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Of Stock Market Spankings…

I tend to not look for an extension of a stock market spanking into a new week. That is, unless there was some huge news that caused the spanking in the first place.

So what happened on Friday? The market dropped nearly 400 points on news that was already available.

Oil hit new highs… big deal? Oil’s been hitting new highs for the past few months.

And we lost jobs… big deal! We’ve been losing jobs for months!

Just goes to show you how fickle this market is. These are spanking that should’ve taken this market well under 11,000. But has that happened yet? Nope.

Traders keep thinking we’ll have a second half recovery. And that we will completely avoid a recession and begin expanding, while inflation dies down.

Sounds like a make-believe world that can never really exist, if you ask me.

End result? I’m not playing the market short today. I’ll look for individual stocks for my opportunities.

Oh, and solar stocks are showing alot of weakness. Many are failing to close above their 200-day moving averages. I’d love to see a close above these averages, but don’t expect it anytime this week.

Electric Cars Would be Nothing Without It

I’m not talking about lithium-ion batteries.

I’m talking about the mineral that manufacturers use to make them; graphite.

Here’s some research I pulled up…

According to British consultancy firm Merchant Research & Consulting Ltd., global demand for graphite will rise by 50% in the coming 5-7 years thanks to growing popularity of lithium-ion batteries, commonly used in mobile phone production.

I wonder if this group even realized the demand future car batteries would have on graphite.

It’s funny, because the next thing I did was try to figure out if there was a graphite shortage. And there is, sort of. The shortage isn’t worldwide (at least I haven’t found anything that says that) Instead, the shortage is local and is only for certain types of graphite.

For instance people have a hard time getting graphite in China. So the Chinese turn to the US (which has more expensive, better quality graphite).

So the mission now is to find some good graphite producers or explorers so that I can dig through their yearly and quarterly statements. The reason I’m doing that is two-fold.

One, to see whether the company is any good. And two, to get more detailed information about the graphite industry. It’s amazing what you’ll learn going through a few reports and presentations.

Already, I’ve found that China and Sri Lanka are the graphite powerhouses in the world. But China is having a shortage and Sri Lanka just can’t get their political situation in order. This is stressing supply of graphite.

Now, companies in Canada are laying claim to significant graphite finds. These are the companies I’ll be looking at. Another company I found, SGL Carbon, looks like a good play. But it is a European company. So beware.

I’ll let everyone know what I find.

How Times Have Changed

I remember just ten years ago when talking about the latest V8 powered sports car was always a hot topic. I also remember when everyone wanted an SUV.

Heck, I still want one.

But that’s just not the case anymore.

As I was looking at various motorcycles on Craigslist, I saw many people offering to trade their SUV or gas guzzler for a decent motorcycle.

Can you blame them? Some people are spending upwards of $100 just to fill up once!

This ‘high gas’ price thing has created a cultural phenomenon. I’ve alluded to it before and talked about how this was necesary for the formation of a speculative bubble.

Today I read an article that cements how popular culture is taking in this whole ‘green’ phenomenon.

From ecogeek.com…

According to a study done by GM (of all people) as part of this year’s Challenge X competition:

Close to nine in 10 women (88 percent) say they’d rather chat up someone with the latest fuel-efficient car versus the latest sports car.

Eighty percent of American car buyers would find someone with the latest model fuel-efficient car more interesting to talk to at a party than someone with the latest model sports car.

More than four out of 10 (45 percent) 18-43 year-olds say it’s a fashion faux-pas nowadays to have a car that is not green or environmentally friendly.

If i’m reading this right – that means the whole concept of big men on scooters may not be so gay after all (even though, I still think i’d look it!). It may even help men cement future relationships with environmentally friendly ladies.

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.