Tuesday, December 7, 2010

Profit From the Black Gold Rush with This Stock

Oil hit a fresh two-year high this trading week, reaching upwards of $88 a barrel.

One way to profit from the current "black gold rush" is to find growing oil companies that also pay attractive dividends.

Marine Petroleum Trust (Nasdaq: MARPS) is one of these gems.

Established in 1956 as a way to efficiently administer oil and natural gas leases off the Louisiana shore, the Texas-based royalty trust offers a healthy 5.9% yield.

As a royalty trust, the company receives revenue from its interests in oil and gas wells and is legally required to distribute at least 90% of its distributable income (revenue less expenses) to shareholders as distributions. Income and distributions vary mainly based on changes in oil and natural gas prices and production volume.

Technically, MARPS is sky rocketing. The stock is in a steep accelerated uptrend and recently bullishly broke a multi-year basing pattern. (more)

Bob Chapman: Elitists Leading On An Odyssey Of Economic Ruin

The price of commodities, particularly food and petroleum products, will be higher in the coming year, which will strain budgets more than ever for those who still have jobs. Unemployment will not get appreciably better and government debt will rise. Government is talking about raising the Social Security retirement age by three years, freezing payments and offering government guaranteed annuities in exchange for those of you that do have retirement plans. Two-thirds of those in and about to retire have only Social Security for 50% of their income. The money collected since 1935 is all gone, having been spent by past politicians. In fact, if you put all present and future commitments together you have a debt of $105 trillion.

The US wants to avoid default and devaluation of the dollar. They can raise taxes, cut spending or default on their Social Security and Medicare commitments, and commandeer personal retirement plans. In whole, or in part, these are options for government. If they cannot manage these changes then the Fed will have to increase money and credit, which is now euphemistically labeled quantitative easing. The powers behind government have looted the system perpetually, but particularly since August 15,1971, when the gold standard was abandoned and the result of this gutting and its consequences is about to manifest itself. Unemployment refuses to fall and little is being done to improve the situation. This year five million American workers lost extended unemployment benefits, as Wall Street, bailed out with taxpayer’s loans, is showering their employees with hundreds of billions of dollars in bonuses. There is no question these are the seeds of which revolution is born. We can as a result expect demonstrations and unrest, as we are now seeing in Europe, which could end up in rioting and other antisocial behavior. (more)

Flashback to Crises Past: Three Stages of Delusion Popular Delusions

The recent sequence of reassurances from various eurozone policymakers suggests we are in the early, not latter, stages of the euro crisis. Only an Anglo-Saxon style QE will prevent dissolution of the euro. Such a radically un-German solution will only be taken with a full acceptance of how serious the euro’s problems are. But denial persists.

The dawning of reality hurts. Prodded and bullied along a tortuous emotional path by events unforeseen and beyond our control, we descend through three phases: the first is denial that there is a problem; the second is denial that there is a big problem; the third is denial that the problem was anything to do with us.

US policymakers’ three steps during the housing crash fit the template well. Asked in 2005 about the danger posed to the economy by the housing bubble, Bernanke responded: “I guess I don’t buy your premise. It’s a pretty unlikely possibility. We’ve never had a decline in house prices on a nationwide basis.” Here was the denial that there was a problem. But as sub-prime issues arose, Ben Bernanke reassured the world that they would be “contained.” And when Bear Stearns collapsed, Hank Paulson promised “The worst is likely to be behind us.” Here was denial that there was a big problem.

Soon the financial system was on the brink of collapse. There could no longer be any credible denial of the problem, so the locus of delusions shifted: there was a problem, but it was someone else’s fault. Thus a ban on naked short selling of financials was implemented in Sept/Oct 2008, as though the crisis was somehow short-sellers’ fault. (It certainly wasn’t the Fed’s fault, according to the Fed. Ben Bernanke argued this year “Economists … have found that only a small portion of the increase in house prices … can be attributed to the stance of US monetary policy.”) (more)

MoneySense - December 2010/January 2011

read more here

Palladium To The Moon & PAL To The Sun

Many investors are aware of the price movement in gold and silver of late, but have you looked at Palladium? Palladium has exploded right past the entire field of commodities along with the little sister of Gold, which is Silver. Both precious metals have logged sizzling 80%+ gains, year to date. Palladium related mining stock North American Palladium Ltd (PAL:AMEX) has done even better than the little brother of Platinum, with a year to date gain of 90%.

As incredible as both the metal Palladium and the Canadian based miner PAL have performed in 2010, I think their run towards the sky is far from over. Let's begin our examination with a chart of the world supply and demand for Palladium. (more)

BNN: Berman's Call

Larry Berman takes your calls and email questions on stocks, ETFs, bonds and more.

click here for video

Chart of the Day: US Spending

Apartments Are Minting Money, How To Grab Yours!

Every day the news carries sad stories of homeowners and their foreclosure woes. More and more hardworking homeowners are either being thrown out by greedy bankers… or walking away from their biggest investment all together.

Any way you look at it, the housing market’s a mess.

And it’s creating a massive shift in homeownership demographics. I found one group of companies making money hand over fist from the shift. I’ll tell you more about them in a moment…

First, let me give you a little data.

According to the magazine Multifamily Executive, the number of owner occupied homes is dropping from an all time high of 67.3% set back in 2006. Right now the number is teetering at 65.9%… and it’s poised to continue falling.

Now the change doesn’t seem that big, but don’t be fooled. Let’s consider the bigger picture. More and more people are shying away from owning their own home. Back in 2003, almost 80% of those surveyed thought buying a house was a safe investment… you want to bet that number is much, much lower today?

We’re seeing early stages of job recovery and growth. Yet many rental companies are noting rental activity is up… and rents actually climbing.

What we’re witnessing is a change in ownership psychology.

So many people have been burned by the real estate meltdown, they either can’t afford to buy a home… or don’t want to. And it’s leading to a demographic shift.

Millions of Americans are looking at renting as a viable long term option. They don’t want to take on the responsibility or risks of owning a home.

More than 33% of Americans say they will rent their next home… and 60% of current renters are more likely to continue renting instead of buying.

These are sobering statistics and they point to a golden profit opportunity.

Many of these renters won’t be buying single family homes… they’ll be looking at renting apartments.

And apartment owners are already seeing the number of interested renters move up. It means more competition for an apartment. And competition means rent rates will go higher. Higher rents mean more money for apartment owners.

But that’s not all they have going for them.

Right now we’re in one of the lowest interest rate environments in history. Big investors with lots of property are locking in super low interest rates… for as long as they can! Why not, it makes sense.

They can lock down one of their biggest expenses, their mortgage interest rate.

That means as they raise rents, their payments are fixed… and the profits get even bigger! It’s like finding a $20 bill on the sidewalk.

Big apartment complex owners will be making money hand over fist in the next few years… if they’re not already! Of course I took a few minutes to look at a handful of the top residential REITs trading in the market.

These are big funds that own major apartment complexes… and one that caught my eye is Associated Estates Realty (AEC). The company has a market cap of just over $600 million. They own 113 apartment complexes with just over 24,000 units.

And S&P recently upgraded the company’s credit rating. They cited recent reports of improving cash flow and efforts to pay down debt. Music to my ears!

The company’s occupancy rating was 96% last quarter and they’re currently paying a dividend of $0.17 per quarter. A little quick math and with a $15 stock price, the yield is a robust 4.5%. All signs point to greater profits ahead for the company. So, if you’re looking for a way to profit from the change in homeowner’s psychology, give AEC a closer look.

Warren Buffett in His Own Words: 23 Timeless Quotes on Investing

Warren Buffett is the most successful investor of our time, perhaps of any time. He is famous for his pithy and witty quotes, which often appear in his annual letter to shareholders.

When strung together, his quotes pretty well sum up his investment philosophy and approach.

Here are my picks for his best sound bites of all time on being a sensible investor. I would invite readers to use the comments feature to offer their favorite Buffett quotes.

  1. Rule No.1: Never lose money. Rule No.2: Never forget rule No.1.
  2. Investing is laying out money now to get more money back in the future.
  3. Never invest in a business you cannot understand.
  4. I don't look to jump over 7-foot bars: I look around for 1-foot bars that I can step over.
  5. I put heavy weight on certainty. It's not risky to buy securities at a fraction of what they're worth. (more)

Investing in Silver in 2011

Forecasting prices for anything can be tricky. And a precious-metal commodity such as silver is no exception.

With gold holding the leash on its "lapdog" - silver - the performance of the so-called "yellow metal" holds the key to silver prices in the New Year.

Here's why: For several years leading up to the 2008 stock-market panic, it typically took 55 ounces of silver to buy an ounce of gold. Today, a gold ounce will cost you 50 ounces of silver.

The message: There's been a fundamental shift, where precious metals investors see silver as the "more-affordable" true-money option. So, I expect this newer 50:1 ratio to hold, and perhaps to even decline - which portends a relative outperformance for silver versus gold.

And that brings me back to my price prediction. If we use the current 50:1 ratio - and my expectation that gold will be trading at $1,900 an ounce by the end of 2011 - I believe we're looking at a target price for silver of $38 an ounce. (more)

Copper Stockpiles Falling Most in Six Years Makes Metal a Goldman Favorite

The biggest slump in copper inventories in six years is compounding shortages as prices head toward record highs, making the metal a top pick for Goldman Sachs Group Inc. and Morgan Stanley.

Demand will outpace supply by 367,500 metric tons next year, enough for wires, pipes and appliances in about 1.8 million U.S. homes, according to the median forecast of 12 analysts surveyed by Bloomberg. Stockpiles may drop to an all- time low of less than one week’s usage, said Michael Widmer, a London-based metals analyst at Bank of America Merrill Lynch. Global exchange inventories have dropped 22 percent this year, heading for the largest slide since 2004, data compiled by Bloomberg show.

Prices advanced 35 percent since June 30 even as the International Monetary Fund predicted slower world growth, U.S. unemployment stuck near its highest level in more than a quarter century and China, which uses two in every five tons of copper, curbed lending and raised interest rates. Now, banks from Credit Suisse Group to Barclays Capital are predicting higher prices, with the median in the Bloomberg survey at a record average of $8,542 a ton for 2011, 15 percent more than this year. (more)

5 Emotional Stages Trading Video – Denial Anger Bargaining Depression Acceptance

One of the funniest and at the same time most insightful videos I’ve ever seen. So much truth involved. These really are the 5 stages you go through if you fail to cut your losses and instead hold on to a losing position.

* Denial – Trading Rule 48: When the ship starts to sink, don’t pray – jump!
* Anger – Trading Rule 28: The market is cruel, it gives the test first and the lesson afterward
* Bargaining - Trading Rule 1: Never, under any circumstance add to a losing position…. ever!
* Depression – Trading Rule 3: Keep a positive attitude, no matter how much you lose
* Acceptance – Graciously accept losses