Finance

• Is a Reduction in Population Numbers the only Sustainable Solution?

  In a recent post, I talked about why we may be reaching Limits to Growth of the type foretold in the 1972 book Limits to Growth. I would like to explain some additional reasons now. Figure 1. Base scenario from 1972 Limits to Growth, printed using today's graphics by Charles Hall and John Day in "Revisiting Limits to Growth After Peak Oil" http://www.esf.edu/efb/hall/2009-05Hall0327.pdf In my earlier post, I talked about how rising oil prices are associated with rising food prices, and how these high prices can make it harder for borrowers to repay their loans, as is now happening in…

• The Benefit of the Doubt Market

  It is already January 24, and the S&P 500 has seen a grand total of two down days so far in 2012. Are we on the eve of one of the great bull markets of all time? Is it off to the races once again? I follow dozens of fundamental and trading research services and the number that are flashing warning lights right now is close to an all-time high. For example, the AAII sentiment survey now shows that 46% of investors believe that the stock market will be high in six months, well above the 39% historic average. It…

• Out of Africa - Portugal solicits Angolan investment

  The following is an interesting and cautionary tale for investors looking at relatively "stable" Old Europe and Africa, seemingly mired in perennial crisis. Since last year the Portuguese government has been heavily lobbying its former colony Angola to invest its petrodollars there as the nation struggles to comply with the terms of a $99 billion financial rescue package. For 500 years, Angola was Portugal's biggest and richest African colony, with huge reserves of oil, gas and diamonds. The event marks something unique in world history since Columbus first set sail, ushering in centuries of European colonial domination - reverse colonization…

• International Junior Oil Stocks: How Investors Can Position Themselves for High-Reward International Plays

  Without question, the oil stocks that have made me the biggest profits have been junior oil companies with international plays. Companies like Xcite Energy, (XEL-TSXv) which went from 62 cents to $6 with a heavy oil play in the North Sea, or TAG Oil developing their New Zealand asset, moving from $2 - $6 a share. (The one big international stock I missed was TransGlobe, (TGL-TSX) which went from $3.50 - $20 on drilling success in Yemen and Egypt.) These junior international plays are often orphaned stocks with big, high-impact exploration plays - and if they hit... WHOOSH! The stock…

• Argentina's Booming Economy Proves There Can be Life After Default

  Quick. Name the country whose economy despite the global recession nevertheless expanded 9.2 percent in 2010 and has kept growing in 2011 at an annual rate of about 8 percent. Still unsure? The nation defaulted on part of its external debt, roughly $93 billion, at the beginning of 2002 after undergoing three years of brutal recession. Argentina, Latin America's third largest economy. Quite a turnaround in nine years, when the nation quickly became a pariah state, foreign investment fled the country, and capital flow towards Argentina ceased almost completely. The government then decoupled the Argentine peso's parity with the U.S.…

• G20 and BRICs - Who's in Charge?

  As the representatives of G20 nations gather in Cannes, thrashing out a new way forward for the ailing European Union's economies, a major yet little observed economic sea change is underway, as the torch is passed from Europe's capitalist systems, forged over the past four centuries, to countries considered until a couple of decades ago "Second" and "Third World - the BRIC nations of Brazil, the Russian Federation, India and China. While it is as yet unclear what form this historic and dynamic shift will ultimately take, investors would be well advised to take notice of this historic economic tectonic shift. Furthermore,…

• Oil & Gas Income Trusts

  The "New Class" in an old, popular investment vehicle Part 1:  A Comeback in the Making? The income trust game is back - just in a different form. Canadian Finance Minister Jim Flaherty killed these high-yield, tax sheltered public companies on October 31, 2006 - not so affectionately called the "Hallowe'en Massacre" by the millions of investors who were enjoying 10%+ payouts annually. Canadian companies had until January 1 2011 to convert back to a regular corporation or face new taxation that essentially reverted them back anyway. But the market has found a loophole that may allow for many new trusts - especially in the…

• The Faustian Bargain has Enabled an Unsustainable Economic System, but Not for Much Longer

  Historically people have shifted their belief systems in various ways. The Greeks and Romans believed in numerous gods and goddesses and attributed all kinds of powers to them. Then the great monotheistic religions came along and people began to believe in just one god, though they honoured him under different names. Recently, beliefs have shifted again, with people worshipping just one part of a god, the invisible hand. Thanks to Adam Smith and those who followed him, especially the current neoclassical economic theologians, we have seen such an increase in the world’s wealth and sheer numbers that it is hard…

• Is a Green Economy too Expensive in the Current Environment

  There is a looming battle over the cost of energy between the ‘green at any cost’ versus the ‘green enough at a reasonable cost’ where wind/solar forces will battle natural gas—you can sense the fog of war ahead as the battle is being set up. The policy landscape has been designed to drive toward clean energy policies sometimes without much regard to the cost.  It started with environmental groups challenging our polluting ways.  Over time those views gained mainstream acceptance and today there is broad public support for the goal of a clean environment, protecting air quality and water quality…

• How to Play Commodities in 2012

  This is my favorite asset class for the next decade, as investors increasingly catch on to the secular move out of paper assets into hard ones. Don’t buy anything that can be manufactured with a printing press. Focus instead on assets that are in short supply, are enjoying an exponential growth in demand, and take five years to bring new supply online. The Malthusian argument on population growth also applies to commodities; hyperbolic demand inevitably overwhelms linear supply growth. Of course, we’re already nine years into what is probably a 30 year secular bull market for commodities and these things…