities, energy, inflation, investing, oil, Peak Oil
