September 17, 2008
Financial stock weaken, but coal looks great
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Written by Michael Vass
Back when I was a stockbroker (I know, it’s a bad word today) I had a buddy that love to quote this old brokerage saying.
“Bears make money, Bulls make money. But pigs just get slaughtered.”
Obviously the Board members of AIG, Lehman, Bear Sterns, Washington Mutual, and more than a few other financial companies didn’t know that saying.
But the blood is in the water and panic is in the streets. Ok, enough of the sayings. The fact is that the financial markets are screwed right now. We have hit my target of 10,800 on the Dow Jones Index – though not in my timeframe. My target of foreclosures has been exceeded, currently targeted at 9%. And my list of probable factors are being checked off 1 by 1.
So far:
Now that is only 4 out of 15 on my checklist, but they are the big ones. Gold is rising as a hedge to the dollar and to protect assets. As is crude oil. The Dow has nearly hit my December target of 10,200.
So what do we do?
I say buy. There is no greater time for profit than when everything is in a freefall down. Of course picking your time and which stock is essential. I like the financials, because the winners will rally strongly once things settle.
I would avoid Citigroup. They insure their own product and had massive exsposure to bad mortgages. I would avoid Insurance companies since I expect that regulation restricting their abilities to own other assets will be restricted shortly.
But what else is there to buy. In every down market something always goes higher. And there are always leaders on the way back up.
Coal is a great area. Energy is one of the top 5 issues on the minds of voters. Politically it’s a go to industry. Increasing coal use is positive because it means less foreign oil, increased business domestically, increased international trade, and cheaper energy prices to consumers.
Also if coal is liquified then we see the potential for a fuel that is carbon-nuetral as compared to oil. The cost of this process is about $35 per barrel equivalent to oil. That means a savings of some $55 or more dollars per barrel at current prices. Yet at this moment production is minimal.
And coal is plentiful. At current energy consumption rates there is enough coal to power the entire world for 57 years, or just the U.S. for 164 years. And did I mention that the U.S. has the largest reserves in the world. This says nothing of the coal-bed methane that is a potential energy source as well.
A couple of interesting names in the sector include:
- Arch Coal
International Coal
Walter Industries
Peabody Energy
Patriot Coal
Massey Energy
Alpha Natural Resources
Now if we are seriously looking for options in this difficult market, taking into consideration political advantages, energy needs, stability, domestic economic benefits, and isolation from the turmoil of the financial markets we have to look at coal. It just seems like smart money to me.
The financial industry will be merging and bouncing around. There will be regulation and political fights about who is doing the right thing. The dollar and crude oil and gold will get stronger or weaker and then back. Smart money looks at panic and sees the road to profit in the future.
Eventually, perhaps even now, financial stocks are attractive but you will get lumps in the near-term. Gold is too emotional. Crude oil is where everyone is trying to get away from. But you like to get on the internet right? Like lights at night? Want to watch TV and stay warm? Energy is the answer, and Solar, wind, biomass and other alternative energy sources don’t exist – nor will they for at least a decade.
It makes sense to me. So like I used to say as a stockbroker
I love life!
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September 1, 2008
Coal-bed methane, $5 trillion in energy that is not talked about
By admin
Written by Michael Vass
Coal-bed methane, have you heard of it? I’m sure most have not. Up until the recent surge in natural gas prices no one really paid attention to this fuel source. Now people are very interested.
Coal-bed methane is not a new item. It’s one of the fears that fill every coal mine. It is responsible for many of the explosions that have occurred in coal mines since the fuel has be sought. In the most simple description methane is produced as a by-product of the process that creates coal. This gas accumulates in cracks within the coal formation, under high pressure. The United States is estimated to have upwards of 700 trillion cubic feet of methane which is currently worth more than $5 trillion and can provide perhaps decades of energy.
In Kansas there are many that are very familiar with exactly what coal-bed methane is and what it can do. This is a positive and negative for the community, and they are expecting more interest as energy alternatives are sought.
The reason is that the wells in Kansas are not like those found in oil. An oil well is at peak production on its first day. A coal-bed methane well may not reach its peak for a decade. Thus leases to land-owners can be highly lucrative. An initial lease can be valued as much as $30,000, with monthly payments for a productive well being $3 or $4,000 a month or more.
While the money can be very good in these economically troubling times, there are other problems that come with it. Wheat, corn and other farm fields are cut by gravel roads to and from wells; roads are in need of constant repair from the heavy vehicles traveling to and from wells and storage facilities. And the influx of high property values has caused the local schools to lose matching federal funds.
And not every land owner has had the same benefits as another. Deals are made individually, and have been for decades. Early adapters may have only received a lease payment of $2,000 and well production payments can vary wildly.
Still this is not a horrible situation. And with the nation struggling to keep up with the cost of foreign oil, and Congress playing political games with the issue of domestic drilling this option is more attractive by the day.
With all the renewed interest in coal as an energy source there is one thing that we can be sure of. Coal-bed methane along with coal mining will be something that many more Americans will become familiar with in the coming years.
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April 1, 2008
Coal Activist Makes Money With Coal Plants
By admin
If Bud Selig was to join the board of a designer steroids company, that move would be certain to turn the heads of baseball aficionados throughout the world.
Here’s the coal industry equivalent. Former Dallas mayor and coal pollution activist Laura Miller is helping build a coal gasification plant in Texas. This is Laura Miller (a.k.a Ms. Opposition for traditional coal plants planned by TXU Corp. in the Texas)
Elizabeth Souder at the The Dallas Morning News brought the story to our attention.
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