Blue Baron

I’m not going to write about how some analysts have predicted that the US is headed for depression, because to me that is a complete farce. I have to admit, sometimes they’re very convincing. In fact, I’d be a believer by now if it weren’t for one simple fact; I’ve read the same gloomy predictions by the same people over the past fifteen years.

In short, don’t you worry, the economy will be fine in the end; no depression is coming but the road will be bumpy.

The price of Oil is ridiculous. Imagine I told you in the summer of 2007 that we were going to see $150 per barrel in one year. You would have written me off as a quack, and for good reason. There is absolutely no reason why oil should be worth what it is today (fundamentally that is). Nothing has changed between this year and last regarding supply. In fact, there are more and more reserves being found this year than there were last. So maybe it’s demand? Not likely.

The speculators have taken the price of oil so high that it’s now creating an economic crisis. This has set up oil for an imminent drop in value.

Here’s why:

Lately it appears that every investor is trying to jump in the market on a Monday and be out Thursday, just in time for the highly anticipated weekend. Investors are trying to take advantage of market rallies and sector hype. Unfortunately this strategy has not worked well for most and it will continue to fail as long as we stay in this current trend.

Let’s face the facts. The markets are not going to make you money in the short term. However, they will make you money over the long term. Don’t get sucked in to this frenzy of trying to make a quick buck. It’s a complete joke. We are investors. To be successful it takes homework and time. If you take the time to research your prospects your success percentage will increase dramatically. On top of that, you might get some sleep at night.

Knowing why you invested in a company is the most important aspect. Stay true to your beliefs and if the fundamentals are in place, the tide will turn positively when the markets correct.

Finally, learn about the future and what it is bringing. If you are a resource investor you might want to research the new technology in discovering mineralization, feasibility issues, environmental concerns etc. If you are a tech stock jock, learn about what trends are expected with the new Web 2.0 – the internet is still in its infancy. These are only examples but the lesson should be clear.

“My interest is in the future, because I am going to spend the rest of my life there.”
- Charles F. Kettering

What not to do in today’s market:

The markets continue to prove that they are still on the tipping point. Every week it’s the same bad news written by a different pen. As the markets plunge multiple percentage points every week, we continue our monthly declines.

When these big companies (banks and insurers) announce news and move the market down, I find myself squeezing my always loyal stressball (it’s the only consistent thing in my working life). To stay ahead and keep the hair on the top of your head, I recommend monitoring a handful of the largest financial companies in the United States very closely over the next two quarters. As the new President takes over, all of the financial mistakes will be uncovered and more importantly remedied. I am very confident a shift is approaching. The financial companies which lay the foundation for growth in North America and the world will stabilize and grow, allowing other industries to do so as well - at much higher levels than today.