Futurist

Lithium Ion Batteries and GEVs: False Gods for the New Millennium

John,
Thanks again for another thorough analysis of the EV pipe dream. As an investor that watched in horror as people invested in the technology hype of the year 2000 I see many correlations to the electric car mania of today. One thing holds true. Bad business plans don't work.
I was wondering if you have any information as to the "cube" referred to in the last AXION conference call. This particular battery pack is to be used on offshore Oil Well rigs as I understand it. How big is that market compared to the micro HEV market?

Any information would be appreciated.

U.S. and China: Lecturing Each Other on Trade

Michael,
I have been following your articles for some time. This is by far your best explanation of some of the trade tensions that the U.S. and China are facing. Thanks for the detail in your articles.

I am a believer that the Chinese consumer has just begun to taste the fruits of a consumer lifestyle. Americans are just beginning to cope with a reduced standard of living caused by over consumption. These two worlds will collide over pollution, material availability, and economic (political) expansion sometime in the future. Your articles are a valuable tool in helping me (and others I imagine) to develop an investing plan that considers the risk as well as the reward.

A look over at least a small part of China's 8% growth: a modern city, made of glass walls and clean streets, built by the government and entirely devoid of people.

Build a new city devoid of people. This is certainly not the way a capitalistic economy would work. Capitalist would cram a million people in a city built for 100,000 until private capital expanded the city.
A parallel would be the boom towns of Oklahoma during the oil boom. They sprout during the booms and whither after the boom.

Instead China looks at the rich coal deposits of Mongolia and knows that those deposits will be used for the next 40 years. They then build a city and have a million people move in as the economy expands. When talking China you have to remember that the Government owns all of the land. One cannot buy land or a house or a condo. The government leases all housing on a 99 year lease basis. Therefore, it is not unusual to build firs as an economic engine ( look at Shenzen). They use cash (not borrowed money to do this). Mongolia is a difficult political area for them. They are trying to calm political unrest by bringing up the living standards of the poorest area of China. Nothing calms political unrest like a rising standard of living.

Investors can certainly disagree with the philosophy but it is difficult to find where there is economic failure over the last 20 years. The problems facing China with a population 4 times larger than the US and only 1/2 the economic power are daunting. Their success is still uncertain but they certainly are making progress.

Three Underlying Reasons for the Dismal Consumer Credit Report

I have followed my generations habits ( baby boomers) for years. All I do is watch myself. The last two years we have cut way back in wasteful spending. We might go out for a nice meal on special occasions but that's about it. We find ourselves playing the game of "how much energy are we wasting" and "what's the lowest price".

Bad habits are hard to break but this recession has done that not only for the boomers but for the next generation as well. Once spending habits are broken they don't go back. All who proclaim "never underestimate the consumer" had better not have much invested in retail stocks

Postal Service Set to Lead the Way in Deploying Electric Fleet

John,
Congratulations on your invitation to speak to EESAT. Your insistence on bringing the facts out about the true risk of Li-on investing and EV technology has certainly drawn out critics who question your knowledge base. I appreciate your ability to continue to present the facts and not just opinion.

I am surprised that the proposed post office study did not explicitly target a Hybrid vs. pure EV approach. The entire cost of the project is $136 million. That includes buying the fleet and charging stations. We subsidize the postal service much more than this amount anyway. Why not just call it a grant for advanced automobile study, then try all of the different technologies under real world conditions. This might actually be a good way to use the stimulus money in a very productive way.

Debunking PHEV Mythology

John,
A quick story. My golf cart died this week and sure enough the batteries are shot. (partially my fault but mostly the hot summers in Florida) I went to price new ones. About $150 per battery. Six are required. I researched all available batteries and guess what. I went with cheap over cool.

Axion has been substantially higher in price and volume. Do you think the existing warrants that were issued a couple of years ago will have an effect on kepping the price below $3.00 per share?

Emerging Economies: The Good, The Bad and The Ugly

Joseph,
Thanks for an article that actually examines the risks of foriegn investing. Although you didn't examine the reward of such investing I understand your premise to be that there are very large risks out there that CNBC never mentions. I was awestruck when I visited China several years ago with their growth and modernization. I have made some investments in their medical field but am always wary that tomorrow the companies I invest in could be out of business by government edict or fraud or bad management.
Today everyone knows that China can never continue economic expansion without :
1) Water
2) Energy
3) Agricultural expansion

These all require government action and a direction and fortitude that is unparalleled in history. Can China really control water pollution and make clean recycled water or is it easier to attack Russia? Can China really produce renewable energy or will they need to take over the Vietnamese oil source? Will the Government reform the land ownership issues of the rural poor or continue down a road of underutilization of their agricultural land.

I believe that the Chinese government has a very long outlook on solving problems. The government doesn't respond in election cycles. Therefore, investors should have the same long term outlook.. But beware. In that long term horizon you might find governments, that are not democratic, take away your property before you get the gain.

Exciting Times as ATVM Loan and ARRA Battery Grants Announced

John,
As an avid reader of everything battery orientated and an investor in Axion it has been interesting to note that your critics always get louder when the market prices are going down. You have correctly forecast the absolute need for lead acid batteries and have told everyone that the future market is going to grow by 300%. If they haven't listened yet and studied your value analysis of the companies then they probably will miss this entire run up. Thanks for the heads up on Axion and the other part of my battery portfolio.
I look forward to your new insights on power storage.

The Tellurium Supply Conjecture and the Future of First Solar

Jack,
Thanks for the informative article. As always your information on rare earth metals puts a very different spin on solving some of our most pressing issues.
I also want to say that the depth of your analysis is very helpful. Not always the case on SA.

The New York Times Calls for Principal Relief: Who's Paying?

The premise of this article is that the amount of debt the banks will have to write off is so undesirable that the government must pay off the difference between the loan and the house value. When a mortgage goes bad the bank becomes the owner. They can sell the mortgage at a discount or sell the home. This in no way affects the general public unless it precludes systemic risk to the banking system. I have owned many houses in my lifetime (15). I have always had a mortgage. It is a contract between myself and my mortgage company. I would think it would only be good business for the lender to go to the borrower and simply ask
" What needs to be done to make this work best for the both of us? Can I convert you to a 40 year loan? Can I lower your interest rate? Can you come up with some cash in order to have me write off some of your mortgage?
Maybe this is simplistic but isn't that only good business for a bank to cut its losses? Other businesses are taking write offs and cutting cost and they are praised for being efficient. Why have banks that made bad loans being singled out as the only business that can't lose on their investment.

I do recognize that millions of mortgages were made that do not have the traditional banker to borrower face to face transaction. It just seems that it is better to have the banking regulators require banks to clean up their own mess instead of a federal bailout that cannot be fair to all.

If however, I wanted to make a federal program it would be designed to eliminate the housing inventory. This would cause prices to rise and eliminate a lot of the underwater mortgage issues. Since the young people will end up paying this debt they should receive whatever advantage a program offers. I suggest a 0% -40 year loan to any first time home buyer that qualifies for the payment as long as they purchase a home that is under short sale or in foreclosure. This drys up the inventory, increases home prices, helps the young, and doesn't reward the borrower that isn't paying a mortgage.

7 ETFs to Short Right Now

I appreciate everyones information as to the "decay" factor in highly leveraged funds. I am aware of this fact but have not found a mathematical distinction between the decay of negative funds or positive funds. In fact I am quite amazed that shorting both type of funds at the same moment has been the perfect long term investment. Now whether that can continue during a bull market is yet to be seen.
The decay factor will probably keep me from using these funds as a hedging tool. They are helpful for short term trading though.

7 ETFs to Short Right Now

Joseph,
I understand your analysis and why you might want to short the market. I am curious as to to why you would short instead of buying the reverse ETF's such as the FAZ instead of the FAS?

My second question is to your market allocation. Did you pick 10% because with triple exposure its the same as risking 30% of your portfolio or are you scaling in to these shorts?

Thanks for the series of articles. It is good to be able to read and analyze differing points of view. As a long term investor in China and America it always worries me that another down leg is coming. However, creating a negative position by using reverse ETF's certainly can cushion the blow and not require one to sell certain cornerstone holdings.

The Obama Fast Track for Hybrid Electric Vehicles (HEVs)

John,
I imagine you saw this article about Midwest Energy testing batteries for wind storage made by BYD.

seekingalpha.com/artic...

This makes sense because Midwest owns 10% of BYD. However, I am not aware of any information as to why their batteries are better than others. Maybe you have an idea. My excitement is the fact that we now have a major wind player expanding the energy storage market.
My guess is that Midwest will test the batteries but if someone else makes a cheaper and better battery even Midwest will make the right economic decision to purchase the better product. Its the Berkshire way to support their own companies but not an an expense to shareholders.

Are Energy Storage Investors Chasing Their Own Tails?

The "elephant in the room" is the U.S. dependence on foriegn oil. One year ago it was all anyone talked about and now people don't even notice the elephant. GE is simply looking down the road at products that improve their particular product line. Immelt understands that oil demand can not fall fast enough to beat the peak oil point. Therefore, if a business is to survive in the next twenty years it has to sell products that reduce oil consumption.
John is correct in looking at an industry (energy storage) for investment that is slated to grow. No new invention can come on fast enough to take away all of the new growth in this area.

At todays prices GE or any other large industrial can buy ALL of the companies John listed in this article for 4 billion dollars. That includes a 30% stock appreciation price. It won't take to much longer for the huge industrial companies to be major players in this new world.

Jim Welsh on the Economy: Past the Point of No Return

Steve,
Very informative article and a rational analysis. How could anyone ,except a short term trader, buy into the market at these levels. These figures prove that a pull back to some test level is at hand over the summer. ( This should sound normal in a regular market let alone this one.)