Financial stock weaken, but coal looks great
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!
November 2nd, 2008 at 1:21 pm
Obama will bankrupt the coal industry.
Obama: “So if somebody wants to build a coal-powered plant, they can; it’s just that it will bankrupt them because they’re going to be charged a huge sum for all that greenhouse gas that’s being emitted.”
August 18th, 2009 at 9:47 pm
Hi,I live in the mountain,s of Eastern Kentucky,Harlan County,I live where there is coal minning,and I want people to know the mine operator’s here have no compassion for communities when they need to haul coal from coal mines down thur our communitie’s creating the most undesireable living condition;s ever.TVA’s ash spill is nothing compared to what the operator’s here do.We live along ky 38 and the coal companies mine their coal and load it on to coal truck’s come off mine property,with mine silth,rock dust,coal dust,mudd,and anything the trucks get on their wheel’s before they enter the road.All that stuff is coming off the truck’s as they travel to their preparation plant’s where they clean the coal and then load it onto train’s to go to utility plant’s.What about our health.What about our home’s.We can’t go out side without having to breath all the stuff.Some even from what I can find even causes cancer and lung problem’s,we auctully have worse condition’s then the people who are working there.Where is the State to protect us from this.The Lord know’s we have called a million time’s nothing ever get’s any better,it is only getting worse.I invite you to see for yourselves just how greedy the operator’s are.They could it up some with a truck wash,before they enter the highway.They can pave the haul road’s to the mine load pit where they load the trucks.They can tarp the trucks.They can run the proper desiel fuel.They want do anything.The state can’t make them.I hope and pray some people have mercy on us in the coal minning area’s,as life here is very bad.I hate having to live here I worry about my health,and my neigbor’s health.Please pray for us that the coal operator’s will have mercy on us and our home’s.