Marc Faber being interviewed again by Bloomberg. He predicts a strong gold market as central banks around the world print money.
For example, our own central bank is increasing the money supply (AMB) roughly at a 1400% compounded rate. You can take a look at the money supply here
Tuesday, November 25, 2008
Sunday, November 23, 2008
Strong Rebound Coming - Dr. Doom
Renowned investor Marc Faber predicts a rebound in equities. He points that equities are oversold, probably more oversold than the crash in 1987. Cash and treasuries relative performance will go down since these are overbought.
Marc Faber has an excellent track record in making long term predictions. Back several years ago, he predicted Citibank to touch the $1 per share mark (Citibank right now is $4 per share and heading lower)
Marc Faber has an excellent track record in making long term predictions. Back several years ago, he predicted Citibank to touch the $1 per share mark (Citibank right now is $4 per share and heading lower)
Sunday, November 16, 2008
Energy Stocks are very inexpensive right now
Energy Stocks are a Good Buy Today
by Alfonso Colombano.
As you may all have seen in the news, Warren Buffett increased his investment in ConocoPhillips.
Warren Buffett uses what's called Value Investing. Value investing consists of buying good quality companies at very cheap prices (think about it as getting $1 bills for 10 cents!) Moreover, Warren's average holding period for a stock, in his own words is "Our favorite holding period is forever."
Energy stocks, especially large cap companies, are being sold for fire-sale prices. For example, ConocoPhillips is selling below book value (market cap is $70.65billion vs. book value of $92.8 billion). Usually companies sell many times above book value (remember that US GAAP uses historical cost) Because these assets were bought many years ago, if you can find a company that is selling below book value, then it's very undervalued (because of inflation, these assets today are worth much more than when they were bought)
Another measure of undervaluation in energy stocks is market cap divided by proved reserves. Currently ConocoPhillips has 10.6 billion of BOE(barrels of oil equivalent), roughly selling for $6.66 per barrel! ExxonMobil is selling for $5.35 per BOE! This is not unique to these stocks, but it's a sector wide phenomenon. For more info on this, click here
Price Earnings Ratio (commonly called P/E ratio) for energy stocks are, I would say, near historically lows (For example, Exxon was selling close to 36 P/E in 2000). The lower the P/E ratio, the more undervalued a company is. COP is selling for a P/E of 3.89. In comparison the avg. P/E for the Dow Jones Industrial average is roughly 13. During the tech bubble, companies were selling at P/E ratios of 40 or even higher. Even if earnings were to go down, say 50% down because of lower crude prices, P/E ratios would still be extremely low.
Moreover, dividend yields, a measure of undervaluation, are at an all time high for energy companies. Again, COP has a 4% dividend yield. Shell and BP have dividend yields of 6% or higher right now. For smaller companies or energy trusts, dividend yields are in the range of 20% upwards.
Lastly, the vast majority of energy stocks have excellent operating cashflows and higher than average cash balances compared to other sectors. In other words, most of these companies do not depend on credit to fund their day-to-day operations.
To finish this article, I would like to share with you some of Warren's quotes:
"We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful. "
"Only buy something that you'd be perfectly happy to hold if the market shut down for 10 years."
"Look at market fluctuations as your friend rather than your enemy; profit from folly rather than participate in it. "
"It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price. "
Agree, disagree? Drop me a line
by Alfonso Colombano.
As you may all have seen in the news, Warren Buffett increased his investment in ConocoPhillips.
Warren Buffett uses what's called Value Investing. Value investing consists of buying good quality companies at very cheap prices (think about it as getting $1 bills for 10 cents!) Moreover, Warren's average holding period for a stock, in his own words is "Our favorite holding period is forever."
Energy stocks, especially large cap companies, are being sold for fire-sale prices. For example, ConocoPhillips is selling below book value (market cap is $70.65billion vs. book value of $92.8 billion). Usually companies sell many times above book value (remember that US GAAP uses historical cost) Because these assets were bought many years ago, if you can find a company that is selling below book value, then it's very undervalued (because of inflation, these assets today are worth much more than when they were bought)
Another measure of undervaluation in energy stocks is market cap divided by proved reserves. Currently ConocoPhillips has 10.6 billion of BOE(barrels of oil equivalent), roughly selling for $6.66 per barrel! ExxonMobil is selling for $5.35 per BOE! This is not unique to these stocks, but it's a sector wide phenomenon. For more info on this, click here
Price Earnings Ratio (commonly called P/E ratio) for energy stocks are, I would say, near historically lows (For example, Exxon was selling close to 36 P/E in 2000). The lower the P/E ratio, the more undervalued a company is. COP is selling for a P/E of 3.89. In comparison the avg. P/E for the Dow Jones Industrial average is roughly 13. During the tech bubble, companies were selling at P/E ratios of 40 or even higher. Even if earnings were to go down, say 50% down because of lower crude prices, P/E ratios would still be extremely low.
Moreover, dividend yields, a measure of undervaluation, are at an all time high for energy companies. Again, COP has a 4% dividend yield. Shell and BP have dividend yields of 6% or higher right now. For smaller companies or energy trusts, dividend yields are in the range of 20% upwards.
Lastly, the vast majority of energy stocks have excellent operating cashflows and higher than average cash balances compared to other sectors. In other words, most of these companies do not depend on credit to fund their day-to-day operations.
To finish this article, I would like to share with you some of Warren's quotes:
"We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful. "
"Only buy something that you'd be perfectly happy to hold if the market shut down for 10 years."
"Look at market fluctuations as your friend rather than your enemy; profit from folly rather than participate in it. "
"It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price. "
Agree, disagree? Drop me a line
Saturday, November 15, 2008
World Energy Source Interview with Jim Puplava.
Very good interview from World Energy Source with Jim Puplava. He makes an excellent point that these low crude prices are making E&P companies cancel projects. I agree with Jim that demand destruction will really not take place. Besides, as he mentions we need roughly 5-6 million barrels a day just to replace declining production
Wednesday, November 12, 2008
Peter Schiff vs. Financial Experts in 2006 and 2007
"How many times have you heard the news outlets same something similar to "No one could have seen this economic downturn coming this is a 100 year event"
Peter Schiff was the economic advisor to one of the presidential candidates during the primaries."
Peter Schiff was the economic advisor to one of the presidential candidates during the primaries."
Friday, November 7, 2008
Making Financial Sense of the Coming Energy Crisis
Here's an excellent interview with Jim Puplava. Jim Puplava is a financial and energy expert. What makes Mr. Puplava different from other financial analysts is that he uses Austrian Economics instead of Keynesian economics.
I encourage of all our readers to visit Mr. Puplava's website and listen to his weekly broadcast. His website is www.financialsense.com
I encourage of all our readers to visit Mr. Puplava's website and listen to his weekly broadcast. His website is www.financialsense.com
Sunday, November 2, 2008
America's gasoline shortage is a bigger threat than Financial crisis
A very interesting interview with Matthew Simmons about possible gasoline shortages in the future. Be sure to visit World Energy TV's YouTube channel for more great videos
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