Oils Coming “Supershifts” – Where the Changes Mean Profit

In the world of oil, about 50 people control what happens. What is going on, right now, is NOT what you may think. Most of it is not making the news.

Indeed, the energy market used to be predictable. But the future of energy and the way oil companies are financing their efforts is changing. There are ‘super shifts’ coming in the oil business – three main ones, in the near future.

The 50 or so people that make up the Inner Circle of energy have some new plans. They control about 90% of the worlds energy markets – and they are making these super shifts happen.

Supershift #1. Chavez of Venezuela soon cuts the U.S. out of $48 trillion worth of oil.

Mr. Chavez sits atop the Orinoco Oil Pool Reserve, about 600 billion barrels of “heavy crude”. It’s estimated at $44 trillion… and he’s already booted Exxon and Conoco, inserting his state run oil company in their place. Right now only the U.S. refineries can handle traditional ‘heavy crude’ like the Orinoco output – but refineries in the Caribbean region, in Jamaica, Ecuador, Trinidad, etc. are gearing up to handle it. This will change the distribution of oil and will obviously impact southern US refining states and their seaports. Once Chavez no longer needs our refineries, he can sell his juice to China, India and else where at will. And oils Inner Circle is going to make this happen. They don’t care about nations or loyalties – profit is their motive.

Supershift #2. China is ponying up $2 billion to tap into Western gas-tech.

Formerly un-reacheable oil and gas reserves are being tapped in the US right now, thanks to technology advances. Some are actually calling it a glut. Just one of the many gas reserves, The Marcellus Shale Pool in the eastern US, is worth about 2 trillion dollars. Sinotec, China’s state run petroleum concern, is working hard to understand how we are getting AT these deposits… so they can apply what they learn all over Asia. Once they catch up on the hi-tech drilling and extraction methods we have pioneered, they can tap into Mongolian, Turkish, Indonesian and other reserves outside OUR current reach.

Oil field Servies companies dealing in hitech drilling and extraction in the US are seeing huge profits right now – and that should continue to skyrocket as China buys their way into the cutting edge oil business.

Supershift #3. Extraction technology unlocks Americas $40 trillion reserves – at last.

California’s conventional production has decreased by almost double digits in recent years – BUT it still sits on 500 billion barrels of hydrocarbon fuel, called the Monterey Shale. Mostly crude oil shale, it has been able to yield only 10% of it’s oil until recent advances. One of these technologies is called Managed Pressure Drilling, first used in 2005. It uses acidized mud and air injection to lift much larger quantities of oil than before, at a cost of only $80 per barrel. It could account for 70 years worth of usage at a fraction of our current import cost… and cut our current tanker imports in half almost overnight. That is a homegrown super shift!

These three shifts will account for some serious changes in our energy future. Many things can happen… who knows, someone may knock off Chavez tomorrow. But these shifts are in the works, right now. The names Orinoco, Marcellus and Monterey Shale are going to become household words, soon enough.

Thanks to Prof. Michael Koors for his comments.

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Number One Lesson in Investing

People wonder all the time what to invest in. There is a dizzying array of investments and it can be boggling trying to decide what will be a winner. But there is something more important to worry about. It is, in fact, THE MOST IMPORTANT THING TO KNOW ABOUT INVESTING.

I’m speaking about knowing when to get out of an investment. As a new investor, you are going to experience some small losses. You cannot be right all the time and these losses are sort of the “tuition” of investing success. But there is a point in any loss when you have to admit that you must bail, or risk losing more than your shirt.

Because of ego, we tend to hold. It is hard for us to believe that we would make a serious mistake, when we have all the online research tools, apps for our phones, etc. You go in to investing to make money, so selling at a loss is very hard thing to do. It’s worse if a stock rebounds after you’ve sold, making you feel like a schmuck. So you have to apply a little self-examination on how you view losses.

It’s like car insurance. You don’t begrudge the net-loss paid out for insurance you never use, do you? Instead you buy it, and get nothing back, so you are covered if  something goes wrong. Controlling a loss when an investment goes the wrong way is the same thing.

You cannot stop losses from happening; they are inevitable, especially in the beginning. So what I’m talking about here is being in control of your losses, instead of being at their mercy. You don’t wait for the investment to tank and fall over the cliff. Instead, have a plan to get out if needed – an insurance policy, if you will.

So what works? It is different for everybody, since each investor has his or her own risk tolerance. But in general, a 7-10% loss against purchase price is a good control point. Let’s call it 8% hereafter.

Remember, emotion is out. This is purely a numbers game. What you must avoid is getting emotional with a stock, being blinded to your mistakes and holding for too long. You vacillate, and then it’s too late. Now, you get discouraged at your big loss and lose confidence. So let me give you an old adage from William O’Neal: “Sell down to the sleeping point.”

This means that if things are going downhill with an investment, but you cannot break off from it, you don’t have to sell it all – just sell enough so you can sleep at night.

Cutting your losses at 7-8% is also better than waiting to reach a 50% loss – when you must then recover by 100% just to break even! Once you get good at this investing stuff, you can sell some of your others when they are high, which will let you be wrong now and then and still not get into the red. This also implies that your better performing stocks should always be held longer than your worst ones. Call that a bonus tip.

You expect to have some minor losses – but you also intend to persevere. Discouragement is not in your vocabulary, because you know it takes persistence to get good at this. Follow this one lesson and soon you will win more than you lose. If any one asks, you can now say that you have a formula: You never have greater than an 8% risk in any stock, ever. Whether it is a top blue chip or an edgy tech stock, your risk is always the same.

Inspired by “24 Essential Lessons for Investing Success,” by William J. O’neal

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How the Stock Market Works

My friend, Andre, said today that he didn’t really understand how the stock market worked. I thought that was odd coming from such a smart guy as he, but I offered to explain it as best I could.

“Andre, the stock markets of the world are really organized flea markets. There are goods and commodities, company’s and holdings, all offered for sale in the hopes that growth will occur and a profit can be made. Think of it this way.

Lets say my hobby is making picnic tables – really good picnic tables. I sell them at the flea market and they are so nice, in fact, that everybody wants one. I have so many orders that I can’t possibly keep up with demand. So I decide to look for some help.

I approach four friends and I tell them that if each will put up $500 dollars, I can double their money.”

“How can you be sure of THAT,” Andre asked.

“Well, I already know I have a demand for my product. But I need increased capacity to meet it. So I show them where could be if I had backing. With their $2000, I could purchase wood at a quantity discount, hire some help and make enough picnic tables to earn $8,000, based on current orders.  I would pay each one back their $500 plus their profit of $5o0. That leaves $4,000, out of which I paid $1,000 for wood and my helpers. The remainder is $3,000, out of which I pay myself $1,000 and reinvest $2,000 back into my picnic table business.

That’s how the stock market works. Of course, people make it more complicated than this and there all sorts of things that actually make it so. But if you keep it simple like this, it makes it easier to understand.”

“That does help,” he said. “So what about that uranium business you’ve been talking about lately?”

“Ah, well, that’s something else. Unlike the picnic tables, whose demand could be met, uranium has a growing demand that looks to fall short on supply in the near future. We can talk about that at our next investment group meeting if you like – hows that sound?”

“Sounds great!”

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The TRICK to Smart Investing

Every time you turn around these days, there is another “guru” that knows the answers to successful investing. Certainly, some of them know something and a few may be on the ball. But none have the miracle crystal ball. Most just spin up a bunch of hype and convince people they know what’s what. I listened to a presentation last night that was 25 minutes on before even my prodigious patience was taxed. I got sick of the canned testimonials and hyperbole and never found out what the secret was…. I just left.

Certainly you, too, have seen the many programs you can buy, all promising the “secrets” to investment millions. Some probably have sound logic and practices behind them, but usually you have to wade through more hype than substance to find out if they do. In the end, you gotta think that the person who profits the most is the one selling them.

So, I wont go there. I wont put you through that or insult your intelligence. Instead, Ill just tell you what the SECRET to profitable investing today really is. Are you ready?

The secret is SCARCITY.

In times past, even recent times, we were taught to believe in emergent technologies. Think of the “dot.com” bubble, for example. “Always be in front of the pack with the latest thing, and you cant lose,” was the thinking. To a great degree, that has not changed. Being first is better than last. But it is also something of a gamble, hoping that your “big thing” will take off and be a hit. Only then can you pat yourself on the back for being smart enough to “read the trends.”

But today you don’t need that guesswork and hand wringing. You just have to find out  what is scarce or better yet, is ABOUT to be. Today, the bywords are “scarcity driven need.” Let me give you another  example.

China, the United States and many other nations are poised to base their energy needs on nuclear power in the coming years. Hundreds, if not thousands of new reactor permits are being submitted around the world. India plans to have 25% of its energy needs supplied by nuclear energy in the near future.  And every one of these reactors will need enriched uranium to function.

The problem is there is a potential shortage of this material. The celebrated deals with Russia to supply down-grade weapons uranium are going to end next year. This means everyone, including the Russians, will have to resort to mined uranium. As it stands now, that resource can just meet current demand. Well… it can IF we actually get it out of the ground. Currently most of it remains in the raw state and unrefined, even as demand for the stuff has only one place to go – UP!

Think I’m nuts, or crying wolf? The price of uranium has gone from $40/lb this time last year to a peak of $75/lb in January, 2011. It is now down at $58, thanks to the tragedy in Japan. But NO ONE is pulling out of their plans to build reactors because of the Japanese calamity. If anything, they are shoring up, revamping their plans using the lessons learned at Japan’s expense. We stand to see more ROBUST reactors, but not fewer of them.

Flatly put, in the next decade or so, there may not be enough uranium when everyone wants it. When the Russian deal ends next year, the U.S. alone stands to lose 10% of it’s nuclear fuel sourcing. Even if we could utilize ALL of today’s global mining capacity, some 3.3 million tons, it would only meet TODAY’s need, according to the European Nuclear Society. And we are not gearing up fast enough to do even that, as far as I can determine.

If we’re to be honest here, the rapid growth of former “backwater nations” like China and India has caught us with our collective pants down. So unless a big, solid uranium meteor crashes into the earth, we are gonna have yet another fuel supply problem, this time with nuclear fuel  (well,  a uranium meteor impact would be another problem altogether, but we wont get into that).

Keep in mind this is not guessing, this is fact. This projected scarcity isn’t all that hard to see. Nuclear reactors are going to be built – NEW ones on top of what we already have. They will ALL need fuel and there is a finite quantity NOW. When that demand increases, so will prices. Those who have invested in uranium in advance of this demand will profit.

The point here is not to run out and buy uranium stock. It would be a good idea… but it’s not what I’m specifically driving at. What I want you to see, wannabe or seasoned expert, is that whatever we are going to need in the future has to come from somewhere – and we can determine what that is without much trouble. I’m talking about things like oil, food, water, uranium, transportation, rare earth elements – – you name it. This is not “emergent,” newfangled stuff, but the objects of necessity. And it seems to me that where need exists along with a shortage, there is profit if you prepared for it.

And in the end, that is the greater point behind ALL investments.

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Oil: The Most Unusal Investment.

It’s no surprise that the oil buying price runs we’ve seen recently are driven by the political turmoil in Libya – Africa’s third-largest oil exporter. The clashes seen in the country are taking about 850,000 barrels out of production each day.

We’ve also noted the recent political protests in Egypt, Oman, Tunisia and others. Algeria, a key producer itself, declared a state of emergency at one point.

Libya and the other OPEC gang-bangers produce 34 million barrels of oil per day. That’s 3/4 of the world’s reserves. So any time something happens over there, from a dust storm to a civil war, it rattles the markets.

And brace yourself – I doubt if we’ve seen the end of these uprisings. There is a cultural schism going on across the region. The hearts and minds of the inhabitants are at stake.

But, even before the current Mid-East throw-downs, oil was climbing. It only takes a tiny leak in the Trans-Alaska Pipeline, or some rock fungus being endangered. A tropical storm somewhere in Indonesia will do it. The simple fact is this – any disruption… or perceived disruption… sends the oil markets into a lather.

This is because of another fact: there isn’t enough oil to spare.

The Unites States sucks up 20 million barrels of oil EVERY DAY. China is practically drunk on the stuff, too – they slog down nearly 10 million barrels daily. India, same story. South America, Russia and a dozen other areas are following suit.

Aside from a brief downturn during the recession, global oil consumption is moving higher. It’s like a juggernaut. Worldwide oil consumption rose 2.4 million barrels per day in 2010 — the second steepest growth rate in 30 years. Most experts expect it will hit 88.2 million barrels per day this year.

But wait – the world’s oil refineries can only manage 87.7 million barrels per day. They simply tap out at that point.

In other words, demand will outstrip supply by 500,000 barrels per day. And I doubt Obama is gonna make a difference. He’s not likely to orchestrate a price reduction like George Bush did on his way out. Hell, he *hopes* the Brazilians will sell the oil they plan to pump from OUR offshore fields back to us. This administration certainly does not get it, so don’t hold your breath.

Production grounds have been declining for years, too… you know, the physical places where oil comes from. There is little new exploratory development, either, since everyone is focused on offshore supplies. But those are expensive places to extract oil from. Prices will have to stay high if these are to be profitable. The same can be said for the fabled “lake of oil” said to exist in this country and Canada. We just aren’t equipped to get these reserves out.

SO, I think prices are headed higher. Oh, they will stabilize here or there, or even dip now and then. But we will see ever increasing price plateaus as an outcome. And we are going to see continued skyrocket profits for the oil companies.

Which is good. Yes, I said it – this is good.

Oil drillers benefit. Service and equipment providers benefit. STOCKHOLDERS benefit. The families of these people benefit. The communities they live in benefit – -etc., etc.

Even the Green Movement benefits when oil prices go high, since it kick-starts real investment in genuine alternatives to oil. But the oil companies engaged in sucking the stuff from the ground will benefit the most.

Sorry, but we gotta keep it real.

So, am I suggesting you invest in oil? YES – and hurry up. Other experts are rubbing their crystal balls and arriving at the same conclusion. These same ‘guru’s’ also suggest you look to the smaller companies that don’t have large exploratory/extraction budgets – or the distractions of the big guys. Canadian oil companies strike me as likely candidates, for example. These smaller exporters and producers have the most to gain from $150 oil, fewer stockholders to divide it up among and fewer people keeping the watchdogs’ eye upon them.

Something to think about.

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Wise Profit From A Boring Investment

  • One of my favorite stock market “guru’s” is Amy Calistri. Her particular insight just jibes with me. Today she mentions a particular company that is one I know well – it has it’s manufacturing operations right here in my county! Many of my friends have ties to it. Here’s an overview of that company, inspired by her – I think you’ll like what she says about it.

The One Dividend-Payer I Want to Hold in Any Market 

Okay, lets be honest: this is one of the more boring companies you’ll research. But, that is what you want if you’re looking for a stock to hold, come what may.

It may be boring, but this one pays dividends like clockwork. They’ve increased for 39 years straight — that goes back to when Nixon was in office. That even includes increases during the Great Recession. In the last ten years the quarterly dividend has risen 154%.

With this one, earnings growth isn’t going to fade out in a split second. The CEO won’t end up in jail with David Lee Roth, and it won’t invent the next generation cellphone. In other words, don’t expect much flash from this company, founded in 1872.

What you can expect is substance without hype.

So which one is it? Paper company Kimberly-Clark (NYSE: KMB)

Yeah – a paper company. They were the first to put toilet tissue on a roll. They invented the “disposable handkerchief” — the iconic Kleenex. And they were the first paper company to advertise their brands on national television. Today, you’ll many of know it’s brands as household names: Huggies, Kotex, and Depends are just a few.

‘Pretty boring stuff, right? However – and this is important – that is the sort of company that does well over time, especially when things get rocky.

Another reason I like it is that it deals with the basic needs of people… in this case ‘bodily functions’. I mean, people are going to eat and drink – they have to – which means that something’s gotta come out the back. And products that meet that need are always gonna be in demand. 

Right now we’re seeing $100-plus oil, Middle East unrest, concerns about another overextended market, shaky government deficits and even Planet X, looming near. That’s a lot of worry. You might sleep better knowing a company like KMB is part of your portfolio.

Not only is it one of the most steady dividend payers around, but the shares hold up well in down markets. Take a look at the stock versus the S&P 500 in the recent bear market…

Right now the shares are yielding about 4.5%. Big deal right? Normally, that isn’t the kind of yield that’s gets me excited.

Why? Because you don’t buy this stock planning to sell it after a month, six months, or even a year. It isn’t exciting in that way. Instead, it’s the sort of holding you want to buy and forget about. Just let it pay you a steady dividend, quarter after quarter.

Now, we all know nothing in investing is never guaranteed. But over time, the dividends from this company are as likely to increase as anything. They have for forty years, after all, and that adds up.

Every share bought just five years ago has provided a 20% gain on dividends alone. You may not brag about that at parties, but in the whacky market of the past five years, that steady return… and dividend… is something to hang your hat on.

Originally inspired by Amy Calistri, Chief Investment Strategist — StreetAuthority, LLC.

IF you are interested in this sort of common sense investment approach, check out Amy’s newsletter, the “Street Authority.” It is full of insightful advice that just makes sense.

If you prefer a ready made program that won’t break the bank. click and paste the following into your browsers address bar…

http://a803a3d2vr5n7lf6pmmgihqnf9.hop.clickbank.net/

The information contained herein are opinion and analyses based on sources believed to be reliable and are written in good faith. No representation or warranty, expressed or implied, is made. All information contained in this report should be independently verified. The administrator is not responsible for errors or omissions and receives no compensation from the companies that may be mentioned. The opinions expressed are subject to change without notice.

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Investing-on-a-Budget

One of the things I hear a lot from people is this comment, “Hey, David… I don’t have much money for investing. I’m pretty much left out, right?” And of course the answer is – drum roll please – NO, YOU’RE NOT.

ANYBODY can invest their money. In fact, there are endless ways to do so.
So, without further ado, here are some basic ideas to get your juices started, from our friends at The Motley Fool (www.motleyfool.com)

How to Invest $20, $100, and $1,000 (and More)By Motley Fool Staff Click here to find out more!

Got only $20 to put away right now?

It may not sound like much, but you can use it to buy shares in Intel. Or Johnson & Johnson. Or Harley-Davidson (you rebel). And those are just a few of more than 1,000 options available. What if you’ve got $100 — or $1,000? Your options are even greater.

We’re not here to tell you where to invest your money. We won’t lay out a handful of stocks on a “buy” list. But what we can tell you is how you can invest your money — the mechanics of investing small, large, and medium amounts of cash. We can even help you choose a broker.

How to invest $20
Let’s start with $20. We’re going to assume that you’ve already paid off any high-interest debt and that you have some money stashed in a safe place (like a savings or money market account) that you can get to quickly in case of an emergency expense. Now you find yourself with a little extra dough, and you want to begin investing for your future.

Is it even worth it to invest such a pittance?

Heck yeah it is! One of the best ways to invest small amounts of money cheaply is through Dividend Reinvestment Plans (DRPs), also known as Drips. They and their cousins, Direct Stock Purchase Plans (DSPs), allow you to bypass brokers (and their commissions) by buying stock directly from the companies or their agents.

More than 1,000 major corporations offer these types of stock plans, many of them free, or with fees low enough to make it worthwhile to invest as little as $20 or $30 at a time. Drips are ideal for those who are starting out with small amounts to invest and want to make frequent purchases (dollar-cost averaging). Once you’re in the plan, you can set up an automatic payment plan, and you don’t even have to buy a full share each time you make a contribution.

Drips may be one of the surest, steadiest ways to build wealth over your lifetime (just make sure you keep good records for tax purposes). For more details on Drips, see “What if I can only invest small amounts of money every month?

How to invest a couple of hundred bucks
So you’ve weeded out all the wooden nickels from your spare-change jar and have tallied up a few hundred bucks. Instead of blowing it on snack food and Elvis memorabilia, consider investing it in an index fund (the only kind of mutual fund Fools like). An index fund that tracks the S&P 500 is your ticket to an investment that has traditionally returned about 10% per year.

Some index funds require as little as $250 for you to call yourself an owner. This low minimum is usually restricted to IRAs (Individual Retirement Accounts). After your initial investment, you can add as much money as you like, as frequently as you like, with no additional costs or commissions. You purchase index funds directly from mutual fund companies, so there are no commissions to pay to a middleman.

If you have a few hundred dollars to start with, then this is a great, low-cost way to establish an instant, widely diversified (500 companies!) portfolio.

How to invest $500
Once you’re up to $500, your investment options open up a bit more. You can still buy an index fund, and now you’ll have your pick of fund companies that require higher initial investments. This freedom will enable you to shop around for a fund with the lowest expense ratio.

You should also seriously consider opening a discount brokerage account. You’ll want to focus on the account option that best serves your needs; some accounts require a minimum initial deposit, and some don’t. That means you can open up an account with whatever investing money you have available, and start researching and perhaps purchasing individual companies. (Or, if you’re enamored of index investing, you can easily invest in Spiders, a stock-like investment that mimics the performance of the S&P 500.)

The key here is to keep your costs of investing (including brokerage fees) to less than 2% of the transaction value. So if you’re planning to add to your position in stocks a few times a month, a Drip or an index fund may still be the way to go.

How to invest $1,000-plus
What can you do with a grand? Obviously, with $1,000 you can open up a discount brokerage account, but look at the rewards if you can scrape up an additional $1,000 a year to add to your original investment.

Say you’ve got 40 years to retirement. If you start with $1,000 and invest an additional $1,000 each year, and your money earns 10% annually, then when you’re ready to retire at age 65, you’ll have $532,111.07. That seems worth it to us. If you have earned income, you can set up a Roth IRA, and you won’t even pay any taxes on that $532K when you withdraw it. (As always, your mileage may vary.)

Again, even at this level, the key is to keep fees from eating up your earnings. So make sure that the costs of investing (including brokerage commissions, stamps to mail in checks, and books that help you learn to invest) are less than 2% of your account’s overall worth. With small accounts, that can be a challenge, but with such low commissions being offered by discount brokers, it’s definitely doable.

Hopefully, this will have encouraged you to think, “I can,” instead of I can’t. If you are ready to spend a bit of money to get started on a proven program, have a look here:

Intelligent Investing – Double Your Money

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