Dr. Stephen Leeb - Seeking Alpha 'Dr. Stephen Leeb' Tag RSS Syndication from SeekingAlpha.com SeekingAlpha.com http://seekingalpha.com/author/dr-stephen-leeb Is Technology Hastening Peak Metals? http://seekingalpha.com/article/175937-is-technology-hastening-peak-metals?source=feed 175937 A few weeks ago, 60 Minutes aired a story about one of the most polluted towns in China. The town is in the business of importing electronic waste (old computer monitors, cell phones, etc.) from the U.S. and melting it down to recover valuable metals.

This is not the kind of high-tech recycling operation you would see in America. The methods are downright medieval, and the pollution controls non-existent. The children and adults of this town live in constant exposure to toxic substances such as lead, cadmium, mercury, chromium, polyvinyl chlorides, etc., and they have the health problems to match.

]]> Tue, 01 Dec 2009 10:33:30 -0500 Dr. Stephen Leeb Dr. Stephen Leeb submits:

A few weeks ago, 60 Minutes aired a story about one of the most polluted towns in China. The town is in the business of importing electronic waste (old computer monitors, cell phones, etc.) from the U.S. and melting it down to recover valuable metals.

This is not the kind of high-tech recycling operation you would see in America. The methods are downright medieval, and the pollution controls non-existent. The children and adults of this town live in constant exposure to toxic substances such as lead, cadmium, mercury, chromium, polyvinyl chlorides, etc., and they have the health problems to match.


Complete Story »]]> Dr. Stephen Leeb Petrobras’ Long-Term Prospects Look as Strong as Ever http://seekingalpha.com/article/175498-petrobras-long-term-prospects-look-as-strong-as-ever?source=feed 175498 Petrobras (PBR), the Brazilian oil giant and one of the largest oil producers in the world, recently announced its third quarter results, bringing in R$7.3 billion ($4.2 billion) in earnings. Although down from R$9.84 billion in the same quarter last year, the figures narrowly beat Bloomberg’s average analyst estimates of R$7.25 billion.
The results reflect a challenging quarter, in which oil prices dropped 41 percent from a year ago. Indeed, Petrobras’ competitors all took similar hits on the back of lower crude prices, most of them to a greater degree than Petrobras (ExxonMobil’s (XOM) third-quarter profit fell a whopping 68 percent and Royal Dutch Shell’s profits fell 62 percent). With production strong and on track to fulfill output targets, and with various long-term opportunities waiting to be exploited, we believe that Petrobras’ long-term prospects remain as strong as ever.
Petrobras has one of the world’s largest proven oil reserves and is among the top ten companies in the world in terms of oil and gas production, as well as total refining capacity. The CEO, Jose Sergio Gabrielli, said in a recent interview that Petrobras’ proven reserves could more than double to around 35 billion barrels in the next two to three years, up from roughly 14 billion now. And Petrobras’ CFO, Almir Barbassa, has said that production targets, currently at 2.05 million barrels a day, are likely to be raised by the end of this year.
Recent discoveries of pre-salt oil fields in Brazil’s Santo Basin, one of the most significant oil finds of the last 30 years, will be instrumental in achieving these new targets. But the real ace up the company’s sleeve is the Brazilian government’s proposal to make Petrobras the only operator of all new offshore pre-salt oil fields yet to be exploited; the company will also obtain the right to produce 5 billion barrels of oil in offshore fields. In addition to government support, Petrobras is unique among its competitors in its technological know-how and experience with pre-salt rocks, giving it an enviable competitive advantage over its peers.
With a strategic eye on its long-term future, Petrobras has also been aggressively expanding its renewable energy programs in wind, solar and biofuel. Petrobras’ total biofuel production, particularly important for Brazil’s energy needs, is set to increase at a 17.9 percent annual rate through 2013.
In another sensible long-term move, Petrobras earlier secured a $10 billion loan from China in return for a guaranteed long-term supply of oil. The loan will help cover costs related to finance planned projects to the tune of $174 billion over the next 5 years. As China’s clout in the global economy, as well as its energy needs become ever-more apparent, ties to the country will become increasingly important in coming years.
Given its strong production outlook, excellent execution and long-term business strategy, Petrobras continues to present an extremely solid investment case in a challenging economic environment. Shares are attractive on a risk/reward basis and relative to peers and the company’s growth prospects. Additionally, shares offer a yield of 3.2 percent that will grow with company earnings and will be boosted further for US investors as Brazil’s currency continues to gain strength against the US dollar. We continue to recommend PBR as a buy.

Disclosure: Leeb Group, its officers, directors, shareholders, employees
and affiliated entities and/or clients of such affiliated entities may
currently maintain direct or indirect ownership positions in financial
instruments (i.e., stocks, bonds, options, warrants, etc.) of companies
or entities whose underlying exposure is in the companies mentioned in
this article.

]]> Sun, 29 Nov 2009 00:48:55 -0500 Dr. Stephen Leeb Dr. Stephen Leeb submits:
Petrobras (PBR), the Brazilian oil giant and one of the largest oil producers in the world, recently announced its third quarter results, bringing in R$7.3 billion ($4.2 billion) in earnings. Although down from R$9.84 billion in the same quarter last year, the figures narrowly beat Bloomberg’s average analyst estimates of R$7.25 billion.
The results reflect a challenging quarter, in which oil prices dropped 41 percent from a year ago. Indeed, Petrobras’ competitors all took similar hits on the back of lower crude prices, most of them to a greater degree than Petrobras (ExxonMobil’s (XOM) third-quarter profit fell a whopping 68 percent and Royal Dutch Shell’s profits fell 62 percent). With production strong and on track to fulfill output targets, and with various long-term opportunities waiting to be exploited, we believe that Petrobras’ long-term prospects remain as strong as ever.
Petrobras has one of the world’s largest proven oil reserves and is among the top ten companies in the world in terms of oil and gas production, as well as total refining capacity. The CEO, Jose Sergio Gabrielli, said in a recent interview that Petrobras’ proven reserves could more than double to around 35 billion barrels in the next two to three years, up from roughly 14 billion now. And Petrobras’ CFO, Almir Barbassa, has said that production targets, currently at 2.05 million barrels a day, are likely to be raised by the end of this year.
Recent discoveries of pre-salt oil fields in Brazil’s Santo Basin, one of the most significant oil finds of the last 30 years, will be instrumental in achieving these new targets. But the real ace up the company’s sleeve is the Brazilian government’s proposal to make Petrobras the only operator of all new offshore pre-salt oil fields yet to be exploited; the company will also obtain the right to produce 5 billion barrels of oil in offshore fields. In addition to government support, Petrobras is unique among its competitors in its technological know-how and experience with pre-salt rocks, giving it an enviable competitive advantage over its peers.
With a strategic eye on its long-term future, Petrobras has also been aggressively expanding its renewable energy programs in wind, solar and biofuel. Petrobras’ total biofuel production, particularly important for Brazil’s energy needs, is set to increase at a 17.9 percent annual rate through 2013.
In another sensible long-term move, Petrobras earlier secured a $10 billion loan from China in return for a guaranteed long-term supply of oil. The loan will help cover costs related to finance planned projects to the tune of $174 billion over the next 5 years. As China’s clout in the global economy, as well as its energy needs become ever-more apparent, ties to the country will become increasingly important in coming years.
Given its strong production outlook, excellent execution and long-term business strategy, Petrobras continues to present an extremely solid investment case in a challenging economic environment. Shares are attractive on a risk/reward basis and relative to peers and the company’s growth prospects. Additionally, shares offer a yield of 3.2 percent that will grow with company earnings and will be boosted further for US investors as Brazil’s currency continues to gain strength against the US dollar. We continue to recommend PBR as a buy.

Disclosure: Leeb Group, its officers, directors, shareholders, employees
and affiliated entities and/or clients of such affiliated entities may
currently maintain direct or indirect ownership positions in financial
instruments (i.e., stocks, bonds, options, warrants, etc.) of companies
or entities whose underlying exposure is in the companies mentioned in
this article.


Complete Story »]]> PBR Dr. Stephen Leeb All Investment Roads Lead to Commodities http://seekingalpha.com/article/172904-all-investment-roads-lead-to-commodities?source=feed 172904 Three seemingly disparate news items last week strongly suggest that the investment world is bifurcating into commodity and non-commodity investments – or if you will long-term winners and long-term losers.

First, India's central bank announced that it had bought 200 tons of gold from the International Monetary Fund. That's half of the total amount the IMF had planned on selling. For a relatively small central bank to buy that much in one fell swoop is a big deal. It promotes gold from the status of a “barbaric relic” to that of an alternative reserve currency. Moreover, it leaves China – and other Central Banks – with egg on their face.

]]> Thu, 12 Nov 2009 03:05:20 -0500 Dr. Stephen Leeb Dr. Stephen Leeb submits:

Three seemingly disparate news items last week strongly suggest that the investment world is bifurcating into commodity and non-commodity investments – or if you will long-term winners and long-term losers.

First, India's central bank announced that it had bought 200 tons of gold from the International Monetary Fund. That's half of the total amount the IMF had planned on selling. For a relatively small central bank to buy that much in one fell swoop is a big deal. It promotes gold from the status of a “barbaric relic” to that of an alternative reserve currency. Moreover, it leaves China – and other Central Banks – with egg on their face.


Complete Story »]]> GLD SLV EWZ EWC EWA FXI Dr. Stephen Leeb Market Moving Closer to Its First Significant Pullback Since Last Spring http://seekingalpha.com/article/171132-market-moving-closer-to-its-first-significant-pullback-since-last-spring?source=feed 171132 Last week, stocks posted their worst showing in eight months. The action was dreadful with all sectors and market segments being clipped. Small caps fared the worst, dropping anywhere from 5 to more than 6 percent, depending the on the average you choose to examine. Market breadth was equally terrible with declining issues outpacing advancers by more than a 7-to-1 margin on the New York Stock Exchange. Markets around the globe responded in kind.
Monday it looked like U.S. shares were headed for at least a temporary respite. But the rally was all too brief. Blue chip shares managed to recover by the end of Monday’s trading, but there were plenty of divergences: small caps, the transports and utilities all lost ground.
Initially, investors cheered the Institute of Supply Management’s (ISM) Manufacturing Index data of October, which came in at 55.7, well ahead of expectations at 53 and the prior reading of 52.6. But the devil was in the details.
The stock market rally fizzled as a breakdown of the ISM data revealed the pace of new orders, supplier deliveries and customers’ inventories all slowed in the month, while prices paid rose. So while the overall report suggested the economy is healthier than it was, key components suggest the recovery remains spotty, at best.
There is much more economic data due out this week that could roil the market. For instance, the unemployment rate is expected to reach 9.9 percent, but a double-digit print will bring out the bears in force. From our perspective, even more important with be weekly jobless claims, which remain persistently high. Money supply figures, which continue to contract, could also set off alarm bells. Without more bank lending the economic recovery is doomed.
The Federal Reserve’s policy setting committee is meeting again this week, which could also affect the market. No change is expected with short-term interest rates, but the wording in the policy statement will be closely watched. At this point, with the recovery still quite fragile, the last thing the Fed wants to do is get stocks running significantly higher. That would put pressure on Bernanke and company to start raising rates again sooner than they’d otherwise prefer.
In fact, the Fed may offer a somewhat more muted assessment of the economy than it did six weeks ago in its last policy statement. The Fed could seek to engineer a modest correction in stocks. By doing so, the central bankers would help keep long-term interest rates down and make it more palatable to continue with its policy of quantitative easing, further aiding the weak banking sector.
Whether we see prices erode from here or if stocks can manage another hurrah back toward the recent highs is open to speculation. One thing is certain, the deteriorating market internals tell us that the stock market is moving closer to its first significant pullback since the spring. Our hope is the correction will be limited in scope, but our fear is it could be far greater than most investors care to imagine.
Looking further out, we see inflation as being a very real threat. And we’re not the only ones who think so. Warren Buffett’s (BRK.A) decision to buy Burlington Northern Santa Fe (BNI), his biggest acquisition ever, is a massive bet by the Oracle of Omaha on inflation since the railroad is levered to commodity prices. The market is recognizing this by bidding up gold prices sharply to a record high, even in the face of a strong dollar.
]]> Wed, 04 Nov 2009 08:59:41 -0500 Dr. Stephen Leeb Dr. Stephen Leeb submits:
Last week, stocks posted their worst showing in eight months. The action was dreadful with all sectors and market segments being clipped. Small caps fared the worst, dropping anywhere from 5 to more than 6 percent, depending the on the average you choose to examine. Market breadth was equally terrible with declining issues outpacing advancers by more than a 7-to-1 margin on the New York Stock Exchange. Markets around the globe responded in kind.
Monday it looked like U.S. shares were headed for at least a temporary respite. But the rally was all too brief. Blue chip shares managed to recover by the end of Monday’s trading, but there were plenty of divergences: small caps, the transports and utilities all lost ground.
Initially, investors cheered the Institute of Supply Management’s (ISM) Manufacturing Index data of October, which came in at 55.7, well ahead of expectations at 53 and the prior reading of 52.6. But the devil was in the details.
The stock market rally fizzled as a breakdown of the ISM data revealed the pace of new orders, supplier deliveries and customers’ inventories all slowed in the month, while prices paid rose. So while the overall report suggested the economy is healthier than it was, key components suggest the recovery remains spotty, at best.
There is much more economic data due out this week that could roil the market. For instance, the unemployment rate is expected to reach 9.9 percent, but a double-digit print will bring out the bears in force. From our perspective, even more important with be weekly jobless claims, which remain persistently high. Money supply figures, which continue to contract, could also set off alarm bells. Without more bank lending the economic recovery is doomed.
The Federal Reserve’s policy setting committee is meeting again this week, which could also affect the market. No change is expected with short-term interest rates, but the wording in the policy statement will be closely watched. At this point, with the recovery still quite fragile, the last thing the Fed wants to do is get stocks running significantly higher. That would put pressure on Bernanke and company to start raising rates again sooner than they’d otherwise prefer.
In fact, the Fed may offer a somewhat more muted assessment of the economy than it did six weeks ago in its last policy statement. The Fed could seek to engineer a modest correction in stocks. By doing so, the central bankers would help keep long-term interest rates down and make it more palatable to continue with its policy of quantitative easing, further aiding the weak banking sector.
Whether we see prices erode from here or if stocks can manage another hurrah back toward the recent highs is open to speculation. One thing is certain, the deteriorating market internals tell us that the stock market is moving closer to its first significant pullback since the spring. Our hope is the correction will be limited in scope, but our fear is it could be far greater than most investors care to imagine.
Looking further out, we see inflation as being a very real threat. And we’re not the only ones who think so. Warren Buffett’s (BRK.A) decision to buy Burlington Northern Santa Fe (BNI), his biggest acquisition ever, is a massive bet by the Oracle of Omaha on inflation since the railroad is levered to commodity prices. The market is recognizing this by bidding up gold prices sharply to a record high, even in the face of a strong dollar.

Complete Story »]]> BRK.A BRK.B BNI Dr. Stephen Leeb Three Companies with Positive, Long-Term Potential http://seekingalpha.com/article/169761-three-companies-with-positive-long-term-potential?source=feed 169761

Earnings season rolls on. Despite still less-than-compelling economic readings, earnings reports have largely been good. With exactly half of the S&P 500 companies already having reported, we’ve seen 75 percent of them meet or beat expectations. Granted, many of these upbeat results stem from cost-cutting rather than strong top-line results, but we’ll take whatever we can get.

The earnings reported by some TCI portfolio holdings this week weren’t off the charts, but they left a positive long-term picture for these companies intact. Let’s take FPL Group (FPL), a member of both our Growth and Income portfolios. Before the market opened yesterday, FPL reported earnings and forward-looking guidance that underwhelmed investors. Excluding one time items, the U.S.’s largest producer of wind and solar power reported earnings per share of $1.38, four cents below consensus estimates.
The reasons for the miss were two-fold. First, the company’s Florida utility business was punished by the recession, as the state has been one of the hardest hit. Florida’s unemployment rate has reached 11 percent – its highest since records began in 1976. The company has expanded its wind farms and solar projects to compensate for lost Florida business, but earnings during the quarter were hurt by poor wind resources in Texas. The combination of the two caused the company to slightly lower its full-year 2009 guidance to $4.10 to $4.20 a share, while also bringing in next year’s estimates. The company is awaiting a rate increase in Florida that could lead to a revenue boost of $1 billion in 2010, but it must wait for a postponed vote from the Florida Public Service Commission that will now take place next year.
While the immediate outlook given by FPL wasn’t upbeat, the company’s long-term prospects still looks bright. Energy prices continue to creep up, and will create increasingly strong incentives on building out renewable sources. FPL, in addition to its tremendous wind and solar assets, is also the country’s third largest nuclear provider – another unregulated business helping to provide the company with long-term double digit earnings growth. Investors will not only get this growth, but dividends to boot – with shares now yielding 3.8 percent. The combination of the two makes the company attractive to income and conservative growth investors alike.
After the close of regular trading Tuesday, Growth portfolio member Visa (V) disclosed its numbers that indicated a strong quarter. Investors are cheering the results, as its shares reached a new 52-week high in yesterday’s trading.
Visa reported earnings per share of 74 cents, outpacing analysts’ expectations by 2 cents and representing a better than 20 percent improvement over the year-ago period. The company, which boasts the world’s largest payments network, was helped by dollar volume, which slid only 1 percent, versus 3 percent in the June quarter. On the conference call, the company noted that U.S. spending on its network actually grew 1 percent in September, and was 3 percent higher in the first 3 weeks of October – both positives for the economy at large. The company also reported strong results in debit card division, a business in which the company has a dominant, roughly 75 percent, market share. As credit card companies shrink credit lines and increase fees, more consumers are shifting to debit to buy their necessities, benefiting Visa.
The company does not take on consumer default risk, while it collects fees for the use of its far-reaching network. As credit remains tight for consumers, Visa’s network will continue to be in demand – both here and abroad.
Looking forward, the company expects revenue growth in the low teens, while margin improvements will help earnings per share grow by over 20 percent. The company, like us, sees shares attractive at current levels. To benefit, Visa announced a stock buyback program of $1 billion – another positive sign for its shareholders.
Meanwhile, shares of ConocoPhillips (COP) were down yesterday after the company beat consensus earnings estimates this morning. The company saw profit drop 71 percent from a year ago, but with earnings per share of $0.98 ex-items, it managed to outpace estimates by 4 cents. The company suffered a from precipitous year-over-year drop in prices for crude and natural gas. At the same time, Conoco was able to increase production by 2.5 percent during the quarter. For 2010, the company plans on reducing capital spending by 12 percent in 2010 in an effort to cut debt and boost returns.
Looking forward, ConocoPhillips is strongly positioned with an eye towards its oil reserves and tremendous natural gas assets. Shares yield over 4 percent, which will make the wait for the return of profits easier. And profits will return in a big way as energy demand will rise with the global economic recovery.
]]> Thu, 29 Oct 2009 05:50:41 -0400 Dr. Stephen Leeb Dr. Stephen Leeb submits:

Earnings season rolls on. Despite still less-than-compelling economic readings, earnings reports have largely been good. With exactly half of the S&P 500 companies already having reported, we’ve seen 75 percent of them meet or beat expectations. Granted, many of these upbeat results stem from cost-cutting rather than strong top-line results, but we’ll take whatever we can get.

The earnings reported by some TCI portfolio holdings this week weren’t off the charts, but they left a positive long-term picture for these companies intact. Let’s take FPL Group (FPL), a member of both our Growth and Income portfolios. Before the market opened yesterday, FPL reported earnings and forward-looking guidance that underwhelmed investors. Excluding one time items, the U.S.’s largest producer of wind and solar power reported earnings per share of $1.38, four cents below consensus estimates.
The reasons for the miss were two-fold. First, the company’s Florida utility business was punished by the recession, as the state has been one of the hardest hit. Florida’s unemployment rate has reached 11 percent – its highest since records began in 1976. The company has expanded its wind farms and solar projects to compensate for lost Florida business, but earnings during the quarter were hurt by poor wind resources in Texas. The combination of the two caused the company to slightly lower its full-year 2009 guidance to $4.10 to $4.20 a share, while also bringing in next year’s estimates. The company is awaiting a rate increase in Florida that could lead to a revenue boost of $1 billion in 2010, but it must wait for a postponed vote from the Florida Public Service Commission that will now take place next year.
While the immediate outlook given by FPL wasn’t upbeat, the company’s long-term prospects still looks bright. Energy prices continue to creep up, and will create increasingly strong incentives on building out renewable sources. FPL, in addition to its tremendous wind and solar assets, is also the country’s third largest nuclear provider – another unregulated business helping to provide the company with long-term double digit earnings growth. Investors will not only get this growth, but dividends to boot – with shares now yielding 3.8 percent. The combination of the two makes the company attractive to income and conservative growth investors alike.
After the close of regular trading Tuesday, Growth portfolio member Visa (V) disclosed its numbers that indicated a strong quarter. Investors are cheering the results, as its shares reached a new 52-week high in yesterday’s trading.
Visa reported earnings per share of 74 cents, outpacing analysts’ expectations by 2 cents and representing a better than 20 percent improvement over the year-ago period. The company, which boasts the world’s largest payments network, was helped by dollar volume, which slid only 1 percent, versus 3 percent in the June quarter. On the conference call, the company noted that U.S. spending on its network actually grew 1 percent in September, and was 3 percent higher in the first 3 weeks of October – both positives for the economy at large. The company also reported strong results in debit card division, a business in which the company has a dominant, roughly 75 percent, market share. As credit card companies shrink credit lines and increase fees, more consumers are shifting to debit to buy their necessities, benefiting Visa.
The company does not take on consumer default risk, while it collects fees for the use of its far-reaching network. As credit remains tight for consumers, Visa’s network will continue to be in demand – both here and abroad.
Looking forward, the company expects revenue growth in the low teens, while margin improvements will help earnings per share grow by over 20 percent. The company, like us, sees shares attractive at current levels. To benefit, Visa announced a stock buyback program of $1 billion – another positive sign for its shareholders.
Meanwhile, shares of ConocoPhillips (COP) were down yesterday after the company beat consensus earnings estimates this morning. The company saw profit drop 71 percent from a year ago, but with earnings per share of $0.98 ex-items, it managed to outpace estimates by 4 cents. The company suffered a from precipitous year-over-year drop in prices for crude and natural gas. At the same time, Conoco was able to increase production by 2.5 percent during the quarter. For 2010, the company plans on reducing capital spending by 12 percent in 2010 in an effort to cut debt and boost returns.
Looking forward, ConocoPhillips is strongly positioned with an eye towards its oil reserves and tremendous natural gas assets. Shares yield over 4 percent, which will make the wait for the return of profits easier. And profits will return in a big way as energy demand will rise with the global economic recovery.

Complete Story »]]> FPL V COP Dr. Stephen Leeb Market Update: Seven-Month Rally Is Getting Tired http://seekingalpha.com/article/169562-market-update-seven-month-rally-is-getting-tired?source=feed 169562 During the past week the stock market has shown numerous signs that the seven-month rally, which has carried shares to not only deeply overbought territory but to their highest valuations in years as well, is getting tired.

Heading into trading this week, the S&P 500 was 20 percent above its 200-day moving average. This is a rather rare occurrence. For instance, even at the height of the tech bubble in 2000 we didn’t reach such an overextended point. In fact, during the Post War period the only occasions we moved up so far, so fast was briefly in 1975, 1982 and again in 1983.

]]> Wed, 28 Oct 2009 14:34:07 -0400 Dr. Stephen Leeb Dr. Stephen Leeb submits:

During the past week the stock market has shown numerous signs that the seven-month rally, which has carried shares to not only deeply overbought territory but to their highest valuations in years as well, is getting tired.

Heading into trading this week, the S&P 500 was 20 percent above its 200-day moving average. This is a rather rare occurrence. For instance, even at the height of the tech bubble in 2000 we didn’t reach such an overextended point. In fact, during the Post War period the only occasions we moved up so far, so fast was briefly in 1975, 1982 and again in 1983.


Complete Story »]]> SPY UDN UUP DIA IWM Dr. Stephen Leeb 3 Stocks that Will Ride the Wind Energy Boom http://seekingalpha.com/article/169084-3-stocks-that-will-ride-the-wind-energy-boom?source=feed 169084 Last week we mentioned the scientific principle that when the scale of things increases, new and unexpected phenomena emerge. And we pointed out that this will have profound implications for investors in the resource sector.

Coincidentally, the November issue of Scientific American came out last week bearing the cover story, “A Plan for a Sustainable Future,” that unfortunately misses this point. Nonetheless, the article is an important read because it speaks to some exciting opportunities in companies developing alternative energy. And, even more important, despite its faults, the article does give us hope that our children may be able to live a good life on this planet. And, who knows, it may not be too late for us as well.

]]> Tue, 27 Oct 2009 09:25:15 -0400 Dr. Stephen Leeb Dr. Stephen Leeb submits:

Last week we mentioned the scientific principle that when the scale of things increases, new and unexpected phenomena emerge. And we pointed out that this will have profound implications for investors in the resource sector.

Coincidentally, the November issue of Scientific American came out last week bearing the cover story, “A Plan for a Sustainable Future,” that unfortunately misses this point. Nonetheless, the article is an important read because it speaks to some exciting opportunities in companies developing alternative energy. And, even more important, despite its faults, the article does give us hope that our children may be able to live a good life on this planet. And, who knows, it may not be too late for us as well.


Complete Story »]]> VALE BHP FPL Dr. Stephen Leeb Earnings Season So Far: Largely Impressive Announcements, Less than 15% Falling Short http://seekingalpha.com/article/168058-earnings-season-so-far-largely-impressive-announcements-less-than-15-falling-short?source=feed 168058 Earnings season is well underway with about a quarter of S&P 500 companies having already reported. The results, helped by favorable year-on-year comparisons, have been largely impressive so far, with over three quarters of announcements coming above expectations and less than 15 percent falling short.
We have only had a few of our holdings report thus far – but we haven’t suffered from any disappointments. As we discussed last week, Intel (INTC) had a blowout quarter – beating its own revised expectations, as well as consensus estimates. The semiconductor giant’s quarter was helped by strong back-to-school revenues – the same type of sales that helped push consumer technology powerhouse, Apple Inc. (AAPL), to another record-setting quarter.
In its earnings announcement after the market’s close on Monday, Apple reported its most profitable quarter ever with net income totaling $1.67 billion – a 47 percent increase over last year. The record profit translated to $1.82 earnings per share, obliterating the company’s own guidance of $1.20 a share (which is admittedly always conservative), and easily beating consensus estimates of $1.43 (the highest estimate, at $1.66 was actually well short too).
The maker of Mac computers, iPod music players, and the ubiquitous iPhone saw its revenues grow by 25 percent versus the year-earlier period to $9.78 billion – again outpacing expectations. The company attributed the strong quarter to strong education sales (a 12 percent year-over-year increase), which helped Mac sales grow by 17 percent versus the 2008 period. The increase was especially compelling given that estimates of growth for the overall market were only 2 percent – allowing to the computer to continue growing its market share, now at almost 10 percent of the U.S. market (but still leaving plenty of room to expand).
iPod sales slacked during the quarter with unit sales down to 10.2 million from 11 million; the good news is that much of this was due to cannibalization from iPhone sales which grew to 7.4 million. The company’s phone accounts for an estimated 2 percent of the worldwide phone market, but should see that increased as the company continues to expand its reach. Earlier this quarter, Apple announced a partnership with China Unicom, China’s second largest wireless provider, and will begin offering the phone in the world’s largest wireless market on Oct. 30th.
With impressive results comes further strengthening of Apple’s balance sheet. The company now boasts an astounding $34 billion in cash, accounting for roughly 20 percent of its market capitalization. The cash not only provides a cushion and measure of safety in times of tight credit, but also gives the company ample funding to expand – whether it be through further research and development, acquisitions, or otherwise.
Not resting on its laurels, Apple made more announcements Tuesday. The company refreshed its Mac and Macbook lines, while also releasing a new mouse that utilizes the company’s patented touch controls. The moves are designed to provide a spark to the holiday shopping – a time in which the company typically thrives. Further down the road, analysts have speculated about tablet-like device being released by the company. Somewhere between an iPhone and a Macbook – the device would likely compete with netbooks, portable DVD players, as well as mobile book readers like Amazon’s (AMZN) Kindle.
As the company continues to deftly sidestep consumer headwinds, earnings growth could easily top 20 percent. The shares, now trading at 27 times 2010 earnings, are still attractive given the company’s growth potential and prowess.
]]> Thu, 22 Oct 2009 04:15:35 -0400 Dr. Stephen Leeb Dr. Stephen Leeb submits:
Earnings season is well underway with about a quarter of S&P 500 companies having already reported. The results, helped by favorable year-on-year comparisons, have been largely impressive so far, with over three quarters of announcements coming above expectations and less than 15 percent falling short.
We have only had a few of our holdings report thus far – but we haven’t suffered from any disappointments. As we discussed last week, Intel (INTC) had a blowout quarter – beating its own revised expectations, as well as consensus estimates. The semiconductor giant’s quarter was helped by strong back-to-school revenues – the same type of sales that helped push consumer technology powerhouse, Apple Inc. (AAPL), to another record-setting quarter.
In its earnings announcement after the market’s close on Monday, Apple reported its most profitable quarter ever with net income totaling $1.67 billion – a 47 percent increase over last year. The record profit translated to $1.82 earnings per share, obliterating the company’s own guidance of $1.20 a share (which is admittedly always conservative), and easily beating consensus estimates of $1.43 (the highest estimate, at $1.66 was actually well short too).
The maker of Mac computers, iPod music players, and the ubiquitous iPhone saw its revenues grow by 25 percent versus the year-earlier period to $9.78 billion – again outpacing expectations. The company attributed the strong quarter to strong education sales (a 12 percent year-over-year increase), which helped Mac sales grow by 17 percent versus the 2008 period. The increase was especially compelling given that estimates of growth for the overall market were only 2 percent – allowing to the computer to continue growing its market share, now at almost 10 percent of the U.S. market (but still leaving plenty of room to expand).
iPod sales slacked during the quarter with unit sales down to 10.2 million from 11 million; the good news is that much of this was due to cannibalization from iPhone sales which grew to 7.4 million. The company’s phone accounts for an estimated 2 percent of the worldwide phone market, but should see that increased as the company continues to expand its reach. Earlier this quarter, Apple announced a partnership with China Unicom, China’s second largest wireless provider, and will begin offering the phone in the world’s largest wireless market on Oct. 30th.
With impressive results comes further strengthening of Apple’s balance sheet. The company now boasts an astounding $34 billion in cash, accounting for roughly 20 percent of its market capitalization. The cash not only provides a cushion and measure of safety in times of tight credit, but also gives the company ample funding to expand – whether it be through further research and development, acquisitions, or otherwise.
Not resting on its laurels, Apple made more announcements Tuesday. The company refreshed its Mac and Macbook lines, while also releasing a new mouse that utilizes the company’s patented touch controls. The moves are designed to provide a spark to the holiday shopping – a time in which the company typically thrives. Further down the road, analysts have speculated about tablet-like device being released by the company. Somewhere between an iPhone and a Macbook – the device would likely compete with netbooks, portable DVD players, as well as mobile book readers like Amazon’s (AMZN) Kindle.
As the company continues to deftly sidestep consumer headwinds, earnings growth could easily top 20 percent. The shares, now trading at 27 times 2010 earnings, are still attractive given the company’s growth potential and prowess.

Complete Story »]]> INTC AAPL Dr. Stephen Leeb Stock Price Strength Notwithstanding, Economy and the Dollar Are Still on the Skids http://seekingalpha.com/article/167750-stock-price-strength-notwithstanding-economy-and-the-dollar-are-still-on-the-skids?source=feed 167750 The dollar continues to work its way lower, prompting people to shift more assets into riskier investments such as stocks. This is a trade that could persist for a time, and indeed, the Federal Reserve and the U.S. government are content to let it continue as it buys time for banks to repair their balance sheets and hopefully restores confidence in our economy. The policy isn’t without its risks, however and we ultimately see it ending badly.
The greenback’s slide is a tonic for commodities. Gold has notched even higher highs, for instance, but that’s really just a symptom of the problem. The real danger lies in the escalating costs of basic economic inputs. Most notable of these is crude oil, which topped $79 a barrel Monday.
From a technical perspective, oil prices have broken out of their trading range, which is likely to bring in more buyers for crude. With very little in the way of overhead resistance to keep prices in check, we could well wake up one morning soon to see oil prices once again in triple digits. Even without further increases, prices have moved up far enough so as to act as a governor on economic growth.
Make no mistake, despite the strength in stock prices during the past seven months, the economy is still in no great shakes. Home foreclosures are mounting, prompting the Obama Administration to unveil yet another plan to aid homebuyers who can’t afford their mortgage. The Fed is doing its part, buying up hundreds of billions of dollars worth of mortgage-backed securities from government agencies in an attempt to keep the lid on rates and spur the ailing housing sector. The banks, meanwhile, may be generating trading profits, but they continue to report deteriorating credit conditions and aren’t making new loans.
Economic figures such as industrial production and capacity utilization have come off their lows, but they remain well below where they stood during the last recession—and companies aren’t hiring. Consumer confidence is also far less than one would expect coming out of recession. Likewise, weekly new unemployment insurance claims have been declining but they remain above 500,000. So it’s a virtual certainty that the unemployment rate will continue to rise.
The official stance of governments aboard regarding the U.S. dollar, meanwhile, is moving from one of quiet concern to modest intervention. Brazil, for instance, has stepped in and imposed a 2 percent tax on foreign purchases of stocks and fixed-income investments in the hopes of keeping its currency, the real, from rising against the U.S. dollar. The real had climbed by a third this year, raising the cost of Brazilian exports. Other nations are likely to follow in Brazil’s footsteps, exerting greater control over their currencies. But given the imbalances in our own economy such moves will likely do little to stem the greenback’s relentless slide.
]]> Wed, 21 Oct 2009 03:46:39 -0400 Dr. Stephen Leeb Dr. Stephen Leeb submits:
The dollar continues to work its way lower, prompting people to shift more assets into riskier investments such as stocks. This is a trade that could persist for a time, and indeed, the Federal Reserve and the U.S. government are content to let it continue as it buys time for banks to repair their balance sheets and hopefully restores confidence in our economy. The policy isn’t without its risks, however and we ultimately see it ending badly.
The greenback’s slide is a tonic for commodities. Gold has notched even higher highs, for instance, but that’s really just a symptom of the problem. The real danger lies in the escalating costs of basic economic inputs. Most notable of these is crude oil, which topped $79 a barrel Monday.
From a technical perspective, oil prices have broken out of their trading range, which is likely to bring in more buyers for crude. With very little in the way of overhead resistance to keep prices in check, we could well wake up one morning soon to see oil prices once again in triple digits. Even without further increases, prices have moved up far enough so as to act as a governor on economic growth.
Make no mistake, despite the strength in stock prices during the past seven months, the economy is still in no great shakes. Home foreclosures are mounting, prompting the Obama Administration to unveil yet another plan to aid homebuyers who can’t afford their mortgage. The Fed is doing its part, buying up hundreds of billions of dollars worth of mortgage-backed securities from government agencies in an attempt to keep the lid on rates and spur the ailing housing sector. The banks, meanwhile, may be generating trading profits, but they continue to report deteriorating credit conditions and aren’t making new loans.
Economic figures such as industrial production and capacity utilization have come off their lows, but they remain well below where they stood during the last recession—and companies aren’t hiring. Consumer confidence is also far less than one would expect coming out of recession. Likewise, weekly new unemployment insurance claims have been declining but they remain above 500,000. So it’s a virtual certainty that the unemployment rate will continue to rise.
The official stance of governments aboard regarding the U.S. dollar, meanwhile, is moving from one of quiet concern to modest intervention. Brazil, for instance, has stepped in and imposed a 2 percent tax on foreign purchases of stocks and fixed-income investments in the hopes of keeping its currency, the real, from rising against the U.S. dollar. The real had climbed by a third this year, raising the cost of Brazilian exports. Other nations are likely to follow in Brazil’s footsteps, exerting greater control over their currencies. But given the imbalances in our own economy such moves will likely do little to stem the greenback’s relentless slide.

Complete Story »]]> UDN Dr. Stephen Leeb Concerns About the Tone of the Market's Current Advance http://seekingalpha.com/article/166694-concerns-about-the-tone-of-the-market-s-current-advance?source=feed 166694 This is becoming a familiar refrain: Stocks, commodities and bonds all remain in strong uptrends, even as the U.S. dollar continues to weaken. Such highly correlated moves can persist for a time, but not indefinitely. Bond prices have moved higher (and yields lower) reflecting deflationary forces at work. Commodities, on the other hand, continue to march higher and are up some 30 percent from their lows, thanks to strong demand from emerging economies. Stocks are traveling with commodities in anticipation of stronger growth here in the U.S., while ignoring the message of the bond market. We may even enjoy some growth for a period, but the rise in commodities simultaneously threatens to bring about a premature end to that growth.

We continue to have serious concerns about the tone of the stock market’s advance. Trading volume has been in a pronounced contraction for months. Last week, and again Monday, we saw stocks move higher even as trading volume has dried up. If you filter out program trading, which accounts for as much as 30 percent or more of total NYSE volume on any given day, you’ll see the market truly is running on fumes. Under healthy conditions, the market advances in an increase in trading activity.
Earnings reporting season is underway once again. So far, we’ve seen companies beat on the earnings front, by and large. That’s not much of a surprise since profit expectations for the third quarter have been set pretty low. But at the same time, companies continue to fall short of sales projections, despite somewhat easy comparisons with the year-ago period.
Ultimately, we need to see an improvement in the top line numbers if stocks are to meet investors’ lofty expectations for bottom line results. Looking back at this time a year ago, analysts we’re overly optimistic with their earnings forecasts. And they are likewise overly confident this time around as well, judging by the economic data rolling in and surveys of corporate spending and hiring plans for the coming months.
We’ve not been all that active with our trading of late. While the next big move is likely to be to the downside, it’s not clear if the market is rolling over yet. And as we’ve seen throughout this rally, being on the wrong side of the trade can be very painful. Sometimes it pays to wait, rather than trading for the sake of trading.
]]> Thu, 15 Oct 2009 09:29:43 -0400 Dr. Stephen Leeb Dr. Stephen Leeb submits:

This is becoming a familiar refrain: Stocks, commodities and bonds all remain in strong uptrends, even as the U.S. dollar continues to weaken. Such highly correlated moves can persist for a time, but not indefinitely. Bond prices have moved higher (and yields lower) reflecting deflationary forces at work. Commodities, on the other hand, continue to march higher and are up some 30 percent from their lows, thanks to strong demand from emerging economies. Stocks are traveling with commodities in anticipation of stronger growth here in the U.S., while ignoring the message of the bond market. We may even enjoy some growth for a period, but the rise in commodities simultaneously threatens to bring about a premature end to that growth.

We continue to have serious concerns about the tone of the stock market’s advance. Trading volume has been in a pronounced contraction for months. Last week, and again Monday, we saw stocks move higher even as trading volume has dried up. If you filter out program trading, which accounts for as much as 30 percent or more of total NYSE volume on any given day, you’ll see the market truly is running on fumes. Under healthy conditions, the market advances in an increase in trading activity.
Earnings reporting season is underway once again. So far, we’ve seen companies beat on the earnings front, by and large. That’s not much of a surprise since profit expectations for the third quarter have been set pretty low. But at the same time, companies continue to fall short of sales projections, despite somewhat easy comparisons with the year-ago period.
Ultimately, we need to see an improvement in the top line numbers if stocks are to meet investors’ lofty expectations for bottom line results. Looking back at this time a year ago, analysts we’re overly optimistic with their earnings forecasts. And they are likewise overly confident this time around as well, judging by the economic data rolling in and surveys of corporate spending and hiring plans for the coming months.
We’ve not been all that active with our trading of late. While the next big move is likely to be to the downside, it’s not clear if the market is rolling over yet. And as we’ve seen throughout this rally, being on the wrong side of the trade can be very painful. Sometimes it pays to wait, rather than trading for the sake of trading.

Complete Story »]]> TBT TLT DBC UDN SPY DIA QQQQ Dr. Stephen Leeb Still Concerned About Tone of Market's Advance http://seekingalpha.com/article/166490-still-concerned-about-tone-of-market-s-advance?source=feed 166490 This is becoming a familiar refrain: Stocks, commodities and bonds all remain in strong uptrends, even as the U.S. dollar continues to weaken. Such highly correlated moves can persist for a time, but not indefinitely. Bond prices have moved higher (and yields lower) reflecting deflationary forces at work. Commodities, on the other hand, continue to march higher and are up some 30 percent from their lows, thanks to strong demand from emerging economies. Stocks are traveling with commodities in anticipation of stronger growth here in the U.S., while ignoring the message of the bond market. We may even enjoy some growth for a period, but the rise in commodities simultaneously threatens to bring about a premature end to that growth.

We continue to have serious concerns about the tone of the stock market’s advance. Trading volume has been in a pronounced contraction for months. Last week, and again yesterday, we saw stocks move higher even as trading volume has dried up. If you filter out program trading, which accounts for as much as 30 percent or more of total NYSE volume on any given day, you’ll see the market truly is running on fumes. Under healthy conditions, the market advances in an increase in trading activity.

]]> Wed, 14 Oct 2009 12:11:23 -0400 Dr. Stephen Leeb Dr. Stephen Leeb submits:

This is becoming a familiar refrain: Stocks, commodities and bonds all remain in strong uptrends, even as the U.S. dollar continues to weaken. Such highly correlated moves can persist for a time, but not indefinitely. Bond prices have moved higher (and yields lower) reflecting deflationary forces at work. Commodities, on the other hand, continue to march higher and are up some 30 percent from their lows, thanks to strong demand from emerging economies. Stocks are traveling with commodities in anticipation of stronger growth here in the U.S., while ignoring the message of the bond market. We may even enjoy some growth for a period, but the rise in commodities simultaneously threatens to bring about a premature end to that growth.

We continue to have serious concerns about the tone of the stock market’s advance. Trading volume has been in a pronounced contraction for months. Last week, and again yesterday, we saw stocks move higher even as trading volume has dried up. If you filter out program trading, which accounts for as much as 30 percent or more of total NYSE volume on any given day, you’ll see the market truly is running on fumes. Under healthy conditions, the market advances in an increase in trading activity.


Complete Story »]]> Dr. Stephen Leeb Intel Shares Continue to Represent Compelling Value http://seekingalpha.com/article/167526-intel-shares-continue-to-represent-compelling-value?source=feed 167526 Intel (INTC) has done it again. The world’s largest semiconductor chipmaker and Growth Portfolio member reported third quarter earnings last Tuesday night that once again beat market expectations. Not only that, the quarter was so impressive that the results actually surpassed the company’s own updated guidance released two months ago.
Thanks to a strong back-to-school season, growing China sales, as well as general industry restocking, Intel collected $9.39 billion in revenues, easily outpacing consensus expectations of $9.05 billion. Gross margin (percentage of sales remaining after costs of production are taken out), which has steadily risen for the last 3 quarters, was 58 percent, beating the company’s own expectations of 53 percent. These two factors led to larger profits, as net income was reported at $1.86 billion, or 33 cents a share, handily beating estimates of roughly $1.5 billion or 27 cents a share.
Intel, whose chips already power more than 80 percent of the world’s PCs, continues to expand its global reach – particularly in China. On the company’s conference call, Intel’s CEO Paul Otellini reiterated his thoughts that Asian consumers will lead a rebound in the personal-computer industry – initiating a rebirth of year-over-year growth in that market this year (which is contrary to most analysts’ predictions).
The region already accounts for 65 percent of Intel’s sales – 55 percent if you take out Japan. Gartner Inc., a technology research firm, noted that shipments of PCs in China grew by 11 percent in the second quarter over the year-earlier period, far beyond the 2.8 percent growth seen in the first quarter. Gartner has yet to release their third quarter figures, but based on Intel’s results, we expect to learn that the pace has remained torrid.
Intel’s outlook for the fourth quarter was also exceptionally upbeat. The company expects revenue for the current period to be $10.1 billion (plus or minus $400 million), outpacing consensus estimates of $9.7 billion. Further, the company sees margins expanding even further, expected at 62 percent (plus or minus 3 percent). While already impressive, the margin number is also notable given that if the company can reach the high-end of its range, it would represent Intel’s largest profit margin in the last decade.
Needless to say, we are impressed with the company’s quarterly numbers, and think Intel is executing its fundamental business plan exceptionally well. With less reliance on the domestic market (only 20 percent of sales), and continued expansion into developing economies, Intel’s revenue stream is growing at a fast clip. The diversity of revenues also helps reduce overall business volatility. As such, we are moving Intel’s risk category to medium risk in the upcoming November issue. This utterly dominant company is trading at less than 15 times 2010 earnings, and with a PEG of 1.4, the shares continue to represent compelling value.
]]> Wed, 14 Oct 2009 08:39:00 -0400 Dr. Stephen Leeb Dr. Stephen Leeb submits:
Intel (INTC) has done it again. The world’s largest semiconductor chipmaker and Growth Portfolio member reported third quarter earnings last Tuesday night that once again beat market expectations. Not only that, the quarter was so impressive that the results actually surpassed the company’s own updated guidance released two months ago.
Thanks to a strong back-to-school season, growing China sales, as well as general industry restocking, Intel collected $9.39 billion in revenues, easily outpacing consensus expectations of $9.05 billion. Gross margin (percentage of sales remaining after costs of production are taken out), which has steadily risen for the last 3 quarters, was 58 percent, beating the company’s own expectations of 53 percent. These two factors led to larger profits, as net income was reported at $1.86 billion, or 33 cents a share, handily beating estimates of roughly $1.5 billion or 27 cents a share.
Intel, whose chips already power more than 80 percent of the world’s PCs, continues to expand its global reach – particularly in China. On the company’s conference call, Intel’s CEO Paul Otellini reiterated his thoughts that Asian consumers will lead a rebound in the personal-computer industry – initiating a rebirth of year-over-year growth in that market this year (which is contrary to most analysts’ predictions).
The region already accounts for 65 percent of Intel’s sales – 55 percent if you take out Japan. Gartner Inc., a technology research firm, noted that shipments of PCs in China grew by 11 percent in the second quarter over the year-earlier period, far beyond the 2.8 percent growth seen in the first quarter. Gartner has yet to release their third quarter figures, but based on Intel’s results, we expect to learn that the pace has remained torrid.
Intel’s outlook for the fourth quarter was also exceptionally upbeat. The company expects revenue for the current period to be $10.1 billion (plus or minus $400 million), outpacing consensus estimates of $9.7 billion. Further, the company sees margins expanding even further, expected at 62 percent (plus or minus 3 percent). While already impressive, the margin number is also notable given that if the company can reach the high-end of its range, it would represent Intel’s largest profit margin in the last decade.
Needless to say, we are impressed with the company’s quarterly numbers, and think Intel is executing its fundamental business plan exceptionally well. With less reliance on the domestic market (only 20 percent of sales), and continued expansion into developing economies, Intel’s revenue stream is growing at a fast clip. The diversity of revenues also helps reduce overall business volatility. As such, we are moving Intel’s risk category to medium risk in the upcoming November issue. This utterly dominant company is trading at less than 15 times 2010 earnings, and with a PEG of 1.4, the shares continue to represent compelling value.

Complete Story »]]> INTC Dr. Stephen Leeb 3 Promising Gold Stocks http://seekingalpha.com/article/166068-3-promising-gold-stocks?source=feed 166068 This past weekend, I attended the 33rd Annual Gold Show in New Orleans.

I was surprised, and also encouraged, that attendance at the Gold Show was very poor. Sure, the aftermath of Hurricane Katrina hasn't helped New Orleans' image as a tourist destination. But even compared to two years ago, very few investors showed up.
This seems strange, considering that gold has been the best performing asset this decade by a wide margin. Basically, the only people in attendance were the hard core gold bugs – the same people who came to the conference when gold was selling for $250 an ounce. The halls seemed almost empty. The rooms where miners had displays had only a handful of investors checking them out.
By contrast, in 1980 when gold had just made its biggest top of the 20th century, attendance at the Gold Show was ten times higher. It was like going to a World Series game.
Ironically, this low attendance is positive for gold, in that it implies that gold didn't need a flood of new investors to make its recent gains. It also tells us that when the flood does arrive, it will push gold prices considerably higher than they are today.
All in all, the conference was a very friendly and informative. I have no financial interest in the success of next year's conference, but I honestly think serious investors would get a lot out of attending next year's.
I should point out that most people at the Gold Show were sympathetic to libertarianism, as are most believers in hard currencies and precious metals. For instance, while signing books, I sat next to Congressman Ron Paul, who once campaigned for President on the Libertarian ticket. I share some of the libertarians' interests, though not all. Nonetheless, Dr. Paul and his wife seemed like lovely people, and almost everyone I met seemed open to and respectful of other’s ideas.
OUR 3 MOST PROMISING GOLD INVESTMENTS
More than ever, gold must be considered an asset class unto itself. For forty years, gold has performed basically in line with the S&P 500 and outperformed a number of overseas markets, including London. In today's volatile world, investors have little excuse for not owning gold.
That's not to say the stock market is ready to top out. Our guess is that stock prices will rise a little further. But when the top finally comes, the correction could be severe. On that day especially, you will be glad to own gold.
Incidentally, I recommended three gold stocks in my presentation at the Gold Show, which I'd like to pass on to you (even though you've probably heard them before).
The first is ASA, which we feel offers the best conglomeration of gold stocks available. David Christensen, the portfolio manager, is tops at finding precious metals miners who excel at increasing production. The fund offers a great combination of upside potential and risk control, in that the companies it buys are also low-cost producers.
We are also taking another look at Barrick (ABX) which used to be in our portfolio. The company recently eliminated its hedge program, which improves its potential to move higher alongside the price of gold. That makes Barrick more of a pure gold play, and one with a big portfolio of great assets. Barrick's outlook has improved and we may return it to our portfolio in the near future.
Finally, our top gold stock remains NovaGold (NG). NovaGold is partnered with Barrick on one of its key projects, and owns some of the largest copper and gold deposits in North America. The company has the potential to soar to 5X its current price. (Of course, with any junior, the risks are above average as well.)
So long as events like the Gold Show draw sparse crowds, you can be pretty sure the bull market in gold is a long way from a top. So for now, buy the dips in gold. Don't chase the rally in stocks.
When gold eventually peaks, it will be like tech stocks in 1999 – everyone will be clamouring to buy gold shares. That may be the time when we leave the sector with our profits in hand.
]]> Mon, 12 Oct 2009 17:08:45 -0400 Dr. Stephen Leeb Dr. Stephen Leeb submits:

This past weekend, I attended the 33rd Annual Gold Show in New Orleans.

I was surprised, and also encouraged, that attendance at the Gold Show was very poor. Sure, the aftermath of Hurricane Katrina hasn't helped New Orleans' image as a tourist destination. But even compared to two years ago, very few investors showed up.
This seems strange, considering that gold has been the best performing asset this decade by a wide margin. Basically, the only people in attendance were the hard core gold bugs – the same people who came to the conference when gold was selling for $250 an ounce. The halls seemed almost empty. The rooms where miners had displays had only a handful of investors checking them out.
By contrast, in 1980 when gold had just made its biggest top of the 20th century, attendance at the Gold Show was ten times higher. It was like going to a World Series game.
Ironically, this low attendance is positive for gold, in that it implies that gold didn't need a flood of new investors to make its recent gains. It also tells us that when the flood does arrive, it will push gold prices considerably higher than they are today.
All in all, the conference was a very friendly and informative. I have no financial interest in the success of next year's conference, but I honestly think serious investors would get a lot out of attending next year's.
I should point out that most people at the Gold Show were sympathetic to libertarianism, as are most believers in hard currencies and precious metals. For instance, while signing books, I sat next to Congressman Ron Paul, who once campaigned for President on the Libertarian ticket. I share some of the libertarians' interests, though not all. Nonetheless, Dr. Paul and his wife seemed like lovely people, and almost everyone I met seemed open to and respectful of other’s ideas.
OUR 3 MOST PROMISING GOLD INVESTMENTS
More than ever, gold must be considered an asset class unto itself. For forty years, gold has performed basically in line with the S&P 500 and outperformed a number of overseas markets, including London. In today's volatile world, investors have little excuse for not owning gold.
That's not to say the stock market is ready to top out. Our guess is that stock prices will rise a little further. But when the top finally comes, the correction could be severe. On that day especially, you will be glad to own gold.
Incidentally, I recommended three gold stocks in my presentation at the Gold Show, which I'd like to pass on to you (even though you've probably heard them before).
The first is ASA, which we feel offers the best conglomeration of gold stocks available. David Christensen, the portfolio manager, is tops at finding precious metals miners who excel at increasing production. The fund offers a great combination of upside potential and risk control, in that the companies it buys are also low-cost producers.
We are also taking another look at Barrick (ABX) which used to be in our portfolio. The company recently eliminated its hedge program, which improves its potential to move higher alongside the price of gold. That makes Barrick more of a pure gold play, and one with a big portfolio of great assets. Barrick's outlook has improved and we may return it to our portfolio in the near future.
Finally, our top gold stock remains NovaGold (NG). NovaGold is partnered with Barrick on one of its key projects, and owns some of the largest copper and gold deposits in North America. The company has the potential to soar to 5X its current price. (Of course, with any junior, the risks are above average as well.)
So long as events like the Gold Show draw sparse crowds, you can be pretty sure the bull market in gold is a long way from a top. So for now, buy the dips in gold. Don't chase the rally in stocks.
When gold eventually peaks, it will be like tech stocks in 1999 – everyone will be clamouring to buy gold shares. That may be the time when we leave the sector with our profits in hand.

Complete Story »]]> ASA ABX NG Dr. Stephen Leeb The Developing World Takes Over http://seekingalpha.com/article/163958-the-developing-world-takes-over?source=feed 163958 A couple of economic statistics released last week suggest the economy may be growing more slowly than expected/hoped/prayed. These statistics included a slowdown in housing and weaker durable goods orders (now that the "Cash for Clunkers" program has ended).

The biggest news, however, came out of the G20 meeting in Pittsburgh where it was decided that the annual summit of the G8 (an organization of the world's top 8 developed economies) will now be replaced by a meeting of the G20 – a group that includes many of the developing and resource-rich nations on which I've been bullish. This passing of the baton signals an important change in the world.
The days of U.S. hegemony have ended. Political power is shifting from Europe, Japan and the U.S. to Asia, South America and other developing nations, with economic power going the same way. In terms of goods produced, the economy of Chindia (China and India) has surpassed that of the U.S. The economy of the entire developing world now equals that of the entire developed world, and given the huge population of the developing world we must conclude its growth potential far exceeds ours. If we ever get back on top again, it won't be for a very long time.
We've talked before about what this change implies. The developing world's voracious appetite for commodities promises to act as a tax on the developing world – pushing up prices to new heights and choking growth. Oil and some commodities may have corrected recently, but another 10%-20% decline will only be a buying opportunity. As long as worldwide growth remains positive, commodities will be in a long-term bull market.
What's more, this change will have a more subtle but important impact on stock market returns.
Move Over England and Rome. The U.S. Takes a Seat on the "Former Center of the World" Bench
If you've been told you can expect to make 10-12% a year from an index fund, think again. The stats don't back up such creative spin.
People who talk about the long-term average return on stocks generally rely on some 83 years worth of data. A few people trace market history back as far as 1804, but it's not clear whether stats from back then are reliable enough or standardized enough to base conclusions on.
Nonetheless, whether you start from 1804 or 1926, all the data on long-term stock market performance is based on the U.S. Moreover, the numbers cover a time when the U.S. went from being a developing nation to king of the developed world.
When looking at this data, you must realize that the U.S. did not grow at the steady pace suggested by the long-term average. In the developing phase, growth was far more rapid. But as our economy matured, growth began to slow. Therefore, as an 83- or 205-year-old economy, the U.S. is unlikely to ever enjoy the pep and vitality it did in its youth. Nor will it likely become the fastest growing nation ever again, not when there are young whippersnappers like China and India running against us.
True, between 1970 and today, the growth rate of the U.S. exceeded that of the equally mature, developed nations (excluding Canada) by about 0.5% a year. We were the best of the old-timers.

However, during this period, average real returns from stocks were far less than in the 40 years before 1970 – despite the Great Depression of the 1930s. We had reached middle age and didn't realize it because the developing world was still in diapers. But the U.S. and the rest of the developed world were past their prime.

]]> Tue, 29 Sep 2009 16:53:59 -0400 Dr. Stephen Leeb Dr. Stephen Leeb submits:

A couple of economic statistics released last week suggest the economy may be growing more slowly than expected/hoped/prayed. These statistics included a slowdown in housing and weaker durable goods orders (now that the "Cash for Clunkers" program has ended).

The biggest news, however, came out of the G20 meeting in Pittsburgh where it was decided that the annual summit of the G8 (an organization of the world's top 8 developed economies) will now be replaced by a meeting of the G20 – a group that includes many of the developing and resource-rich nations on which I've been bullish. This passing of the baton signals an important change in the world.
The days of U.S. hegemony have ended. Political power is shifting from Europe, Japan and the U.S. to Asia, South America and other developing nations, with economic power going the same way. In terms of goods produced, the economy of Chindia (China and India) has surpassed that of the U.S. The economy of the entire developing world now equals that of the entire developed world, and given the huge population of the developing world we must conclude its growth potential far exceeds ours. If we ever get back on top again, it won't be for a very long time.
We've talked before about what this change implies. The developing world's voracious appetite for commodities promises to act as a tax on the developing world – pushing up prices to new heights and choking growth. Oil and some commodities may have corrected recently, but another 10%-20% decline will only be a buying opportunity. As long as worldwide growth remains positive, commodities will be in a long-term bull market.
What's more, this change will have a more subtle but important impact on stock market returns.
Move Over England and Rome. The U.S. Takes a Seat on the "Former Center of the World" Bench
If you've been told you can expect to make 10-12% a year from an index fund, think again. The stats don't back up such creative spin.
People who talk about the long-term average return on stocks generally rely on some 83 years worth of data. A few people trace market history back as far as 1804, but it's not clear whether stats from back then are reliable enough or standardized enough to base conclusions on.
Nonetheless, whether you start from 1804 or 1926, all the data on long-term stock market performance is based on the U.S. Moreover, the numbers cover a time when the U.S. went from being a developing nation to king of the developed world.
When looking at this data, you must realize that the U.S. did not grow at the steady pace suggested by the long-term average. In the developing phase, growth was far more rapid. But as our economy matured, growth began to slow. Therefore, as an 83- or 205-year-old economy, the U.S. is unlikely to ever enjoy the pep and vitality it did in its youth. Nor will it likely become the fastest growing nation ever again, not when there are young whippersnappers like China and India running against us.
True, between 1970 and today, the growth rate of the U.S. exceeded that of the equally mature, developed nations (excluding Canada) by about 0.5% a year. We were the best of the old-timers.

However, during this period, average real returns from stocks were far less than in the 40 years before 1970 – despite the Great Depression of the 1930s. We had reached middle age and didn't realize it because the developing world was still in diapers. But the U.S. and the rest of the developed world were past their prime.


Complete Story »]]> AAPL SRCL FPL Dr. Stephen Leeb Three Real Defensive Stocks http://seekingalpha.com/article/161552-three-real-defensive-stocks?source=feed 161552 Readers often ask us why we continue to recommend investing in the defense industry. Actually, we hold three defense stocks in our Growth Portfolio: Northrop Grumman (NOC), Raytheon (RTN), and CACI International(CACI).

Admittedly, the defense industry depends on government contracts, and casual observers might wonder if these will soon start to shrink. Given the extraordinarily high deficits the government is running up these days – including massive sending on entitlement programs, healthcare, corporate bailouts, and economic stimulus - surely even the most profligate politician will be combing the budget looking for areas where some savings can be made. Defense would seem to be a prime candidate for cutbacks, especially since the war in Iraq looks past its peak.

]]> Tue, 15 Sep 2009 07:46:12 -0400 Dr. Stephen Leeb Dr. Stephen Leeb submits:

Readers often ask us why we continue to recommend investing in the defense industry. Actually, we hold three defense stocks in our Growth Portfolio: Northrop Grumman (NOC), Raytheon (RTN), and CACI International(CACI).

Admittedly, the defense industry depends on government contracts, and casual observers might wonder if these will soon start to shrink. Given the extraordinarily high deficits the government is running up these days – including massive sending on entitlement programs, healthcare, corporate bailouts, and economic stimulus - surely even the most profligate politician will be combing the budget looking for areas where some savings can be made. Defense would seem to be a prime candidate for cutbacks, especially since the war in Iraq looks past its peak.


Complete Story »]]> NOC RTN CACI Dr. Stephen Leeb Inflation or Deflation? Invest in Gold http://seekingalpha.com/article/160636-inflation-or-deflation-invest-in-gold?source=feed 160636 The big question remains: will we experience inflation or deflation in the months ahead? The good news for investors in gold is that it doesn't really matter. Precious metals will do well in either scenario.

True, we have seen gold move more or less in step with the market of late. But the yellow metal has taken bigger strides. Despite the recent rally, the 12-month return for the overall stock market is negative 17%. Whereas, shares in gold miners - as measured by the Philadelphia Gold & Silver Index (XAU) – have gained 35%. That's a 52% outperformance for gold stocks.

]]> Thu, 10 Sep 2009 01:46:19 -0400 Dr. Stephen Leeb Dr. Stephen Leeb submits:

The big question remains: will we experience inflation or deflation in the months ahead? The good news for investors in gold is that it doesn't really matter. Precious metals will do well in either scenario.

True, we have seen gold move more or less in step with the market of late. But the yellow metal has taken bigger strides. Despite the recent rally, the 12-month return for the overall stock market is negative 17%. Whereas, shares in gold miners - as measured by the Philadelphia Gold & Silver Index (XAU) – have gained 35%. That's a 52% outperformance for gold stocks.


Complete Story »]]> ASA Dr. Stephen Leeb 5 Anomalies in the Current U.S. Markets http://seekingalpha.com/article/159243-5-anomalies-in-the-current-u-s-markets?source=feed 159243 If there's any lesson to be learned from Hollywood's fictional aliens, it's that they deserve to be treated with caution. If an alien wants to have you for dinner aboard his flying saucer, make sure you find out first whether you'll be the guest or the main course.

So today, while Newsweek speculates on the existence of extraterrestrial life and movie-goers enjoy films like District 9, we find ourselves shaking hands with another form of alien, while planning our escape route at the same time.

]]> Mon, 31 Aug 2009 21:30:40 -0400 Dr. Stephen Leeb Dr. Stephen Leeb submits:

If there's any lesson to be learned from Hollywood's fictional aliens, it's that they deserve to be treated with caution. If an alien wants to have you for dinner aboard his flying saucer, make sure you find out first whether you'll be the guest or the main course.

So today, while Newsweek speculates on the existence of extraterrestrial life and movie-goers enjoy films like District 9, we find ourselves shaking hands with another form of alien, while planning our escape route at the same time.


Complete Story »]]> INTC CVX V TEVA SLB BAX MSFT Dr. Stephen Leeb Will Oil Be the Last Asset Standing? http://seekingalpha.com/article/158090-will-oil-be-the-last-asset-standing?source=feed 158090 Stocks and commodities gained last week while the dollar – as is often the case these days – fell.

As you recall from last week's update, the correlation between these three assets has unusually close. The see-saw today has stocks and commodities on one side and the dollar on the other.

]]> Tue, 25 Aug 2009 05:41:56 -0400 Dr. Stephen Leeb Dr. Stephen Leeb submits:

Stocks and commodities gained last week while the dollar – as is often the case these days – fell.

As you recall from last week's update, the correlation between these three assets has unusually close. The see-saw today has stocks and commodities on one side and the dollar on the other.


Complete Story »]]> POT MOS FLR INTC AAPL RIG NBR NOV OIL USO DBO XLE OIH Dr. Stephen Leeb Clarifying America's No-Win Economic Dilemma http://seekingalpha.com/article/156660-clarifying-america-s-no-win-economic-dilemma?source=feed 156660 In last week's update, we outlined the no-win situation that the U.S. economy finds itself in today. We were pleased that so many people sent us comments and questions. Considering how much work we put into these missives, it's great to know people are reading them. And while we can't reply to every message individually, we can attempt to address the most common issues and questions people had.

Our basic argument is that the U.S. is becoming a smaller part of the global economy, while the combined emerging markets and resource-rich markets are starting to matter more.

]]> Tue, 18 Aug 2009 02:38:55 -0400 Dr. Stephen Leeb Dr. Stephen Leeb submits:

In last week's update, we outlined the no-win situation that the U.S. economy finds itself in today. We were pleased that so many people sent us comments and questions. Considering how much work we put into these missives, it's great to know people are reading them. And while we can't reply to every message individually, we can attempt to address the most common issues and questions people had.

Our basic argument is that the U.S. is becoming a smaller part of the global economy, while the combined emerging markets and resource-rich markets are starting to matter more.


Complete Story »]]> CVX DIA SPY QQQQ EEM BKF Dr. Stephen Leeb The Market Bubble Is About to Pop http://seekingalpha.com/article/155422-the-market-bubble-is-about-to-pop?source=feed 155422 You may find it hard to resist going whole-hog into the market these days, especially as we are likely to get a very strong third quarter. By some estimates, growth could be 4%. It could even reach 6%.

However, all the growth we'll see will be the result of unsustainable factors such as inventory accumulation, car production increases (due to the “cash for clunkers” program), etc. With this in mind, you must resist the urge to increase your weighting in stocks.

]]> Tue, 11 Aug 2009 10:53:22 -0400 Dr. Stephen Leeb Dr. Stephen Leeb submits:

You may find it hard to resist going whole-hog into the market these days, especially as we are likely to get a very strong third quarter. By some estimates, growth could be 4%. It could even reach 6%.

However, all the growth we'll see will be the result of unsustainable factors such as inventory accumulation, car production increases (due to the “cash for clunkers” program), etc. With this in mind, you must resist the urge to increase your weighting in stocks.


Complete Story »]]> RIG NBR MOS FLR PBR POT NOV CVX FPL Dr. Stephen Leeb