Larry Bellehumeur

Dr. Stephen Leeb on Commodities and Inflation - Is He a Genius or Alarmist?

thanks for everyone, who took the time to read and comment.

KSA -- I would personally rather look at Viterra than ADM, as it is more of a pure play on Grain prices. If you prefer ADM, you would also have to likely think that there is some validity to the expansion of Ethanol. As for MOO, I just took a look at their holdings. I rather like the broad exposure (Equipment, Fertilizer, Seeds and more). Might not be a bad play.

ChefDavid -- I have heard that argument before. Since there is so much scrutiny on these large companies now, I would have to believe that they are following what is in their mandates. You never know, though, I guess...

DirtyOil -- One does have to admit (even someone who benefits from the Oil Sands, like me, as I like in Alberta), that the Oil Sands do burn off a lot of other resources, including Water and Nat Gas. However, the world simply needs to produce more oil, or risk the price skyrocketing over the next few years. The Oil Sands producers are under extreme pressure to clean up their acts, and with the Billions being thrown at them, one has to hope that they can.

Dr. Stephen Leeb on Commodities and Inflation - Is He a Genius or Alarmist?

ok, having troubles keeping up with all the comments!

George09 -- Can't say that I totally agree. Oil's rise affects all things in the economy, from manufacturing to Ag to Transportation to heating your home. This spike in prices is not caused by inflation, but rather by a supply/demand inbalance. Look at the past few inflationary times (such as the 70s/80s) and it was caused by the sudden spike in Oil. Leeb's theory in the Oil Factor is that whenever Oil rises 80% over the previous year, inflation is bound to build up in the system to cause a recession within 18 months.

Dallas -- to be clear, Leeb coined the term "BRAC". I also agree with the previous comment that many of the Middle East Producing countries could also be mentioned. I wasn't aware of NZ's Commodity promises.....I am curious now.

433429 -- I think that Grain prices may also be an interesting thing to watch. I think that Leeb did mention is, but the major point was that Oil tends to be the commodity that is most noticed in Inflationary results. However, since Food is also left out of the CPI, Ag's true impact may not be fully known. Your point is well taken.

GeoJoe -- To quote the CEO of Suncor, when asked if we are in Peak Oil, "We wouldn't be, if the Oil Companies were allowed full access to all of the Oil that is held by the Nationalized Programs". Peak Commodities is as much Political as it is Geological.

Cheers
Larry

Dr. Stephen Leeb on Commodities and Inflation - Is He a Genius or Alarmist?

This must be my most "Commented-on" article....thanks for all the great comments..

Emerald -- Can't agree with you more. I also like CNQ (which I am long on), due to the fact that I don't believe that their Horizon Oil Sands project has been fully priced into the stock.

Tipalia -- I have to believe that KMP's dividend is sustainable for now. I haven't seen their payout ratio, but Pipelines as a rule generally have one of the best cash flow reliability in all of the stock world. What I would be worried about with any of the pipelines is if they over-extend themselves (build too fast), or if there truly is going to be a lack of product (i.e. conservation) flowing through their product. Not likely scenarios.....Disclosure, no position in KMP

Ozzy -- I think that people, in times of distress, often turn to what they know, which is often the reason that History repeats itself. I think much of what worked in the 70's will indeed work....the only class that I can see not working as well is REITs, but it still will be a better investment than most.

Michael Young -- It should be interesting to see what happens to the Non-Commodity sectors of the BRAC countries. As a resident of "Commodity Rich" Alberta, I can tell you that it became virtually impossible for a Non-Oil/Gas business to afford to remain competitive in Alberta, as the costs of labour just got out of control. As well, the CDN dollar began to trade with the rise in commodities, gaining it the nickname of the "Petro-Buck" locally. This virtually killed much of the manufacturing in the rest of the country, as the price of their shipments globally rose by close to 60% in 5 years. I think that it will be a lot of division in the BRAC countries, which is why I recommend to no use a General ETF to cover each country. It will also be fun to see how they keep inflation cool in the BRAC countries....

Cheers everyone,
Larry

Dr. Stephen Leeb on Commodities and Inflation - Is He a Genius or Alarmist?

Thanks for everyone's comments.

MCI -- As mentioned in the article, Gold (in addition to its inherent protection against inflation) is often seen to as a Safe Haven. My point was more that people did not seem to view it in this way to the extent that one would expect (as seen by many of the investors/analysts). I still personally think that it is a great place to run and hide during bad times, but unless the masses think the same thing, we may not see the rise be as dramatic as it should. The other problem is the nasty decline that Gold took in the early part of this crisis when it should have exploded upwards, but I chalk that up to more of people unwinding positions that they could....

Guapo - Your points are well taken. I personally think that the US dollar may get to the point that even the main commodities themselves won't be priced in them by 2011. Then, it will be a freefall...

If nothing else, Leeb's views make one look at alternative ways to invest, ones that steer greatly away from the usual Wall Street mentality.

Dr. Stephen Leeb on Commodities and Inflation - Is He a Genius or Alarmist?

Update -- I actually did take a small opening long position in BHP Billiton yesterday, with the anticipation of making the position larger if there is any further weakness in the stock.

Thanks for reading, Buy it Cheap! Those who can sell things into any of the Emerging Markets are also likely to do well in the upcoming years....

Stagflation and Peak Oil: How Related Are They? (Part II)

Skeedaddy -- Point well taken on ag stocks. I probably left them out since I was dumb enough to dump Potash after doubling my money at $120. Probably too painful for me to dig up!!

Stagflation and Peak Oil: How Related Are They? (Part II)

Forgot to add....

One risky, but with good upside, way to play Alternative Energy is Hanwei Energy (HE - Toronto). They have great exposure to both current fuel sources (material/piping used in Pipelines) and future sources (Wind Turbines and others). They also are a safe way to play Asia/Russia, as they do all of their work in those areas, but follow Canadian Accounting practices.

As a disclosure, this is about 12% of my portfolio now. Risky, but I think this one could be a 2-3 bagger in a couple of years from here.

Stagflation and Peak Oil: How Related Are They? (Part II)

Nova -- Not a dime, actually. Take a look at what has always done well in the past times when there was high inflation. Real Estate has always kept pace with inflation.....will it this time? Don't know, don't have a crystal ball, but it does make sense to own hard assets in the time of desperation. I don't think we will see Hyperinflation, as the Fed will prevent that......

GMiki -- Nothing wrong with small-caps. My personal preference is large-caps in downtimes. Look at how many small caps become extremely volatile. When it looks like we are going to start to come out of this, small caps will absolutely destroy large caps, no doubt. Until then, might be kind of risky, at least for me.

I'm not one to chase Alternative energy, but this is the way of the future. I think it may be better to play technologies that have a place today. I like Wind, Nuclear and Solar, but there aren't a lot of safer ways to play this. GE is about as safe as you get, and even they have gotten killed (although that is more to do with their Financial exposure).

Keep the comments coming! I have thick skin....=)

Stagflation and Peak Oil: How Related Are They? (Part II)

Great comments from everyone....

Fred -- You're absolutely correct. I mean PBR....

209003 / drooyich:
- There no absolute guarantees when it comes to how to invest...all you can do is to guess what might go up.
- In terms of some of the stocks that are mentioned, I know most of them well, and they undoubtedly will give you good leverage to the respective commodities. One of the issues is that no one really knows for sure which commodity will be in the most demand. If Nuclear really does take over, then Uranium Participation (U-Toronto) is a great play. Same goes for Coal, with Fording Coal.
- However, if the technology somehow moves us away from these commodities, they will get killed (unlikely, but stranger things have happened).
- For Uranium exposure, I like U.To to play the commodity, and Cameco (CCO-Toronto) to play the producer. No position in either.

Bearfund -- Dont disagree with you on your statement. I guess it is the only Government-protected way to play it, which is why I mentioned it....I'd love to get another way myself...

Cheers
Larry