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Battered Investor Syndrome
David Dreman, 07.01.10, 06:20 PM EDT
Forbes Magazine dated July 19, 2010
Investors have taken a psychological beating. Their portfolios and their confidence have been eaten away. It's a good time to buy.
The Dow Jones Industrial Average just had its worst May since 1940. Europe is reeling--its economies, its stock markets, its politics. Why all the pessimism? Are we having some kind of 70-year flashback? It's as if people were having nightmares of hobnailed Nazi boots filling the streets.
The markets fear that a devastating monetary crisis will destroy the European Union, country by country. As the euro's value falls--against the dollar and even more powerfully against gold--doomsayers are coming out of the woodwork to state that the euro will collapse, paralyzing the union's economies and then precipitating a decline in world trade, which in turn will give rise to a global economic downturn.
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Fears of recession can be seen in the falling prices of basic materials, like oil and copper. A different sort of fear is driving up the prices of gold and Treasury bonds. Ten-year Treasuries are yielding 3%. That sounds like a flashback to the Great Depression.
Are things really that bad? No. In fact, to me, this is a perfect environment for selective buying. I think many of us are suffering from what I am calling battered investor syndrome. It's a form of slow psychological torture that can eat away at your confidence and your portfolio. There's the PIIGs problem (the fiscal failings of Portugal, Italy, Ireland and Greece), and then there was the mysterious Flash Crash, and now, in a scene reminiscent of A Clockwork Orange, we watch daily videos of oil gushing into the Gulf. It makes you want to just sell stocks and curl up in a fetal position.
I say it's time to take a deep breath and listen to reason. First, don't think for a minute that the European Union is going to collapse. Germany, by far its leading economic power and its largest exporter, has a huge interest in holding it together, as do France, the Netherlands, Belgium, the U.S. and the U.K.
I have no doubt the Europeans will have to impose much stronger fiscal discipline and, if that doesn't work, possibly push out some of the weaker sisters such as Greece, Iceland, Portugal and possibly Spain. Economic memory is short. In the formative stages of the European Union there was very serious debate about whether these nations should have been a part of it in the first place.
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Europe can thrive even with a smaller euro zone. Investors have forgotten that the U.S. did exceptionally well trading with the European countries for the 54 years when they had separate currencies after World War II.
As an investor, you need to seize opportunities like the one we have now. Jittery markets are great for finding bargains if you are a long-term investor. Here are two exchange-traded funds and a bank that should do well when the panic subsides.
Oil and gas exploration and development companies, as well as oil service companies, have been whacked hard since the bp spill started. The stocks have also been knocked down by the temporary ban on deep-sea drilling enacted by President Obama. Don't obsess over the jockeying going on in the courts over this issue. The public's distaste for importing oil from bad regimes, and the anguish of unemployed roughnecks, will cause either the President or the courts to end the moratorium.
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domingo, 4 de julho de 2010
Fisher opina sobre gas natural
opinião sobre gas natural
Energy Under Our Feet
Ken Fisher, 07.01.10, 05:40 PM EDT
Forbes Magazine dated July 19, 2010
Environmentalists hate well fracking. But ultimately good, cheap technology wins out over paranoia.
More From Ken Fisher
Despite its many critics, hydraulic fracturing will change the nature of energy production. Your investments in the energy sector should reflect that fact. Fracking, as it is called by insiders, means injecting fluid at very high pressure into a well used to produce oil, water or natural gas. The most important application is in natural gas production. The injections produce tiny fissures in underground rock, allowing the gas (or whatever you are trying to extract) to seep out.
While fracking is a decades-old process, it has made great technological strides in the past few years. It will make and keep natural gas cheap for a long, long time. Gas that now costs $5 per thousand cubic feet at the wellhead could come down in price to $2. The consequence will be a large-scale displacement of competing energy sources by gas.
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The losers in this technological shift will be energy sources that are either dirtier than natural gas (coal, especially) or much more expensive (wind and solar). The winners will be the suppliers of fracking technology.
Environmentalists have their misgivings about gas and about the methods used to get it out of the ground. But there's no denying that burning natural gas (methane, that is) produces less carbon dioxide per unit of energy than burning coal. The consequence is that electric power production is going to migrate from coal to gas.
Windmills and solar cells are carbon-free sources of electricity. But they are costly. If you've been investing in those, give it up. That game is effectively over.
Natural gas has the additional benefit of being a domestic energy source. Fracking opens up vast tracts of the U.S. to exploitation by gas drillers. There's enough energy under our feet to last us for decades, maybe centuries.
The impact of cheap methane on the petroleum business will be less pronounced and slower in coming. That's because crude oil can be turned into very convenient transportation fuels (gasoline and diesel). You can power a truck with natural gas, but it needs an expensive retrofit. This is in contrast to the situation in electricity production, where gas-burning plants are cheaper to build than coal-burning ones.
Environmentalists should like fracking for its relative cleanliness. But they don't. They have made a bugaboo out of the chemicals in fracking fluids, which supposedly can leach into groundwater sources. I'm convinced they're dead wrong. Ultimately good technology with a cost advantage will win out over paranoia.
One pure play is Carbo Ceramics ( CRR - news - people )(CRR, 73), a Houston firm that makes various forms of "proppant," particles (sand or a synthetic substitute) injected along with the fracking fluid to keep the fissures propped open after the pressure is withdrawn. Carbo is also a leader in fracture design, consulting services and simulation software. Its products are made in America, China and Russia and sold worldwide. This small technology firm is about to take off. It has a great balance sheet and sells at only 18 times my estimate of 2010 earnings, with a 1% dividend yield. In two decades institutions everywhere will own this stock. Get in ahead of them.
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Energy Under Our Feet
Ken Fisher, 07.01.10, 05:40 PM EDT
Forbes Magazine dated July 19, 2010
Environmentalists hate well fracking. But ultimately good, cheap technology wins out over paranoia.
More From Ken Fisher
Despite its many critics, hydraulic fracturing will change the nature of energy production. Your investments in the energy sector should reflect that fact. Fracking, as it is called by insiders, means injecting fluid at very high pressure into a well used to produce oil, water or natural gas. The most important application is in natural gas production. The injections produce tiny fissures in underground rock, allowing the gas (or whatever you are trying to extract) to seep out.
While fracking is a decades-old process, it has made great technological strides in the past few years. It will make and keep natural gas cheap for a long, long time. Gas that now costs $5 per thousand cubic feet at the wellhead could come down in price to $2. The consequence will be a large-scale displacement of competing energy sources by gas.
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Emailemail
imageprint
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imagenewsletter
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imagedel.icio.us
imageDigg It!
imageyahoo
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The losers in this technological shift will be energy sources that are either dirtier than natural gas (coal, especially) or much more expensive (wind and solar). The winners will be the suppliers of fracking technology.
Environmentalists have their misgivings about gas and about the methods used to get it out of the ground. But there's no denying that burning natural gas (methane, that is) produces less carbon dioxide per unit of energy than burning coal. The consequence is that electric power production is going to migrate from coal to gas.
Windmills and solar cells are carbon-free sources of electricity. But they are costly. If you've been investing in those, give it up. That game is effectively over.
Natural gas has the additional benefit of being a domestic energy source. Fracking opens up vast tracts of the U.S. to exploitation by gas drillers. There's enough energy under our feet to last us for decades, maybe centuries.
The impact of cheap methane on the petroleum business will be less pronounced and slower in coming. That's because crude oil can be turned into very convenient transportation fuels (gasoline and diesel). You can power a truck with natural gas, but it needs an expensive retrofit. This is in contrast to the situation in electricity production, where gas-burning plants are cheaper to build than coal-burning ones.
Environmentalists should like fracking for its relative cleanliness. But they don't. They have made a bugaboo out of the chemicals in fracking fluids, which supposedly can leach into groundwater sources. I'm convinced they're dead wrong. Ultimately good technology with a cost advantage will win out over paranoia.
One pure play is Carbo Ceramics ( CRR - news - people )(CRR, 73), a Houston firm that makes various forms of "proppant," particles (sand or a synthetic substitute) injected along with the fracking fluid to keep the fissures propped open after the pressure is withdrawn. Carbo is also a leader in fracture design, consulting services and simulation software. Its products are made in America, China and Russia and sold worldwide. This small technology firm is about to take off. It has a great balance sheet and sells at only 18 times my estimate of 2010 earnings, with a 1% dividend yield. In two decades institutions everywhere will own this stock. Get in ahead of them.
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