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A Crude 10 Year Perspective: The DJIA, Oil and Gold

Fitz,

I have the highest respect for both Hefner and Boone, but both have their personal agendas.

1) I read Hefner book (the GET) and I find he is a bit too chummy with CEO Aubrey McClendon of Chesapeake that he glosses over all the serious issues associated with non-conventional gas. While the book is the most comprehensive I have read on natural gas, he is far from neutral.

2) T. Boone Pickens wants the federal government to pay for the cost transmission line infrastructure to his wind farms.

A Crude 10 Year Perspective: The DJIA, Oil and Gold

The stock market was artificially inflated in the late 1990's thanks to the internet boom. Normally stock market indexes appreciate anywhere from 10 to 12% per year on average. In the short period of 1995-2000 we saw the DJIA shoot up 150% and NASDAQ go up 500%. Anything over 15% gain per year is unsustainable over the long term. The current DJIA = 10000 is actually the value it should have grown to since 1995.

Although gold is a good hedge. I can live without gold.

I cannot live without oil, which is used in thousands of applications (besides transportation). I think my money will appreciate the most over the long run invested in oil and gas.

The 95% of the world's energy mix (according to the BP statistical survey and the EIA) comes from oil, gas, coal & nuclear. Oil and Gas will be the key energy sources from the next 40 years. Alternative energy is still in its infancy. Solar and wind account for only 1% of the world's energy mix. Natural gas would be a good transitory solution, since existing cars can be modified to run on it for only a few thousands dollars. This is a much cheaper alternative than hybrid, hydrogen or electric cars.

Obama vs. McCain: Which Candidate is Better for Ethanol and Equipment Companies?

Traditionally, the Republican solution to the energy crisis is to increase supply. We are clearly seeing this with McCain and his drill ANWR and US Coast policy as well as supporting clean coal technology. If you think McCain is going to win in November go long on exploration & production as well as oil field services and deep sea drillers.

On the other side of the coin, Democrats traditionally have advocated a policy of decreasing demand for oil and punishing oil companies. We clearly see this in Obama's campaign with his increased CAFE standards, windfall taxes for oil companies and ending E&P tax breaks. I you think Obama is going to win, short big oil comapnies and go long on the hybrid car builders.