The realities of peak oil and the disastrous US monetary policy of the last 8 years have completely changed the rules of investing. Pick up any financial publication - be it Money magazine, investment publications from Vanguard, or articles by the lead economists at firms like Schwab and Fidelity and you will still see a common theme: advice from money managers to have a well diversified portfolio. I am here to tell you that this is good advice for them, but terrible advice for you. Here's why.

Most investment advisors these days continue to promote a nice pie chart which is broken down into easily understandable slices. Typically, these slices include US stocks, international stocks, bonds, and cash. Some investment advisors have added commodities to the pie. Along with the slices, the advisors provide us with percentages, usually indexed to the investors age. Common advice might be something like: 40% US equities, 20% international equities, 20% bonds, 10% commodities and 10% cash. This is simply an example, but you get the idea.

Why do I believe this to be a bad idea? For US investors, the realities of peak oil mean the following: energy prices will continue on an upward climb and therefore inflation will follow. The massive devaluation of the US dollar since Bush took office (>50%) will simply exacerbate the problem since oil is traded the world over in US dollars (at least for now!). As readers are aware, I have often commented that the US dollar has been replaced as the world's "reserve currency" by a barrel of oil. Regardless, what do the realities of peak oil mean for the diversified investor?

Let's take a look at the pie. For the 40% of US equities (remember, these percentages are simply examples), if we assume this to be invested in the S&P500, only 15% of that will be in energy since that is the approximate energy weighting today (energy recently leap-frogged financials in this respect, which is a big red flag in itself for those paying attention). So, 15% of 40% and the investor will have roughly 6% of his money in energy. Hmmm...that's not very good. Considering the last 10 years the S&P500 has returned around 3.5%, now wonder people are complaining about their portfolios balances! Meanwhile, in that same period, many energy investments have been up 25-30% per year.

International equities is a bit of a different, and better, story. The falling US dollar has been a boon for foreign investments. Those investors which have been astute at foreign market picks have really done well. That said, in the future investors would be well advised to keep their foreign investments in countries that produce oil: Brazil and Russia come to my mind.

Most US bonds and fixed income in general is dead money. With low US interest rates (2.5%), high inflation (over 5%, don't believe the government data, which everyone knows is fudged), and a US currency that has been dropping 6-7% per year, most US fixed income investments are simply a way to fall behind in terms of capital preservation, let alone capital appreciation.

Commodities is a good bet. If the investment pie has a 10% slice in commodities, shake your advisor's hand. Oil, natural gas, gold, silver, wheat, cotton and soy beans are all good. These investments are real, or hard, assets and will surely help the US investors keep pace with inflation and a devalued currency.

"Cash" is a bad idea unless you place it in US dollar hedges like the Merk Hard Currency Fund [MERKX] or the Prudent Global Income Fund [PSAFX]. Cash simply won't keep up with inflation and the falling currency.

So, of the investment pie the professionals advise, only 21% are in assets that protect the investor from the realities of peak oil and a devalued currency: the 6% in energy and the 10% in commodities. Over the past 10 years, this formula would have been a losing proposition once inflation and the falling value of the dollar are taken into account.

What's an investor to do? First of all, forget diversification - it is a way to the poor house in the years ahead. Forget the S&P500 and US bonds. Concentrate your money in energy, precious metals, and commodities. Period.

Here are some great choices to outperform the market in the coming years (in no particular order):

  • ConocoPhillips (COP)
  • Exxon Mobil (XOM)
  • Chevron (CVX)
  • StatOil (STO)
  • Schlumberger (SLB)
  • Nabors Industries (NBR)
  • Chesapeake Energy (CHK)
  • Anadarko Petroleum (APC)
  • GLD (Gold ETF)
  • DBC (Commodities ETF)
  • Vanguard Energy [VGENX]
  • Vanguard Precious Metals [VGPMX]
  • Fidelity Select Energy Services [FSESX]
  • Fidelity Select Natural Gas [FSNGX]
  • Merk Hard Currency Fund [MERKX]
  • Prudent Global Income Fund [PSAFX]

Buy these stocks, funds, and ETFs and just hold them. Don't let day-to-day headlines or huge energy volatility scare you out of these positions and you will do fine over time. As an aside, the oil inventory report just came out today, and oil inventories were down over 8 million barrels, a big big surprise versus estimates. Anyone remember Gomer Pyle - "Surprise, surprise, surprise!" Still, there is no comprehensive US energy policy out of Washington, DC.

Dow Chemical yesterday specifically pointed to the lack of a comprehensive US energy policy as a big reason for having to raise its prices. This is a scenario the investor should get used to, and be prepared for in the years ahead.

Meantime, if you'd like to send your Congressman/woman or Senator a real comprehensive energy policy, please send them this link.

It will definitely be the most patriotic action you take this day. Thank you!

Michael Fitzsimmons

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This article has 83 comments:

  •  
    May 30 08:53 AM
    The author apologizes: 21% above should be 16%: 6% energy + 10% commodities.
  •  
    May 30 09:21 AM
    I agree with you and make a similar argument for young people's future retirements:

    20smoney.com/2008/05/0.../
  •  
    May 30 09:25 AM
    Interesting and quantitative reasoning for what I think I've found myself intuitively (luckily?) gravitating to over the past few years. So much of my portfolio has trended to energy (NatGas, Oil & TarSands, CanRoyTrusts, and even Solar & Coal) that I've been concerned that I was not "diversified"... enough. Here's an article that reasures me that I'm not crazy. [my picks might not be perfect, but there were/are reason to be energy/commodity heavy]
  •  
    May 30 09:28 AM
    Nothing in this paper makes any sense. Its nothing but a politcal rant.
  •  
    May 30 09:39 AM
    That would be political not politcal. That make you wrong twice.
  •  
    May 30 09:44 AM
    Six figure portfolio...90% invested in two energy-related companies(one Canroy, one GOM offshore driller)...up 40% since January. I believe you are on the right track.
  •  
    May 30 09:45 AM
    Global production was 85.9 million bpd in February of 2008. Peak oil?
  •  
    May 30 09:49 AM
    P.S. Petrobras struck more light oil in shallow waters yesterday: www.reuters.com/articl...

    That makes that about their 10 billionth oil discovery this year. Peak oil?
  •  
    May 30 10:04 AM
    'Are You Diversified?' is a fools game, in this current investment enviornment, as Fitz correctly points out (IMHO). I have laughed at Cramer each night, as he plays this little game, and can say without reservation that those who have followed his diversification game, have not done nearly as well for the past 3 years, as my non-diversified grouping of energy stocks and funds. The question now, however, is 'what happens next'........and the answer to that is not nearly so clear. If the last energy crisis is any guide, energy stocks continued to go up, after everything else turned down, with oil stocks up 60%+ in 1980 alone. Kurt Wulff (superb Oil Analyst, IMHO, mcdep.com), sees some similarities between our current situation and 1980 (election year, energy shortage recognized, high energy prices affecting the economy, etc.), and is still very bullish on oil and energy stocks. I follow Kurt closely, and continue to follow his advice. I recommend him highly. He posts here from time to time, but his advice is free on a time delayed basis at mcdep.com.
  •  
    May 30 10:15 AM
    What peak oil?

    Consider Saudi Arabia is producing well below their maximum achieved rate of 10.5 Million BPD. Iraq is well under their maximum of nearly 4 mbpd.

    OPEC in general is below 30 mbpd, down from a peak of nearly 35 mbpd.

    Venezuela, Mexico, Norway, England, and Nigeria are all below their maximum production levels.

    Iran indicates that they will produce less in the future. Perhaps, Mahmoud and co. know that they have reached a peak, and rather than just admit it and let it drop, they are going to politicize the future reduced output and keep the world thinking that they have more than they do.

    Russia recently reported a 1% year on year drop in production. While it may be too early to call that a peak, as the drop is very small, it doesn't bode well.

    It is also interesting to note that the US has also hit a peak (a few decades ago). But, we all know that if we just let the oil companies drill a little more that would not have occurred.

    Each of these countries has peaked for different reasons; revolution (Nigeria, Iraq), incompetence (Russia, Mexico), environmental wackos (US), just plain wackos (Venezuela), economic choice (Saudi Arabia and Iran) or admittedly running out of oil (England and Norway). The bottom line is it sure is beginning to look a lot like Hubberts peak oil scenario.
  •  
    May 30 10:16 AM
    For those peak oil non-believers (yes, there still are some), I refer you to yesterday's (5/29/08) article on page A8 of the WSJ (yes, even the Wall Street Journal is coming around! fantastic) titled:
    "Oil Exporters Are Unable to Keep Up With Demand"
    In particular, check out the production numbers of many countries are going DOWN as the oil price has skyrocketed. We'll see $200/barrel oil by 2010.
  •  
    May 30 10:39 AM
    We'll see $200 oil because the dollar is on it's way to zero.

    According to the American Geological Institute the high commodity price of oil is half explained by the weak dollar i.e. political and not geological factors: seekingalpha.com/artic...
  •  
    May 30 10:39 AM
    Brian Pursley - "Global production was 85.9 million bpd in February of 2008. Peak oil?"
    woohoo, that beats the 2005 peak of 85.5mbpd. Glad to see that a 100% increase in oil prices has brought on additional 0.5% more oil into the market. I suggest you familiarize yourself with the production rates of some old friends of yours such as Cantrell and the North Sea.

    There will always be oil on this planet. Its just that you won't always be able to pay for it

  •  
    May 30 10:42 AM
    Hey Fitzman, another great article. Any chance of you becoming the Secretary of Energy under the next administration?
  •  
    May 30 10:54 AM
    Just as with most other geological based resources, the oil easy to find and cheap to produce is behind us, and the difficult and expensive lies ahead. Present oil use is nearly 15M tons/day. 5B tons/year. Similiar trends exist with respect to met coal. The trends are clear, and have been clear for decades. The realities for earths geology is not much changing anymore.

    For investors, an important near term consideration may be the risk to USA based oil company ownership, given the rabid anti-big-oil sentiment of the citizenry and the naivety of the politicians with respect to facts.
  •  
    May 30 10:57 AM
    Okay, Brazil discovers oil. When is it coming onstream? Tomorrow? Ten years from now? Twenty? These are very deep and hard to pump finds. And deepwater oil rigs are in short supply--though Brazil has most of them.

    Who has audited the Saudi fields? You take their word? An oil expert from Iran has sounded the peak oil bell--I can't tell you his name because I'm a slouch, but I've read his commentaries.

    How about microcaps for the adventurous? How about uranium?

    How about gold and silver?
  •  
    May 30 11:21 AM
    Not a bad column. I think to blame Bush for the dollar's decline is a bit unfair. The Democrats want an even weaker one. The massive US trade deficits and ridiculously low interest rates have led to the weak dollar.

    Peak oil is a reality. However, I question putting huge amounts of money into the oil majors. These are dinosaurs who can't possibility replace their reserves. An oil company without reserves is dead. The stocks will be dead (lag the price of oil) for a long time to come. It seems the only group that wants to own for Exxon stock is Exxon!
  •  
    May 30 11:26 AM
    My brain says you're right.

    But, as a Californian, my gut says that it's Enron revisited... & the world is being gamed... at least by 50%. My portfolio has not been very diversified in a long time. I've tended to energy, mining, food, infrastructure. Those are things that I can get my mind around.

    However, I'm beginning to have those butterflies in my stomach that I tend to regret when my brain says put them on ignore. Those butterflies are warning that we'll see another energy crash like in the early 1990s.

    It benefits all of these oil producing countries from Iran to Venezula to Nigeria to Saudi Arabia to slow the tap & skew their figures to the worst case scenario. But, it's a tight rope that they walk. They'll open the taps, oil will flow, & we'll revert to same ol' same ol'... but at a somewhat higher price.

    The real question is how many times will we go thru this scenario with peak oil?
  •  
    May 30 11:54 AM
    Hey fool, it is BOTH the dems and the republicans who got us into this mess. What are you biased?
  •  
    May 30 11:57 AM
    FoxV: And I suggest you familiarize yourself with Petrobras which is growing it's reserves at 6% annually. Allow me to introduce you to some new friends of mine named Barracuda, Caratingua, Tupi, Jupiter, and Carioca.
  •  
    May 30 12:14 PM
    CLH: Your constructive comments are appreciated - thanks for taking the time to write something substantial - and good luck in the S&P500.

    Ozarker: that cracked me up.

    cynical: ur on the right track...it's not being cynical when the facts line up.

    pursley: i won't debate you any more - we agreed after my last paper to simply check back in 5 years to see who was right. that said, the dollar is down about 50% since bush took office, yet oil is up over 6x - it ain't all about the dollar...it is supply/demand. not sure why supply/demand works for all other commodities but not oil. part of the denial process i suppose.

    FoxV: excellent rebuttal! :)

    bluesmoke: i'm flattered and would be glad to do the job for free! because i DO love my country and boy do we need somewhere there who acknowledges peak oil....otherwise, i fear we are toast.

    User: good point. if we dont get an energy policy to deal rationally with peak oil, i can envision a scenario where the US gov takes over the big oil companies claiming "national security". i have oftened wondered if this is not the real reason why the US gov is ignoring peak oil and a rational energy policy to deal with it. once they control the oil, the have ultimate control over the population.

    GMiki: that's right - non-peakers always talk about the new oil discoveries, but they never factor in the worldwide depletion rates of the current fields, currently depleting at the rate of about 4.5 million barrels/day. not to mention that the number of new elephant fields discovered since 1960's has slowed down dramatically, i.e. roughly less than 10 during that entire time.

    enviro: i hear you wrt to the majors. that said, it seems a bit unwise in an era of peak oil not to hold a company that can produce 4 million barrels a day (XOM). i like ConocoPhillips as much for their nat gas exposure and Lukoil as i do for their oil production capability. plus, i Mulva is the best CEO in the business. and, i agree with you about XOM stock buybacks...they should be rewarding their shareholders with increased dividends! they have the lowest yield of the majors, by far, yet the best balance sheet, cash flow, and net income. i would much rather the rutkus at the shareholder's meeting be about the buybacks vs dividends than most of the poop that was discussed there.

    scholastic: well, peak oil has happened many times in many places: continental US, prudoe bay, north sea, mexico's cantrell, etc. etc. the energy crisis of the 1970's was a political crisis (an embargo due to US Israeli policy). what we have now is a true supply/demand crisis due to increased consumption in china, india, russia, and the middle east at the same time production is beginning to top it. sure, we mights see a few million more barrels come online, and some of the top execs (Mulva at CEO) think we could perhaps top at 100 million BPD. that said, the EIA and DOE energy estimates are predicting demand will hit 135 million BPD. that is a huge huge disconnect. the US is the most exposed country in the world to peak oil: we use 20% of the world's oil (5% of the population) and import 65% of that. that is why i am so adamant about the US adopting a comprehensive energy policy to deal with it. time is quickly passing by and the last 8 years have been a complete waste.
























  •  
    May 30 12:58 PM
    Brian Pursley - "Allow me to introduce you to some new friends of mine named Barracuda, Caratingua, Tupi, Jupiter, and Carioca."

    So you're suggesting that the ultra deep, with no current technology available to exploit Tupi field will replace Cantrell that bubbled up from the ground?

    Keep smoking
  •  
    May 30 01:05 PM
    How much does it cost to convert Coal to liquid via coal gasification technology? That is a realistic long term maximum for the price of a barrel of oil and I think that the number is around $90/barrel. On the other hand, coal gasification produces lots of CO^2 and unless we develop a good way to sequester it, it is a dead end as well. At some point we will reach "peak coal" but that is probably beyond the timespan of even a very forward looking investor.

    Diversification is a no brainer and it is reckless to have all your money concentrated in one or two stocks or even one or two industries. I am personally mostly invested overseas, to protect myself against the falling dollar, but I am invested all over the place, not just in oil and commodities.
  •  
    May 30 01:14 PM
    Fitz: Again, the supply is low due to political and not geological factors. The United States has over 10,000 miles of undrilled coastline. Peaks in oil production are caused by man not nature. But like I said I hope you're right. I hope we peak and I become a billionaire because I have my eye on a new Hummer.

    FoxV: Your claim that no current technology is available to exploit Tupi is based upon willful ignorance and a lack of education.

    Petrobras to Start Output at Tupi Ahead of Schedule: www.bloomberg.com/apps...

    "I don't think we face any technical challenges that are insurmountable,'' said Gabrielli, 59. "We think that today the main problem is cost reduction, not availability of technology.'': www.bloomberg.com/apps...

    How's that crack pipe treating you?
  •  
    May 30 01:27 PM
    My meandering Vietnam era mind wondered if the real reason we went into Iraq was not to take over the oil (although the mega embassy argues against that) but to disrupt the oil flow. It seems the insurgents do a pretty good job of keeping the Iraqi oil flow limited and the Saudis do a pretty good job of keeping supply shut in. Of course, having a real fighting force of 140,000 +/- American soldiers keeps the Iranians at bay for the time being - it seems to me thats why we put Saddam in there in the first place, to keep the Shiites out of Saudi. Anyway, oil sure has had a nice run since the beginning of the Iraq war and a couple mbd shortfall has kept the price up up up. We might now be seeing some actual elasticity of demand and less consumption as unnecessary usage is voluntarily foregone. W, as an old erl man, has probably secured his place as the greatest president of all time as far as the oil patch is concerned. McCain says we'll be there a good long time so I would expect he will get lots of contributions from the oil folks. This has worked out better than they could possibly have anticipated.
  •  
    May 30 01:53 PM
    If you're a peak oil person, as am I, you must realize that China and India and SE Asia are not going to ascend to world prominence via their impressive industrialization. Superexpensive oil means their industrialization stops cold very soon. Europe is going to fall apart as well due to peak oil, so the Euro is now under attack. I"ll go along with the precious metals for inflationary reasons, but it sure looks like the dollar stands to climb back up -- other currencies will be under so much stress.
  •  
    May 30 03:18 PM
    To Scott Benson :
    WORD ......
  •  
    May 30 04:22 PM
    Let's not forget that it is the RATE of extraction that is important. Yes, Brazil has found a jazillion barrels of oil 30k feet under the sea. But can they pump N million barrels a day out of there to match the decline of the rest of the world?

    Same thing with coal to liquid technology or turkey guts or tar sands or oil share or whatever. Everything needs to ramp up a LOT of replace something like Cantarell in decline.
  •  
    May 30 07:08 PM
    The realities of peak oil and the disastrous US monetary policy of the last 8 years have completely changed the rules of investing. I AM ALWAYS SUSPICIOUS OF ANY AUTHOR WHO STRAYS FROM HIS FIELD, IN THIS CASE, FINANCE, TO GET INTO POLITICS. WHAT IS MAGICAL ABOUT 8 YEARS? Pick up any financial publication - be it Money magazine, investment publications from Vanguard, or articles by the lead economists at firms like Schwab and Fidelity and you will still see a common theme: advice from money managers to have a well diversified portfolio. I am here to tell you that this is good advice for them, but terrible advice for you. Here's why. YOU ARE RIGHT.
    Most investment advisors these days continue to promote a nice pie chart which is broken down into easily understandable slices. Typically, these slices include US stocks, international stocks, bonds, and cash. Some investment advisors have added commodities to the pie. Along with the slices, the advisors provide us with percentages, usually indexed to the investors age. Common advice might be something like: 40% US equities, 20% international equities, 20% bonds, 10% commodities and 10% cash. This is simply an example, but you get the idea. RIGHT AGAIN.
    Why do I believe this to be a bad idea? For US investors, the realities of peak oil mean the following: energy prices will continue on an upward climb and therefore inflation will follow. The massive devaluation of the US dollar since Bush took office (>50%) BEING POLITICAL AGAIN. WHY NOT SAY SINCE GREENSPAN RETIRED OR SINCE THE START OF THE 108TH CONGRESS? will simply exacerbate the problem since oil is traded the world over in US dollars (at least for now!). As readers are aware, I have often commented that the US dollar has been replaced as the world's "reserve currency" by a barrel of oil. NOT SURE I AGREE. I DON’T KNOW THE ANSWER, BUT THINK THAT GOLD AND PAPER ARE STILL EASIER TO STORE AND TRADE BECAUSE THE COST OF DELIVERY IS SO LOW BY COMPARISON. Regardless, what do the realities of peak oil mean for the diversified investor?
    Let's take a look at the pie. For the 40% of US equities (remember, these percentages are simply examples), if we assume this to be invested in the S&P500, only 15% of that will be in energy since that is the approximate energy weighting today (energy recently leap-frogged financials in this respect, which is a big red flag in itself for those paying attention). I WISH YOU HAD EXPANDED UPON THIS IDEA. I WANT TO KNOW MORE OF WHY YOU FEEL THIS WAY. So, 15% of 40% and the investor will have roughly 6% of his money in energy. Hmmm...that's not very good. Considering the last 10 years NOW HE IS USING A DISPASIONATE AND NON POLITICAL DATE the S&P500 has returned around 3.5%, now wonder people are complaining about their portfolios balances! Meanwhile, in that same period, many energy investments OLD ‘LYING WITH STATISTICS’ TRICK – USE A SPECIFIC TO SHOW ONE SIDE OF THE ARGUMENT AND A GENERALIZATION FOR THE OTHER SIDE – APPLES TO ORANGES have been up 25-30% per year.
    International equities is a bit of a different, and better, story. The falling US dollar has been a boon for foreign investments. Those investors which WHO have been astute at foreign market picks have really done well. That said, in the future investors would be well advised to keep their foreign investments in countries that produce oil: Brazil and Russia come to my mind. WHAT ABOUT STABILITY OF THE GOVERNMENT?
    Most US bonds and fixed income in general is dead money. With low US interest rates (2.5%), high inflation (over 5%, don't believe the government data, which everyone knows is fudged), and a US currency that has been dropping 6-7% per year, most US fixed income investments are simply a way to fall behind in terms of capital preservation, let alone capital appreciation. COMPLETE AGREEMENT. I THINK REAL INFLATION IS WELL OVER 5%.
    Commodities is a good bet. If the investment pie has a 10% slice in commodities, shake your advisor's hand. Oil, natural gas, gold, silver, wheat, cotton and soy beans are all good. These investments are real, or hard, assets and will surely help the US investors keep pace with inflation and a devalued currency. I WOULD ADD COPPER AND NICKEL.
    "Cash" is a bad idea unless you place it in US dollar hedges like the Merk Hard Currency Fund [MERKX] or the Prudent Global Income Fund [PSAFX]. Cash simply won't keep up with inflation and the falling currency. AGREE AGAIN.
    So, of the investment pie the professionals advise, only 21% SHOULD BE 16% are in assets that protect the investor from the realities of peak oil and a devalued currency: the 6% in energy and the 10% in commodities. Over the past 10 years, this formula would have been a losing proposition once inflation and the falling value of the dollar are taken into account.
    What's an investor to do? First of all, forget diversification - it is a way to the poor house in the years ahead. Forget the S&P500 and US bonds. Concentrate your money in energy, precious metals, and commodities. Period. I THINK THERE IS ALSO A PLACE FOR REAL ESTATE IF ONLY A PROPERTY FROM WHICH YOU CAN GROW A MAJORITY OF YOUR FOOD NEEDS, PREFERABLY OFF THE GRID.
    Here are some great choices to outperform the market in the coming years (in no particular order):

    . ConocoPhillips (COP)
    . Exxon Mobil (XOM)
    . Chevron (CVX)
    . StatOil (STO)
    . Schlumberger (SLB)
    . Nabors Industries (NBR)
    . Chesapeake Energy (CHK)
    . Anadarko Petroleum (APC)
    . GLD (Gold ETF)
    . DBC (Commodities ETF)
    . Vanguard Energy [VGENX]
    . Vanguard Precious Metals [VGPMX]
    . Fidelity Select Energy Services [FSESX]
    . Fidelity Select Natural Gas [FSNGX]
    . Merk Hard Currency Fund [MERKX]
    . Prudent Global Income Fund [PSAFX]

    Buy these stocks, funds, and ETFs and just hold them. Don't let day-to-day headlines or huge energy volatility scare you out of these positions and you will do fine over time. As an aside, the oil inventory report just came out today, and oil inventories were down over 8 million barrels, a big big surprise versus estimates. Anyone remember Gomer Pyle - "Surprise, surprise, surprise!" Still, there is no comprehensive US energy policy out of Washington, DC. AGAIN, VENTURING INTO THE POLITICAL BUT I THINK OUR 'ENERGY POLICY' CHANGES WITH EVERY NEW CONGRESS.
    Dow Chemical yesterday specifically pointed to the lack of a comprehensive US energy policy as a big reason for having to raise its prices. This is a scenario the investor should get used to, and be prepared for in the years ahead.
    Meantime, if you'd like to send your Congressman/woman or Senator a real comprehensive energy policy, please send them this link.
    It will definitely be the most patriotic action you take this day. Thank you!

    GOOD PIECE. WHEN I GET THE TIME THIS WEEKEND, I WILL GO TO THE LINK AND READ THE ‘ENERGY POLICY.’ THIS COMMENT IS MEANT TO BE CONSTRUCTIVE, NOT DISTRUCTIVE. DROP THE POLITICS AND AVOID THE TEMPTATION TO SENSATIONALIZE WITH STATISTICAL GAMES AND I WOULD CALL THIS AN EXCELLENT PIECE. THANKS.

  •  
    May 30 11:45 PM
    This article and it's comments remind me of the AAPL articles about how wonderful Jobs is and the idiot comments that always follow.

    I love hindsight - don't diversify because we can't possibly be WRONG!

    Honestly since peak oil is a certainty and it can only go up, it's so damn easy to make an investment decision.

    I'd rather make boring above index returns than gamble on the 'it's different this time' crowd anyday.
  •  
    May 31 01:53 AM
    I agree with the big picture in this article and am relieved to see so many others agree with what my gut is telling me to do financially. I was starting to worry that I wasn't "diversified enough" but don't feel good about the S&P or the traditional advice. We've been investing overseas with an emphasis on energy, commodities and infrastructure and using MERKX as a hedge with our cash.

    We are also looking at alternative energy companies such as solar, wind, geothermal and even the newer wave power (eg Finavera) given that they should do well as oil continues to rise in price.
    (disclaimer - we just bought some Finavera stock and are hoping they'll do well. Still figuring out what geothermal and solar stocks or etfs to buy....)
  •  
    May 31 08:14 AM
    I'm with maxroom (way back in the early comments). Give me Canroys for the next 10 years, and natural gas and utilities. I'm making more in dividends than I could even think of spending in increased gasoline costs. I'm not a big money investor, nor am I opposed to some of the financial stocks, but for right now, I'm about 50% into the fuel stocks and splitting the rest. No ETFs for me because the yield isn't nearly good enough. In a few years, I'll think about it, but for now, I'm looking for better yield.
  •  
    May 31 09:54 AM
    Hello Fitz; You are now on my radar. My gut tells me you are right perhaps because my holdings are similar to your recommendation. However, I prefer the non precious metals over the glitz. You realize you have opened Pandora's box and demoralized the brilliant advisers that never get it right (except for Buffet) and rely on diversification for their kudos or excuse. You might as well open another box and suggest that mutual funds are as dead as a door nail and are about to go the way of the horse and buggy. ETF's are so much more efficient and with better performance. My days of being penalized by MF's for fast trades and inflexibility are over. Just compare EWZ, KOL, IEZ, and FCG to similar mutual funds at Fidelity, Vanguard and/or T Rowe Price and you'll understand my position. PG
  •  
    May 31 09:56 AM
    You might be LUCKY to be in the OIL, Precious Metals.... but if the "demand" for these goes down... your portfolio will go down. I say you are LUCKY, since CHINDIA & emerging markets are keeping the demand up. So, you can keep your course for a year or two, but what are you going to do then?????

    One area, I like RIGHT NOW is technology stocks (especially software). We should see CVLT, ORCL, SAP, GSB, AMSWA/LGTY, and numerous others... accelerate in their stock price. MSFT is too large (like XOM) to make major moves. Let's see what happens in TECH STOCKS during the next 6 months (in comparison to your portfolio).
  •  
    May 31 10:31 AM
    Don't know why I bother, as you kids are so sure in your positions that you only half-listen to those with far more experience:

    I've been investing for almost 40 yrs. I've seen a number of bubbles, including sure-thing 'nifty-fifty', technology, and now peak oil. They come along and folks can't see beyond the hype, they think they will be money machines forever. They were not...and 'peak oil' won't be either.

    I've learned many lessons from my mistakes.

    I'll pass along just this one...over the course of the economic cycle, it isn't your big winners that are most important to your wealth; it's your big losers! If you allocate too much in one place, you are setting yourself up for huge losses.

    Therefore, anyone who tells you not to diversify should be shunned.

    That doesn't mean you should never overweigh 5 or 10% pts. in mega-trends -- like energy, alternative. energy, health care, or materials, for example...but anyone who leaves bonds and broad S&P 500 stocks out of his portfolio is going to pay dearly before this economic cycle ends.
  •  
    May 31 10:40 AM
    This author spouts off with a lot of bad investment advice. There are a lot of people who are not going to let the OPEC cartel rig oil prices along with the commodity futures exchanges.

    The German government is in the news today regarding price fixing by commodity futures traders. The German Minister is going to bring up this topic at a G8 meeting.

    I have started collecting articles from various sources ( including the 294 page report from the US Congress ) to give to my Congressman.

    If you want price fixing to continue along with higher food, heating oil and gasoline prices then listen to these guys who are misleading you into thinking you are going to make big bucks in commodities trading.

    It is a game for suckers. The prices will come down.
  •  
    May 31 10:43 AM
    To Mr. Pursley regarding Brazilian finds and how quickly they will come to production:

    According to PBR's rather optimistic scenario (as noted in the link you attached), they expect to be pumping 20,000 bpd out of Tupi in 2009 (as the expert quoted in the article said, I also think that is pretty optimistic), 100K bpd by the end of 2010 (more than 2 years from now), and based on all of these finds (Tupi, Carioca, etc), PBR expects to be pumping 4.2 million bpd in 2015, versus 2.3 million now.

    In other words, under PBR's own very optimistic schedule, they will produce an extra 1.9 mbpd seven years from now.

    Question to you: If you add up depletion rates at Ghawar, Cantarell, and all the other fields in the world over the next 7 years (ie, by 2015), what does that total depletion add up to?

    Many people believe global depletion to be running at 5-7%/year, but let's say 3% per year--and don't even compound it.

    So, in 7 years, depletion is 20% of our current 85 mbpd--ie, 17 mbpd.

    Certainly, PBR will not be the only source of extra oil--maybe the Middle East and Nigeria will settle down and pump fully (although I might note that human history is rather short on, if not entirely bereft of, epochs of global peace and harmony--man is the most contentious animal of all), and maybe the decision not to drill ANWR will be reversed (although I wouldn't hold my breath on that one), but not EVERYTHING will go the way of extra production.

    In adddition, mark my words that by 2015, Tupi/Carioca/etc oil will cost at LEAST $100/barrell to produce, putting a floor of probably $130 (assuming a modest netback of $30/barrell) on the price of oil even without taking supply/demand into account.

    My point: None of us know what real supply and real demand will be in 2015, but we all know that demand from developing countries will increase significantly, that all fields deplete naturally, that cost of production from the new fields will be far higher than the gushers of old, and that OPEC has made it clear that 2-digit oil prices are a thing of the past.

    Thus, I believe that downside risk in the best oil/gas investments is rather limited while upside potential is pretty substantial.

    Although I think the author has overstated the case that diversification is unnecessary, I will also say that my rather sizable stock account is 100% invested in a Canroy (PWE) and a solar company (TSL). Of course, my stock account only constitutes a small percentage of my net worth, so I can take the chance to put all of my eggs in the "energy" basket, but that is NOT the approach I would suggest to others less risk-tolerant than I.

    I would, however, recommend that people overweight good energy and alternative energy investments in their account.

    Jack
  •  
    May 31 11:21 AM
    I agree with the analysis but beg you -- Evaluate the proposed strategy! If your motto is "All for me and let the rest of them eat cake" then by all means exacerbate the current situation and dump as much money into the commodoties market as fast as you can!

    It is a self-fulfilling prophecy. The oil and commodoties exchanges are reacting to inflow of money, not a shortage of oil or other goods. The self-consumed idealogues that have been running this country have not only failed to develop an energy policy, they have printed enough money to wallpaper the Great Wall of China! And meantime, we lemmings continue to tuck our 10% into our little 401k so that the stock market continues to be pumped up.

    It is Econ 101 - too many dollars chasing too few goods ("investments&quo... = lnflation!

    And you and me making an extra 5% return on our money this year will likely not deliver us from the chaos that will engulf everyone if the trend continues. Broke people do stupid things, but starving people are often violent. Is that really the society you want to live in so you can protect (maybe) your little piece of the rock? Do you really want to explain to St. Peter why you thought it proper to run up the price of food to make a buck?

    Not me. I have taken my 10% penalty and dealt myself out of the game. It is my intent to take most of my little nest egg and buy stocks in companies that (1) are focused on "earnings" versus "revenues" and (2) believe in "greening the future" because once this all ends, that's where the money will be.



  •  
    May 31 11:28 AM
    Terrific and well thought out article! But be careful, guys, the short term oil price bubble may be upon us, regardless of so-called peak oil. I don't think the author meant to say don't diversify, it's HOW you diversify.

    For example, no matter what oil prices do near term, the value of oil service stocks will continue to skyrocket. There is only so much drilling equipment (esp. deepwater), and with oil company revenues at record highs, demand is off the charts.

    The same goes for railroads. Only so many tracks and railcars, and they're getting a boost from the malaise in the trucking industry, as well. Agriculture industry related companies are also extended to capacity, which bodes well for their stocks. And ya gotta love Brazil, it seems they're doing everything right.

    So by all means you MUST diversify, only watch how you do it. Just ask the guys who had all their money in lilies and dot-coms if they think that would have been a good idea.
  •  
    May 31 11:55 AM
    To richjoy - amen. the consequences of being wrong are so enormous that unless you have a printing press in the basement it will change your life for a long time. Diversification with money you cannot afford to lose is crucial.
    BTW, given $875+ gold and $120+ oil, why aren't interest rates on long UST bonds way, way higher? One would think the bond market is forecasting a recession/depression. If that happens, where do commodity and overall stock prices go?






    4
  •  
    May 31 12:48 PM
    oldgoldbug: Given your handle, I suspect you know something about 'can't miss' bubbles touted by those who reinforce each other with a steady stream of blather.

    Agreed, interest rates on long bonds and 10-yr notes are not set by the Fed...and in the face of growing inflation, should be still higher than they are today. Are they telling us there is more economic pain ahead?...perhaps (and if so, oil consumption will decline by still more than we have seen recently).

  •  
    May 31 01:02 PM
    WOW!!! Good article!!! It is almost like talking to myself, (not that I'm that smart) except written much better. To me investing 101 says invest in companies that:
    1. Have product that is demand
    2. Have high long term growth potential
    3. Have high profit potential
    4. Have the ability to pass along cost of business increases
    5. Have great cash flow
    6. Have a moat such as high cost of entry into the business segment

    For the last several years, natural resources and energy have met these criteria because a growing world NEEDS these things.

    Coal needs to be added to the list of investment considerations along with the miners, mining equipment, infrastructure and ag. It's all good!!!

    Some say these companies are high risk because of the link to commodities. Right now though Financials, Consumer and Tech are all looking higher risk to me. I add Tech because it is consumer driven and the consumer is at risk.

  •  
    May 31 01:13 PM
    Ann from KC - I agree that there is a way to invest wisely and at the same time do so in a way that doesn't cause harm. We are avoiding coal (CO2 and mercury) and nuclear (too much potential for harm if there's an accident) for now. There are alot of good green energy options out there, they're clearly part of the long-term solution to the energy problem and they will certainly do increasingly well as oil goes up.
    We are also avoiding putting money into food commodities even if it is a good investment because we are concerned about raising food prices and affecting those that are barely making it. We ARE putting some money into oil companies that are diversifying or are diversified into other technologies (eg - Statoil ASA based in Norway has hydropower and is considering wind). I'm a little ambivalent about it. increased oil prices equals increased food and everything else prices, but increased oil prices will also cause a shift to alternative (hopefully cleaner) energy sources. Solar/geothermal/wind technologies are plenty mature enough to be increasingly used if the proper incentives are in place. If the government won't subsidize these, then the market will eventually force a change as oil becomes too expensive due to decreasing supply/demand. Check out Finavera (on the TSX). They are still small and could get into funding problems but they are a clean tech (wave power) and already have a contract with PG&E.
  •  
    May 31 01:50 PM
    mike fitz,

    I am just curious about your picture. What peak are you on?
  •  
    May 31 02:38 PM
    Can anyone comment on the price/demand for oil and US consumption/Military consumption once this war ends?
  •  
    May 31 04:57 PM
    pearl2k,

    I doubt that military consumption of fuel in support of IRAQ will make much of a difference in global supply/demand.

    On a different note. The problems in this region go back 1000's of years. In my opinion, when America leaves, (if we can ever make a gracefull exit) the entire region will once again de-stablize into fighting factions and civil war. History is on the side of my opinion in that regard. Any de-stabilization in this region will push the price of oil out of sight. Dissidents believe in reign or ruin. This is demonstarated on a smaller scale in Nigeria and it's problems with rebels. The US gets about 10% of it's imported oil from Nigeria.
  •  
    May 31 06:15 PM
    Mr. Yetiv: "Question to you: If you add up depletion rates at Ghawar, Cantarell, and all the other fields in the world over the next 7 years (ie, by 2015), what does that total depletion add up to?"

    I figured you were going to tell me since you peak oil cultists know everything even though you don't trust any statistics. How should I know? I thought Saudi statistics can't be trusted. Those are only 2 fields and according to Matt Simmons Ghawar should've run out already. See here: peakoildebunked.blogsp...

    Anyway, who cares about Ghawar besides Matt Simmons and the Saudi Royal Family? I know I don't: peakoildebunked.blogsp...

    There are other oil fields, get over it: peakoildebunked.blogsp...
  •  
    May 31 06:19 PM
    All of this peak oil angst stems from not wanting to face life without a Hummer. Go ride a bike.
  •  
    May 31 06:23 PM
    Yes ... let's forget about diversification. Clearly the entire financial world's got it wrong, and this author has it right.

    With every boom, with every cycle, someone stands up and says ... but this time it's different. We have a NEW economic standard, a new paradigm. And sooner or later, a normalized cycle returns to the world.

    Ultimately, this siren song gets repeated and repeated. Buy fertilizer! Buy oil refiners! Buy oil exploration! Buy alternative energy! Buy Internet stocks! Buy CDs! Buy Bonds! You'll never keep up with ravaging inflation/deflation/st... with that strategy!

    Here is a simple example of how far off this strategy is ... gold, as an investment, has failed to keep up with the S&P over any reasonable time period (normally defined as 10 years). If the goal for a portion of your portfolio is a hedge against inflation, why not simply invest in TIPS or US Treasuries?

    While there may well be merit in short term, overweighted holdings in gold/oil, there is no long term merit to it. If you are a speculator, I suppose Mr. Fitz's ideas might be reasonable. But the investment advisors support people with time frames of ten to thirty years - who are seeking performance without excess risk. There is no support for his ideas in such a time frame, and likely is why he doesn't offer them.





  •  
    May 31 09:12 PM
    Brian Pursley,

    You're right that the supply is low due mainly to political factors. You're also right that the world has plenty of oil. I agree with both of those premises of yours and I'm still bullish on oil, at least for the next 5-7 years. Why? Because it will probably take at least that long for supply increases to catch up with demand. A lot of these projects take years to get the oil flowing, and everyone won't be trading their car for a hybrid overnight.
  •  
    May 31 10:45 PM
    richjoy nailed it and I second everything he says

    Follow the author and the fools who agree at your own detriment...
  •  
    May 31 10:49 PM
    Dave: Likewise long. NOV, RIG, PBR, PKX (especially if they get Daewoo Shipbuilding) obvious winners. HAL and BHI cheap compared to SLB imo.
  •  
    May 31 11:08 PM
    Hmmm. The S&P 500.... While I am very long oil and minerals, I strongly suspect that the S&P 500 might be a sleeping giant about to awaken. If you look at USA manufacturers who have been profitable in the past few years, just imagine how further declines in the value of the dollar will provide a hurricane-like tailwind. Anyone who recalls the Bucyrus-Erie company in the 1960's would probably classify it as a quintessential rust-belt company. But look at it today! And realize that Milwaukee/Southern Wisconsin has dozens more companies just like that one. So, the falling dollar is not all bad. It just might be restoring an imbalance that sent too many jobs overseas. In fact, when viewed in that weird glow of the falling dollar, the diverse and dynamic USA economy begins to look more and more like Brazil... After all, we have great mineral wealth, monster agriculture, high-tech, excellent infrastructure, and probably also a bounty of energy supplies that have been wisely protected from development under a probably false ecological pretense. So, keep a keen eye on the S&P 500 and especially those that export goods. As the dollar sets, it may rise.

  •  
    Jun 01 12:15 AM
    He might be guessing right, he might be guessing wrong ... but about the future he's guessing. And he's definitely politically unhinged. Econ 101 .... Law of Supply and Demand. When demand goes up, supply either gets more plentiful or more expensive. Has this guy heard of a couple of little places called China and India? That's on the Demand side of the equation. And where was he 10 years ago? ... championing the cause of more nuclear energy plants in the US, and drilling and collecting known huge oil reserves in ANWR, and in the deep water off the coasts of Florida and California? No, I didn't think so ... that would have been the increased Supply side of the equation. He was ranting against those moves, so he really has no intellectual ground to stand on here.
    ps - does he blame the huge runup in dry bulk shipping rates on Bush too? Michael - you can't claim, out of both sides of your mouth at the same time, that 1) Bush is an idiot, and 2) that he's smart enough to be manipulating the entire global economy and all of its players. Puhleeeeeeeeeeeeeeeze.
  •  
    Jun 01 12:45 AM
    richjoy, I agree with you to a point. "It's different this time" are the most expensive words in finance. But I doubt your final advice to stay with the S&P500 and especially bonds, not because it's different this time but because it isn't. Explosive monetary expansion is devastating to growth; anything devastating to growth is devastating to equities. It should surprise no one that the infamous "Death of Equities" cover appeared after a decade of negative real interest rates and out of control price growth. Here we are again, with interest rates negative and prices spiraling upward. But we're not there yet: stocks are not cheap and interest rates are not high.

    Equities did not die, nor will they this time. They not only survived but thrived, thrived on the discipline Volcker imposed on the money supply. True, some companies will be winners and others losers in this madness, depending mainly on how long we allow the Fed to persist in its folly. But if US equities are to recover as they have before, that folly must end. Real interest rates must soar, and with prices rising rapidly, nominal rates must soar even faster. For this reason, I say that your parting words are self-contradictory: if equities are to be good investments again, surely anyone holding bonds must lose his shirt in the process. If these events do not take place, US equities really will die, to be followed in short order by Treasuries as the American economy collapses. You cannot have it both ways, but bonds are toast in either. I challenge you to describe a scenario in which Treasury prices do not decrease substantially over the next decade.
  •  
    Jun 01 09:21 AM
    CAN YOU SAY BUBBLE? What happens when you have 90% of your portfolio in 2 energy stocks??
  •  
    Jun 01 10:35 AM
    great comments guys & gals! i love to see it. as usual, i must participate in the to-n-fro:

    pursely: i thought we declared a truce for 5 years? meanwhile, after reading the WSJ article on page A8 last week, please explain to me while the oil exporter's production is dropping while oil has quadrupled - this is political?

    oldgoldbug: yes, bush wanted to go into iraq no matter if the majority of the 9/11 hijackers were saudi (the saudis already supposedly "like" us). it was either iran or iraq - iraq was easier to manufacture reasons for, not to mention if the US goes into iran and the straits of hormuz are shut, oil doubles or more even from $126/barrel. i think bush and his buddies were even shocked by their inability to keep iraqi oil flowing and the geopolitical risk premium point on oil due to their actions. that said, i suppose their thinking is that it's easier to steal iraqi oil than to adopt a comprehensive energy policy.

    scott: agree oil affects europe too, but they are much farther ahead in terms of france's nuclear and germany & spain's wind. however, when it comes to currrencies, i'd put my bet on brazil, russia, and even the middle eastern currencies if they get off the dollar peg, which they will have to unless they want to enjoy the inflation that goes with that. massive amounts of money is (and will continue to) flow to oil and gas producers from the importing countries. US's biggest trade deficit component is $650 billion/year for oil. can't say that is a scenario for a strong dollar. not to mention, the US can't fight inflation by raising interest rates because of the massive debt load of its non-saving citizens. therefore, US dollar weak, oil high, inflation high. thus, the portfolio i recommended.

    sharpPA: agree. you must have worked the oil fields of western NY and PA with my grandpa, who managed to stay independent in spite of rockefeller's lock on railroad transportation of penny crude oil.

    flylines: my field is (was?) electrical engineering with an eye toward systems architecture for wireless. what is "magical" about the past 8 years is this:
    - US currency devalued over 50% (!)
    - huge US fiscal deficits and an insane tax policy in time of "war"
    - largest growth of the government in 8 year period in history
    - takeover of publicly traded investment house by the Fed (Bear)
    - lowering of interest rates when inflation is rising
    all this by a "conservative&quo... republican. these are facts. there is nothing "conservative&quo... about these policies. they are the most RADICAL policies certainly in my lifetime.
    you wanted examples of 25-30% gainers over the last 5 years, well, they are pretty much the recommended picks, so check them out.
    you want to talk about stability of government?
    you talk about stability like the US is and will be: what is so stable about a government that imports 65% of its oil and prints money like there is no tommorow. ever here of the weimer republic in germany? sure we have military superiority, but look how we use it: unilaterally while dissing our old allies? just like the little schoolboy, security is measured by the number of friends you have. we don't have any left. agree with your food comment, add a pond for fish and a mineral bag to attrack deer. thanks for your review - very thorough! and yes, plz send feedback on my energy policy. i have two late additions to it: 60 mph top speed limit; 4 day work week.

    blah blah: good username selection for you.

    papagiki: i have no problem with ETF's and hold some myself. that said, i absolutely love my positions in Vanguard Energy and Fidelity Select's Nat Gas & Energy Services. there performance over the last 5 year is probably close to 8-10x the S&P500. can't beat that with a stick man.

    phil: demand for oil goes down? only in the case of a depressiona nd we're all hosed anyhow. so, not in my lifetime.

    richjoy: i have invested for close to 30 years. i used to be a fan of diversification. peak oil has changed that for reasons i explained. i am still a big fan of diversification: within the energy and precious metals sectors! ;)

    jjsason: "There are a lot of *people* who are not going to let the OPEC cartel rig oil prices along with the commodity futures exchanges." what, are the people gonna take over all the oil rigs in all oil producing nations? get real.

    yetiv: well said! pursley and i have supposedly called a truce, but feel free to go after him yourself wrt depletion rates, which he appears to be in a state of denial.

    ann: hi, i love it when the ladies participate. with respect to my strategy being "all for me", it's hard for me to watch the government rape the treasury and devalue my currency (and therefore my net worth) by 50% and stand by and watch without taking action. wrt money flowing into oil and pushing the price up, this is a good thing! high priced oil might be the one thing that gets the US off it's butt an adopt a comprehensive energy policy based on transitioning OFF of oil. i think we are on the same page here. have you read my energy policy?
    seekingalpha.com/artic...
    would appreciate your feedback plz. wrt 5%, it would be more on the order of 20-25%.

    paulk: i like the railroads and ag too, that said, to me they are still peak oil plays.

    richjoy: plz be more specific on my "blather".

    philips49: is your first name conoco? :)

    kat: i used to be against nuclear too. problem now is we have ignored oil and energy policy for so long, we simply have no choice but nuclear. i take coal generation off the table because, forgetting the CO2, it is simply destroying our water table, our lakes, streams, river, and fish with mercury poisining. and yes, i know the half-life of mercury. agree we need massive wind and solar, and agreed the government must get involved due to the sheer magnitude of the energy void which is coming. thx for your comments.

    freefall: the picture is atop mt. conejos, 13,172 ft, san juan wilderness colorado. great day hike. not a 14'er, but will give you a good work out. besides, the cutthroat in tobacco lake, which you will pass on the way to the peak, are *huge*.

    peark2k: from the article in the WSJ the other day on the US military's oil consumption, i figured out that the US military uses 1.5 days of total worldwide oil production per year.

    pursely: very patriotic of you to buy the hummer. you're the best friend russia and the middle east has.

    gr8ideas: good luck with the S&P500 and bonds in the coming years. i'll check back with you in 5 years and see if you are keeping up with inflation and the falling US dollar. wrt gold, please check out the 1970's action on gold, and compare to the action on gold the last few years - see any simliarities? now, after the 70's gold dropped along with oil when the saudis turned on the "spigot". i maintain there is no "spigot" any more, and the rise of oil will be as far into the future as you can see.

    hackensack: again, plz read the previously referred to article in the WSJ and tell me why so many oil exporter's production is down while oil prices have gone up 4x? what kind of "politics" is that?

    blah blah: again, no substance and your username was very well chosen.

    Kezorm: oil, oil services, and gold creamed the S&P500 in the 1970's. high oil prices and rising inflation will do the same now. in fact, if the S&P didn't have the energy related companies in it, the outperformance would even be more exceptional.

    lksseven: there is no guessing with respect to worldwide oil production and worldwide oil demand. politically unhinged? please read my bullets up above about what has happened financially during bush's administration and defend them. republican ideology seems to accept non-republican policy and blinded you to the truth of finances just as it did to the truth about iraq. you njever heard me say bush is manipulating the entire global economy - please point to those words in my article. you cannot. if you are going to debate me, at least debate ME, not yourself and your own words or interpretations of what you think i said.

    zack: who is suggesting two energy stocks? did you not see the entire list of recommendations?
  •  
    Jun 01 11:24 AM
    Great article and great recommendations for diversification MERK and Prudent-wish the expense ratios were lower. Don't fight the trend and it's ok to put all your eggs in one basket, just really keep an eye on that basket. When or if the fundamentals change I'll move out of energy.
    I have a friend working off-shore in the gulf and the challenges are enormous.