Archive for May, 2008

Another Quote of the Week

If you know me at all – you know I really don’t like Hillary (like half of America).

So i’m so glad she said this…

“If you will vote for me next Tuesday, you are voting for the most fiscally responsible candidate in this race on either side of the aisle,”

Hmmm. Fiscally responsible, eh? Last time I checked, her campaign was over ten million in the RED. And even with the inevitability of her loss to Obama, she continues to spend on ads, flights, and various campaign related functions. You’d think that she’d atleast stop spending.

But no – she’s far too fiscally responsible for that. Just as fiscally responsible as president Bush.

Motorcycle Economics

So last Friday, one of my coworkers -Christian Hill (we call him Chill) – brought up the idea of buying a scooter.

Admittedly, I think scooters are pretty gay. And so did the ladies of IDE.

But Chill defended his position. And he eventually began making sense. But not because scooters somehow became ‘less gay’. But mainly because he showed me a scooter that didn’t look gay!

It was the Honda Ruckus – a little 50cc scooter that can take you up to a death defying 40 miles an hour. Sure it had no power. But the damn thing got nearly 100 miles to the gallon.

So over the weekend I started thinking about it.

Right now I spend around $280 for gas every month to fill up my gas hungry six cylinder. But most of my gas is wasted in the 2.9 mile trip I take to and from work four times a day. My car is great on the highway – but it deserves to be slapped in the city (averaging roughly 15MPG. Yeah, there’s alot of freakin lights!).

If I bought a little Ruckus, i’d get 100 miles to the gallon. I’d have to spend about six bucks to fill it up and i’d be able to go all month. Instantly, i’d save $200 on my gasoline bill. Best of all, my investment would pay for itself in about ten months time. after that, it’s all gravy.

But you know what – i’m a big freaking guy. I have long legs, long hair, and just length. I’m also heavy, clocking in at around 230 pounds of pure, unadulterated man.

I’d look SO gay if I rode around in a Ruckus.

So I started looking into other bikes. I quickly realized I would need a motorcycle license (about $250 for the class) and a bike which made me look like the man that I am – not like a flaming, awkward looking bafoon.

First, I was obsessed with 250cc bikes. I quickly realized i’d barely be able to take them on a highway. And even if I did, i’d be going a whopping 70 MPH and the slightest breeze would blow me around. And if I want my girlfriend to ride with me, forget it. The bike would probably eject us both in pure protest.

So I had to go further and look at 500cc bikes. Finally, I found one that works. It wasn’t small, could handle my weight and size, would be great on a highway, and could easily take two people without getting moody.

The bike is a cruiser (a Kawasaki) and gets roughly 60 MPG. A far cry from 100MPG, but still very nice. Best of all, a used 500cc bike costs only slightly more than the little Honda Ruckus!

And if I want to ride an older version of this Kawasaki, I could get one for $1,100.

So here’s where the economics part comes into play.

City driving costs me about $200 a month in my car.

If I had a bike, i’d spend $30. That’s a $170 savings just for riding the bike.

And if I decided to take the bike on the highway sometimes, my savings would grow.

If I bought the $1,100 bike and count the motorcycle class, it’d take me 8 months to make up the cost! After which, i’d have an extra $170 every month. You wanna know where’d I’d put it? In oil companies : )

You see why this is making more and more sense?

The worst part is that gas prices can keep climbing. Near term, they might come back. But long-term, we should see $5, even $7 gas by the time 2010 comes.

That’s because even though US consumption is dropping, the BRIC nations are increasing theirs. This in essence offsets our decrease, meaning worldwide consumption stays the same or even slightly rises.

Combine this with the fact that oil production has been declining since 2005, and you’ve got a recipe for super-high oil prices. And it won’t stop until emerging economies begin to slow their consumption. And that won’t happen for a long time (unless we see a big worldwide depression).

Either way – i’ll be getting a bike in the next month or two. And when I do, i’ll be sure to let you know what the savings are (Exactly).

Where Have I Been?!?!?!?!

I know, I know – i’ve been slacking lately.

But that doesn’t mean that it wasn’t for good reason!

This weekend was my girlfriends Birthday – so we spent time in IKEA (hey, that’s what she wanted!) and took a look at all the nifty stuff. I even got my name called on the intercom because apparently I dropped some of my credit cards!

Those IKEA folks – so prompt, so friendly.

Other then that, i’ve been taking a good hard look at cellulosic ethanol and determined that right now it’s still a little early to put your money there. We don’t know who’s going to come up with the best technology first. And then after that, they would need to take a year or two to even get into full blown production.

So instead i’m looking to batteries.

Financial Times said that by 2030 over half of all new cars should be plug-in cars.

Combine that with the fact that in the next three years automakers will put hybrid technology in almost every car they have… or that Nissan wants full electric cars… Or that te Chevy Volt may be one of the most exciting cars of all time.

All of these cars need new lithium Ion batteries.

There aren’t many people making the batteries. And the ones that are really haven’t gone public. But there has to be a way to take advantge of this. And I plan on discovering it in the next few days and telling everyone about it.

Until tomorrow – Charles

Opportunities Everywhere

Have you all seen the action on Terra Industries (TRA). Looks like it’s getting ready for a rally. As I write, it’s sitting on its 200-day moving average, which acted as resistance before (hell, I made nearly 20% on them on the last bounce two weeks ago).

Also, i’m noticing some ripeness in the solar stocks.

Ethanol stocks are still in the crapper, though.

I did a bunch of research on cellulosic ethanol. Let me tell you, there aren’t many good plays there. And the ones there are still have some time left before they become sexy.

With that said, in the next few days i’ll be telling you more about what I found.

A good reason why Ethanol popped yesterday

As my colleague Jon Herring so kindly let me know, corn prices dropped sharply yesterday. As we all know, cheaper corn means better margins for ethanol producers.

I’m sure Pacific Ethanols earnings didn’t hurt things, either.

In the end, this drop in corn prices is sure to only be temporary. We’re likely to see corn prices push higher by the end of the year, meaning ethanol stocks might get hit with tighter margins later in the year (taking stock prices down).

Quote of the Week

So I start looking at the markets this morning to see what’s going on.

Of course producer prices came in higher than expected. Year over year, they’ve gone up three percent. I wish that were the truth. But after all the adjustments our inflation report has received over decades, inflation is drastically understated.

Either way, that three percent number was the biggest climb since 1991. And you know what Fed Vice Chairman Donald Kohn said?

He said the quote of the week…

“With the information now in hand, it is my judgment that monetary policy appears to be appropriately calibrated for now to promote both rising employment and moderating inflation.”

Is Donald living in a far away land with mythical creatures and no inflation? It sure seems that way if you look at his quote. How can he come close to saying that interest rates (Which are NEGATIVE after inflation) will foster low inflation AND growth?

This just drives me batty. And it furthers the thought that the AG and commodities bull is alive and well.

Ethanol on Fire!

Just last week I was talking about how slammed ethanol was getting. Well, that looks like it’s changed.

And you can thank Pacific Ethanol (The company that’s dropped like 90% in the past two years) They announced a loss (but if you take out the charge it’s a profit…) of 90 cents a share. So they, of course, get taken over 40% higher.

That was enough to trigger the whole, oversold, sector to snap higher.

Aventine renewables popped 15%
Verasun energy popped 15%
And even ADM moved slightly higher.

You should know that when a 90 cent per share loss turns into ‘good news’ that something is bubblin.

According to Forbes, ethanol producers are doing better because of record high gas prices. Let’s not forget how much gas it takes to create one gallon of ethanol. Depending who you talk to, we either come out with slightly more ethanol than gas, or slightly less.

Either way, higher gas prices are a big input to the price of ethanol. So higher gas prices should mean more expensive ethanol (or squeezed margins, either way, NOT GOOD). And let’s not forget that ethanol is the worst fuel in the world.

It kills your gas mileage while at the same time helping starve children in third world countries.

Private industry needs to hurry up and get cellulosic ethanol processes up and running. In the next few days, I’ll tell you of a few companies trying just that.

How the Government Can Screw Your Investment

Clean energy in the U.S. is very much dependant on government incentives.

I can guarantee that many companies would avoid installing solar panels if it werent for various state and federal incentives. So you might think it’s a bit strange that the government let some of those inventives expire.

And the expiration of those incentives has done quite a number on the clean energy sector. You have solar companies unable to recover some of their previous highs and a bunch of other ‘green’ companies having a hard time.

Right now there’s a bill that should reinstate many of these incentives. And once that bill gets passed it will eliminate a big restriction on ‘green’ companies. I expect to go long shortly after I see that.

At this point i’ve checked out tons of solar companies and picked out my favorites. I’ve also been looking at wind and geothermal producers. All of these sectors will see shocking growth for the next five to ten years.

Peeling away from the green, i’ve been looking at some deep sea oil rig companies. One of them is getting recommended to our Global Profits Hotline crew. Another will be recommended in Andrew Gordons paid service, The Wealth Advantage. Needless to say, this sector is on fire. And it’s stupid cheap too.

With that said, i’m back to researching. See you all later!

Three things about Green Investments

After one of our readers, Jonathan, gave me a fantastic resource on ‘green’ investments, I started looking at the companies.

A few things i’ve noticed are…

1. Solar power is on a bull run of epic proportions. I mean, seriously.

2. Ethanol and biodiesel producers are being burried, alive, kicking and screaming due to higher input prices (corn, soy,etc…)

3. There are way too many clean energy companies that aren’t on the U.S. exchange. That’s ridiculous. Come to America, you corporate freaks!

I’m going to continue going through these companies. And i’ll soon come back with more observations and opportunities.

Till then,

Charles

Another Clue…

What’s the biggest stumbling block for the mass adoption for solar energy? Cost.

If you installed solar panels in your home – even after government incentives (which continue to grow) – it would take you around five to ten years before you break even on your investment.

Well, one company is looking to change that. The start up by the name of Sunrgi says that they can make solar power that is just as cheap as coal!

That’s five cents per kilowatt hour, not the twenty to thirty cents it currently costs.

How do they do it? They use mirrors to focus the light into a very small, highly efficient solar panel. Because there is so much sunlight hitting this small panel, it converts very well.

And since it uses only small amounts of the poly silicon needed to make these panels, it costs them less to produce (if you didn’t know, poly silicon is in high demand and there isn’t enough of it. Prices have been skyrocketing and that’s been hurting margins for solar producers).

Finally, with so much sunlight being concentrated into one area, temperatures could break 3,000 Fahrenheit. That’s why the company has built in coolers to keep the panels cool (and help them last longer than normal panels).

The company plans on being in production within 12-15 months.

Whether this actually happens is another story altogether.

So do you see the bubble I’m talking about? Jonathan already guessed it – that freakin genius. And if you haven’t already, then it’s time for me to tell you what it is…

It’s this whole green movement.

I can’t go one freaking day without seeing a commercial about how a company (which spews tons of harmful chemicals into the air) is somehow going green because they planted one whole tree in a land of no water.

IBM is going green. Google is. Chrysler says they are (with the worst gas mileage in the universe) Ford and GM say they are too.

Let’s not forget about Toyota, Exxon Mobil, GE, and every other major corporation out there.

I don’t want this to be a rant about how stupid these companies really think people are (do you believe they are that much greener). But at the least they’re making the attempt.

And as they make the attempt, thousands of blogs and websites are going online focusing on green technology, organic eating, and social responsibility.

And to think, this is only the beginning of this whole movement.

Once a democrat becomes the president – green will boom even more!

So, I’m going to start focusing more on green technology. Being that I believe the future bubble is here, it would be smart to start getting more involved in the field.

We all have lots of money to make in the next five years. And this is the start of that. I hope you can join me for the ride : )

Take care.