Lipstick on a pig or Commodity bust ?

The last several weeks of trading has seen the continued decline of the price of commodities and the decoupling of the relationship between the declines of oil prices leading too rallies in US equities. There are four main reasons for the price decline; 1) the dollar has begun to rally, as US interest rates stabilize and other global economies follow the US into a slow down. 2) Commodities are priced in dollars and a stronger dollar has brought down those prices by firming up the profits of the sellers of these commodities 3) the entire commodity market has had a significant deleveraging due to rule changes in margin requirements and 4) the US seems to be on point to make the first major change in energy policy since the 1970’s featuring a shift in focus from conservation to expansion of energy resources

McCain Victory will lead to lower Commodity and Energy prices

As a McCain victory in November looks more and more likely and with it a significant overdue change in US energy policy and strategy, energy prices and commodities will continue to decline on the hope of new found opportunities in exploration.
The McCain policy of increasing capacity flies in the face of the last 40years of US energy policy of conservation and waiting for a miracle magic resource the takes away nothing and adds something. Like so many of these fantasy no cost to you ,no money down ideas it has lead to a dangerous dependence on importing foreign oil as a political tool in lieu of foreign aid . Yes there are many alternatives such as nuclear, natural gas and coal but expansion of use of these resources has also been stifled by 40 years of the “fossil fuels are evil lobby”.

Senator McCain’s recent performance and political mastery of appointment of Alaska’s Governor Sarah Palin puts him in the driver seat for this November’s election. Go ahead let the opposition attack “motherhood” and focus on family matters all they want, it is simply a non starter with the American public and will do even more damage to the wood be McGovern –ites.

This blogger for one would like to say good riddance to the policy of energy constriction and the whole 1970’s mentality and thinks the time may be right for change .Recent weakness in commodity prices maybe confirming a McCain Victory will lead to lower Commodity and Energy prices

when it comes to energy and food its all about politics

So is this the end of the commodity boom or is this a correction on the long road to higher food, energy prices and inflation? Many will argue on one side or the other of the supply and demand curve, but my view is that when it comes to energy and food its all about politics. And the politics are very simple; since the 1970’s the US has embarked on a policy of adding no new available supply of energy. Instead choosing to view the amount of energy available as a pie to be divided up but not added too, a sort a zero some game. No new domestic drilling, generation, transmission and so on has been the net result. Supply constraints have been made up for by importing more and more foreign oil while domestic energy resources ,coal ,oil ,natural gas, nuclear and so on have been suppressed in hopes that higher prices would lead to some new form of non polluting ,cheap, non carbon based usable wonder energy ie… “the promise of fantasy energy” .

If we have learned one thing from our European friends that have endured excessively high energy prices for several decades is that energy consumption and use are a function of technology, and life style not price. No one in America seems ready to give up their SUV and trade it in for a horse and carriage. America after all is a country founded on the ideals of economic mobility, and “mobility” of the individual not class being the key idea. Even though many in the political class seem to want to eliminate this fact from American life the general population and this blogger have other ideas.

Energy prices have been determined and will continue to be determined by the politics of availability, Weather by accident or design if the world’s largest economy would make a major change( ie …try to increase the availability) in it’s energy policy it would have a major impact on glabal energy prices for decades to come.

“let them eat ah…Pizza”

So I stopped in to pick up a pie at Ridgewood Pizza the other day and was informed that my pie was now a whopping $10 a full 25% increase from the $8 previous Monday, Wednesday Special price. Yikes …so what’s going on with Pizza prices. Seems the global commodities price explosion has hit home. Prices of wheat, flour, sugar as well as prices for oil, natural gas, coal and precious metals to name a few have not seen these kinds of price increases since the 1970’s . Unlike many other places on earth there is no need for food riots or the offing of heads of inept despots ,in America making money of human folly is fair game .Yes but isn’t investing in volatile commodities very risky you ask? Risky yes but now because of the miracles of modern technology you can invest in Precious Metals, Gold, Oil, Natural Gas ,Agriculture Equipment, Green Power and so on through the use of what we call Exchange Traded Funds or ETF’s for short. What is an ETF you ask? An ETF (Exchange Traded Fund) is simply a basket of stocks that is bought and sold on a stock exchange as if it were a single stock. ETF traded funds are a great way to play a particular sector or diversify your portfolio. So if you want to take advantage of say a falling dollar or just looking to make some extra bread to treat yourself to a pizza give me a call your friendly neighborhood investment advisor and remember that these investments as all securities carry risk of loss of principal and are not insured like bank deposits and you could lose all or most of your money.


James Foytlin
Investment Representative
54 Washington Place
Ridgewood NJ 07450
Toll Free 1(866)492-359
1(201)301-2780
Fax 1(201)301-2762
Cell 1(201)966-788

Carter Era Portfolio

February 20, 2008

Hello,

Clients continue to ask, what era do compare the current market environment to ? I don’t think things are as dire as the 1930’s, and the politicians of today are just totally incompetent, they couldn’t screw things up that much as they did in the 30’s they just don’t have the skills. Nothing like 1987, the market has not moved adjusted for inflation in almost 7 years ,in 87 it have almost tripled from 1982 , To me this smacks of jimmy carters 1970s’ an era of dumb dumber and dumbest .Most of today’s politicians and pundits sound like the dopes form the 1970’s . And everyone is just going along for the ride with the big lie. I see almost no difference between Hillary Obama and McCain they sound like jimmy carter 2 to me. And this idea that if you challenge the Medias forgone conclusions you are an enemy of the people is also so very 1970’s, so break out the DISCO ball and look toward our old nemesis jimmy carter and “peak oil” for investment advise.

Therefore continue to focus on what I call a Carter Era Portfolio, sector focus is on:

Metals and Mining
Energy
Agro business
Utilities
Gold