The inflation vs. deflation debate has heated up again. The debate looks far from being settled, even among professional investors. This may be the single most important debate in the investment world.

Jim Rogers, Peter Schiff, James Sinclair, Gerald Celente, Marc Faber and Congressman Ron Paul are on the inflation camp. The argument is simple: As the US government racks up trillion dollars of deficit spending, the money can come from neither raising tax, nor borrowing. So the only way out is print money out of thin air. In history, any time a government chooses to solve its fiscal problem through massive money printing, it always leads to hyper-inflation at the end. So that is going to happen. It might be postponed a bit but can not be avoided.

Recently, I have been looking to add some small positions in stocks that would excel during an economic recovery. Unfortunately, after a quick search of these types of stocks, it's easy to see that their valuations have risen through the roof as of late, with not much changing on the fundamental side.

From shipping to commodities to business services, it's becoming much harder to find value, especially with the recent market rally. Fortunately, I think I've found a company, who although extremely risky, might be able to find a place in the 'speculation' section of many investors portfolios.

The Baltic Dry Index (BDI), a shipping index considered one of the most reliable global economic indicators, has been surging up for 17 consecutive days as of Feb. 11, 09. It's not often that something just keeps going up for 17 days. The BDI’s strong rally has caught a lot of people’s attention. However, dry bulk shipping stocks like DryShips (DRYS), Excel Maritime Carriers Ltd. (EXM), Eagle Bulk Shipping Inc. (EGLE), Genco Shipping & Trading Ltd. (GNK), TBS International Inc. (TBSI) and Navios Maritime Holdings Inc. (NM) plummeted instead of moving with the BDI. So, what's going on here? Let me digress a bit before talking about the fundamentals of shipping.

Despite a 17-day rally, most people remain skeptical about the outlook of the BDI. In a recent post, Trader Mark asked "What's Really Going On." Most believe the BDI rally will be short-lived, so when BDI finally dropped for two days, Bespoke Group declared: "BDI rally is DEAD!"

Gold rush 2009 is on, as gold is the front-runner in precious metals, so far. Gold is now only 10% away from its early 2008 high; silver is off 39%; platinum is still off 57% from its high; and palladium is still off 67%.

Don't buy the front-runner, buy the laggard, palladium! Chasing the front-runner and big crowds is the fastest way of losing money. Just look at recent bloodshed in DryShips (DRYS), a front runner in shipping stocks. I switched from DRYS to Excel Maritime Carriers Ltd. (EXM) and cautioned about DRYS in mid-January 09. So, I was lucky to have avoided the massacre in DRYS. There are inherit problems in DRYS that are now exposed, but big crowd sentiments added to the severity of plummet.

Today's market is full of opportunities to make money or rather to lose them. Just remember: The market always makes the biggest group of people lose the largest amount of money to allow a few to get obscenely rich at the same time.

For your own good, you should always avoid the biggest crowd, and go to quiet, secret places few have notice. This is true for making money and for life in general. Imagine you are at a place with hundreds of thousands of people, and a situation of imminent danger arises.There are only two bridges leading to safety - one is narrow and in terrible shape, and another is big and in solid shape. Which one would you choose? I would rather foolishly run to the dangerous one, knowing that all the smart folks will rush to the safer bridge, and collapse the safer bridge due to the sheer weight of the big crowd. That's the philosophy of life.

I am convinced that the bullish fundamentals of palladium are even better in 2009. Recently, Impala Platinum (IMPUY.PK) updated its estimate of platinum and palladium supply/demand data for 2008. Did you notice the significant drop in the Russian supply? The annual sale of Russian Strategic palladium stockpiles, about 1.5M to 2M ounces a year, finally ENDED! Back on June 11, 08, the palladium market had a knee-jerk response when Norilsk Nickel (NILSY.PK) merely suggested the termination of the stockpiled palladium sale. Now that it really is ENDING, how will people react when it becomes widely known? Russia maintains a Defense Strategic Stockpile for its own wartime needs, not for selling PGM metals below cost to the world.

In Impala's estimates, recycling accounts for 1.1M ounces of palladium supply in 2008. The CPM Group estimated the recycling to be as high as 1.6M ounces a year. The good news is this supply will also be removed in 2009. A new catalytic converter contains about four grams of palladium, while an old one has about two grams left. Recycling recovers about 75%, or 1.5 grams each, worth about $9 in palladium at today's price. The PGM recycling process is a long, complicated and costly one, and at today's low price, there is simply no incentive for recycling. Stillwater Mining (SWC) is better off dropping the PGM recycling business and concentrating on mining. This could also boost the metal's market price, as it would free-up large working capital that was locked up in the recycling materials inventory, and enhance the company's balance sheet, as a result.

A month ago (December 10, 2008), I started an informal technical analysis experiment:

Certain chart and volume patterns are supposed to foretell a stock's (commodity's, ETF's, etc) future price movement. Occasionally, if I come across such chart patterns I'll post about them. Then, I'll check back after a while to see how the predictions turn out.

We saw another irrational knee-jerk market reaction on Jan. 7, when the price of oil dropped more than 12% in one day in response to EIA's weekly inventory report. The report actually showed an increase of 6.68M barrels, and the unwarranted knee-jerk reaction shows the market interpreted the data completely wrong. If you scrutinize the data - oil price should jump up, not down.

If oil is being hoarded, of course the inventory will jump up. The data shows that last week’s U.S. oil imports increased dramatically over the same week a year ago: 13.698M barrels a day versus 12.904M. Therefore, for the week, an extra 5.558M barrels of oil was imported. If the U.S. is buying more crude oil, of course, inventory will raise. When Americans are buying more, shouldn't the oil price be driven up in the international market? Inventory was up NOT because Americans are consuming less, but because we imported much more.

By Julian Murdoch

The Baltic Dry Index (previous articles: The Baltic Bet, 9/16/08 and Follow The Freight, 4/28/08) has taken a beating, as have shipping stocks. But are the two as directly linked as it seems? Or is it possible that shipping stocks, like so many commodities equities, could be undervalued right now?

In his recent lampoon of U.S. financial policy, Asia Times reporter Spengler noted, “An American economy based on opening containers from China and selling the contents at Wal-Mart (WMT), or trading houses back and forth, provides scant profitability.” While the future profitability of these methods is a subject of debate, Spengler ’s argument highlights an integral practice—one so ingrained that many fail to notice—the acquisition of raw and finished products overseas and the industry built around their transportation.

Unless you live by Manhattan’s East River or in the port of Piraeus outside Athens, it is easy to forget how enmeshed the maritime industry is with everyday consumption. The most efficient transoceanic way to transport anything from corn to Nike sneakers to oil is aboard one of the thousands of merchant ships that dock and depart U.S. ports daily. Fleets of vessels constitute major public companies, and as Claymore launched the Claymore/Delta Global Shipping Index ETF (SEA) in August, it facilitated access to the maritime shipping niche through select shipping equities.

By Jeff St. John

A new exchange-traded fund that invests in "progressive" transportation companies – ranging from makers of electric-vehicle batteries and drive systems to bicycle makers and railroad and shipping giants – will soon add its name to the a growing roster of ETFs focused on green businesses.

As reasoned in my previous article, the drybulk fundamentals remain healthy; in the following months, we witnessed a 100% increase in the drybulk rates. After hitting a new record high late in May, with BDI at an amazing 11,793 points, the market was steady for two weeks before dropping heavy in the latter half of June. In just a matter of days the the BDI plunged about 15%, once again terrifying the stock market. Since the end of June the drybulk rates have been increasing after BDI hit a low of 9,139, wich represented a 22.5% drop in only 5 weeks. The January drop was thought by some to be a one-off, but in this highly volatile business nothing but the extraordinary is to be expected. This is drybulk shipping; volatility alert!

What happened this time?

Oceanfreight (OCNF) is benefiting from global commodity demand as its vessels reach nearly 100% utilization rates. The company has surprised on earnings three out of the last four quarters on average of 117.48%. Oceanfreight has a forward P/E of 9.66.

Full Analysis

We all know the baby boomers are going to begin entering retirement. While there are many different styles of investing, I believe that when one enters the retirement stage of life, income investing is by far the best. Investing in companies and bonds that offer high dividend yields can prevent one from being forced to start living off the capital in the portfolio. Nothing would suck more than outliving your portfolio and winding up a 85+ year old with no money and a big burden to your children or your country.

Finding high dividend yields will probably become increasingly hard. Why? As the boomer’s enter retirement they will most likely start searching for high yielding investments in large numbers so they can afford retirement. As the demand for these high dividend yielding investments increases, so too will the price of those investments, meaning that dividend yields may decrease.

Stocks discussed in the lightning round session of Jim Cramer’s Mad Money TV program, Friday February 29. Click on a stock ticker for more analysis:

Bullish calls:

ABB (ABB): ’I think ABB is a great infrastructure play without the worries that you got from URS Corp. (URS) this week…I’m not worried that the CEO quit.’
CVRD (RIO): ‘You buy that stock! … it's a dominant mineral company, and there is no worldwide slowdown.’
Cleveland-Cliffs (CLF): ‘ … may I recommend - now on this huge pullback - Cleveland-Cliffs now down 10 straight points after a monster quarter...’
Quicksilver Resources (KWK): ‘That is the ideal company to buy, as natural gas goes higher! They've got all these stripper wells that are worth more and more... I think KWK is great.’
Yamana Gold (AUY): ‘Remember, if that stock goes below $16, I'm going to buy more for my charitable trust... I hope you join me.’
Gushan Environmental(GU): ‘I want you buy it ahead (of earnings)... Chinese biofuel... I think that's a terrific idea. GU, it's a speculative name.’

Stocks discussed in the lightning round session of Jim Cramer’s Mad Money TV program, Friday February 15. Click on a stock ticker for more analysis:

Bullish calls:

General Motors (GM): 'I said GM has bottomed …Cost are going down… GM is a buy here. There's a GM preferred … that trades at $20 bucks. That's a really good piece of paper.'
Oceanfreight (OCNF):' …it's got a double-digit dividend... I think the dividend is safe …buy, buy, buy!... Let's wait for a pullback.'
Johnson Controls (JCI): 'I am only recommending, the last two years, one auto parts company, and that's Johnson Controls which makes seating.'
World Wrestling Entertainment (WWE): 'They have a good yield, they have a good growth story. Domestic, not so great... International good... I want to buy WWE! Buy, buy, buy... '

• More Consolidation Coming. This was one of my beginning of the year themes– insert link and in the wake of the EXM/QMAR merger industry executives see more mergers on the horizon which appears to be dragging up the valuations of the smaller players.

• Rates Have Rebounded Sharply. We thought this would happen as we approached the Chinese New Year on Feb 8 and it did, with a pronounced V-shape. Click here to see the latest move in shipper rates.

Earnings For The Big Bulkers Begin This Week. (DRYS) and (QMAR) on Thursday, (DSX) on Friday.

Research In Motion (RIMM): 'Growing at 30%. ... Because of inflation, no one wants to own a high-priced stock. ... All I can do is the fundamentals. ... Research In Motion is a buy.'
Costco (COST): 'If I own a retailer I want to own the best, and Costco is the best.'
Tenet Healthcare (THC): 'I want you to buy here. ... I see long-term results for this company.'
Yamana Gold (AUY)
Newmont Mining (NEM)
Barrick Gold (ABX)
Mosaic (MOS): Mosaic has been, without a doubt ... along with Agrium, along with John Deere, along with Monsanto, is an absolute fab find. ... It goes through $100 to $110.'
Bunge (BG)
Agrium (AGU)
Deere (DE)
Monsanto (MON)
Covance (CVD)

Let me preface this entry by saying I have no position in the dry bulk shippers, so by association one could paint me with "I missed the boat" (oh, puns are so fun). With that said, I partook in a similar mania in late 2005 with the oil tanker stocks, many of which skyrocketed for the same reasons the dry bulk shippers are increasing today - global growth, unquenched demand for more and more crude, great economies of Chindia demanding more crude.

Well all those factors have proven to be true but the stocks dropped precipitously from their highs and never fulfilled the potential that was discussed back then.

With that said, back in early October I mentioned a potential near term top in the Macau casino names as Steve Wynn cashed out.