Our experience is that Supplemental Medicare Insurance rates are rising approximately twenty (20) percent a year. Are these increases measured properly in the Consumer Price Index? Will they be if the government adopts a chained CPI?
Exxon's (XOM) Rex Tillerson predicts global energy demand will grow 35% by 2040, a view broadly shared by BP's Bob Dudley. But producing oil from unconventional sources can cost as much as $50-$75 a barrel, and even higher deep offshore. That's the challenge ahead; even Tillerson says he never expected to spend an expected $38B/year through 2017 to get just a 2%-3% uptick in annual production. [View news story]
To this amateur, the takeaway is clear. Humanity is slip sliding down the net energy slope and the appropriate investments are domestic MLP's with slow decline rates. LINE and LGCY.
Savvy hedging has helped Linn Energy (LINE -2.6%) plump its payout and attract investors, but a Barron's report says the MLP may be overstating cash flow available for distribution by not deducting the cost of financial derivatives from its realized gains on hedging activities in its financial statements. The company says its hedge strategy has served its investors well. [View news story]
One can only hope that many more nervous nabobs of negativism sell their shares to me at lower and lower prices.
Team Alpha Portfolio: Selling A Stock When Serious Questions Arise [View article]
I have very high confidence in LINE's management over the long term. It is a core holding and will probably remain so far into the future. Didn't Warren tell us to plan to hold any stock we buy for 10+ years? Does he sell when there is a bump in the road?
Is it incorrect to believe that ever since the globalization of the American economy shifted into high gear, the average person has experienced a virtually unending string of years characterized by lower real income?
Nate Silver's 'The Signal And The Noise' Seems Better Than It Is [View article]
On May 4, 1997 I was sitting in the auditorium of The Equitable Center in Manhattan and watched former World Chess Champion Garry Kasparov play Deep Blue. As an avid amateur chess player, I've read many accounts of the root causes of Deep Blue's Match victory. None have been as incisive and enlightening as Nate Silver's explanation on page 283. Mr. Silver explained the mistake(s) Garry made in erroneously concluding that the architects of Deep Blue must have been "cheating" for wont of a better term. Until I read Mr. Silver's book this many years later I and my chess playing acquaintances never knew what the root cause(s) of Garry's mistake(s) were.
Furthermore, Nate Silver's narrative on page 287 regarding Bobby Fischer's Game of the Century against Grandmaster Robert Byrne; which contained an unimaginably brilliant, and seemingly counterintuitive sequence of moves; explains that modern day computer analysis can only duplicate but not improve upon Bobby Fischer's analytical powers back in 1956. Today's machines show Bobby found the one line that wan't erroneous out of an unthinkable number of possibilities. Today's computer engines can match the line Bobby Fischer found and played, but not improve upon it. Nate Silver explains this with heretofore unequaled clarity.
For myself, the "Race Against the Machines" chapter described in part above made the book well worth the price.
Nymex crude oil rose $1.25 to finish at a four-month high $95.49/bbl after a steady advance on bullish economic data (I, II) and supply concerns stemming from the hostage situation at the Algerian gas facility. Prices rose as high as $96.04 in afternoon action and settled with a 1.3% gain. Governments continue to scramble for information about the fate of their citizens in Algeria. [View news story]
No, it's supply concerns related to the ability of any of hundreds of organized terrorist groups to breach the fence lines of oil and gas facilities all over the world. For terrorists, this was a "teachable moment".
Exxon Ventures Into Less Lucrative Waters To Increase Crude Output [View article]
Great article (human confirmation bias at work here!) which seems to validate the thesis behind LINE and LGCY. XOM is a great company but there is a lengthening pattern of inability to replace its crude oil reserves regardless of "going to the ends of the earth in an effort to do so" like Arctic drilling etc. Long term this implies humanity is already on the plateau of crude oil production and is slip sliding down the "Net Energy Slope". All factors which support the thesis for long lived assets onshore in North America as extraction costs and prices of crude oil rise worldwide.
What's up with the Vietnam ETF (VNM -4.2%)? It's tanking today even as the Ho Chi Minh Index - the world's best performer in a young 2013 - gained again (+0.6%) overnight. Stocks there have benefitted from a series of rate cuts, but the IMF suggests policy has been eased too quickly in the face of growing inflation pressure. [View news story]
Is corruption by government officials an impediment to profits (the mother's milk of stocks) for Vietnamese companies?
Why $100 Brent Will Not Last Through 2013 [View article]
Take a peek at Freddy Hunter's graph(s) and note the black line at the bottom labeled "Extraction Costs". Articles about long term future oil prices almost never address the issue implied by its trend and ignore that humanity continues to slip slide down the crude oil net energy slope.
I wish Mr. Hunter would write an article giving amateurs like myself more insight into his trendline work such as the basis and forecasting methods used. No doubt it would be a bonanza of new knowledge and information!
Linn Energy For 7.9% Yield And 22% Upside [View article]
Richard48,
Thanks for your input. LINN is 50 percent of my portfolio. However, lately I've begun to question some of the thesis. I've felt your points would dominate the issue going forward and have not sold even a single share. However, it's much more of a calculated risk than it was even a short year ago, in my amateurish opinion. I'm banking on the new pipelines in mid 2013 and 2014 to take some of the existing crude oil glut in central and west Texas to the gulf coast. Until then, I'll probably accumulate some shares of LINN and LGCY.
Again, thanks for the confidence boosting comment! Happy Holidays. Phil
Linn Energy For 7.9% Yield And 22% Upside [View article]
Dear Author,
Regardless of long term hedges, does it concern you that an increasing chorus of SeekingAlpha writers are calling for the price of WTI crude to fall into the $50-$70 range due to a supply glut and furthermore that the price of natural gas cannot reach $4? What's going to happen to that distribution when the hedges cannot be renewed at anywhere near their current prices?
Will Your Retirement Savings Last? [View article]
Exxon's (XOM) Rex Tillerson predicts global energy demand will grow 35% by 2040, a view broadly shared by BP's Bob Dudley. But producing oil from unconventional sources can cost as much as $50-$75 a barrel, and even higher deep offshore. That's the challenge ahead; even Tillerson says he never expected to spend an expected $38B/year through 2017 to get just a 2%-3% uptick in annual production. [View news story]
Legacy Reserves (LGCY): Q4 EPS of $0.04. Revenue of $90.5M beats by $0.52M. (PR) [View news story]
Linn Energy LLC Blows Up The Short Sellers [View article]
World Industrial Output Reached A New Record High In 2012 [View article]
Savvy hedging has helped Linn Energy (LINE -2.6%) plump its payout and attract investors, but a Barron's report says the MLP may be overstating cash flow available for distribution by not deducting the cost of financial derivatives from its realized gains on hedging activities in its financial statements. The company says its hedge strategy has served its investors well. [View news story]
Team Alpha Portfolio: Selling A Stock When Serious Questions Arise [View article]
The U.S. Goes Global [View article]
Nate Silver's 'The Signal And The Noise' Seems Better Than It Is [View article]
Furthermore, Nate Silver's narrative on page 287 regarding Bobby Fischer's Game of the Century against Grandmaster Robert Byrne; which contained an unimaginably brilliant, and seemingly counterintuitive sequence of moves; explains that modern day computer analysis can only duplicate but not improve upon Bobby Fischer's analytical powers back in 1956. Today's machines show Bobby found the one line that wan't erroneous out of an unthinkable number of possibilities. Today's computer engines can match the line Bobby Fischer found and played, but not improve upon it. Nate Silver explains this with heretofore unequaled clarity.
For myself, the "Race Against the Machines" chapter described in part above made the book well worth the price.
Nymex crude oil rose $1.25 to finish at a four-month high $95.49/bbl after a steady advance on bullish economic data (I, II) and supply concerns stemming from the hostage situation at the Algerian gas facility. Prices rose as high as $96.04 in afternoon action and settled with a 1.3% gain. Governments continue to scramble for information about the fate of their citizens in Algeria. [View news story]
Exxon Ventures Into Less Lucrative Waters To Increase Crude Output [View article]
What's up with the Vietnam ETF (VNM -4.2%)? It's tanking today even as the Ho Chi Minh Index - the world's best performer in a young 2013 - gained again (+0.6%) overnight. Stocks there have benefitted from a series of rate cuts, but the IMF suggests policy has been eased too quickly in the face of growing inflation pressure. [View news story]
Why $100 Brent Will Not Last Through 2013 [View article]
I wish Mr. Hunter would write an article giving amateurs like myself more insight into his trendline work such as the basis and forecasting methods used. No doubt it would be a bonanza of new knowledge and information!
Linn Energy For 7.9% Yield And 22% Upside [View article]
Thanks for your input. LINN is 50 percent of my portfolio. However, lately I've begun to question some of the thesis. I've felt your points would dominate the issue going forward and have not sold even a single share. However, it's much more of a calculated risk than it was even a short year ago, in my amateurish opinion. I'm banking on the new pipelines in mid 2013 and 2014 to take some of the existing crude oil glut in central and west Texas to the gulf coast. Until then, I'll probably accumulate some shares of LINN and LGCY.
Again, thanks for the confidence boosting comment! Happy Holidays.
Phil
Linn Energy For 7.9% Yield And 22% Upside [View article]
Regardless of long term hedges, does it concern you that an increasing chorus of SeekingAlpha writers are calling for the price of WTI crude to fall into the $50-$70 range due to a supply glut and furthermore that the price of natural gas cannot reach $4? What's going to happen to that distribution when the hedges cannot be renewed at anywhere near their current prices?