Kirk Spano was tabbed "The World's Next Great Investing Columnist" by MarketWatch of the Wall Street Journal network in 2011. He has written for Motley Fool, Seeking Alpha and been widely distributed by various newswires, brokerage feeds and on Morningstar. As one of the first to identify the developing resource boom in America, Kirk has been able to pass on stellar returns to his investors and subscribers. He has appeared on Fox Business and made regular appearances on the radio. Mr. Spano is the founder of Bluemound Asset Management a fee-only Registered Investment Advisor.
With the correction in full swing I have been looking for stocks that might benefit from the decrease in oil and natural gas prices - quickly. With lower prices at the pump and hopefully less expensive late autumn heating bills I am anticipating that some of the companies you would normally expect to bounce around the holidays might have unusually sold off this month. I found three companies that are likely to do very big business this holiday season that have absolutely spectacular balance sheets.
The first company is in the same business that made Michael Jordan an even richer man. The next one is a hit among teens and young adults who need something that really fits around their hips. And finally, I have a Carl Icahn favorite that you probably have an account with already.
Today the oil market, which has already been falling quite a bit, completely fell off a ledge today near the close. For the day, oil prices were down 4.6% as the IEA cut its oil demand forecast. For traders and those who are overweight oil stocks this is painful. As subscribers know, we took profits on oil stocks twice in the past year:
In the "peak oil plateau" article above I discussed hitting the low-end of the oil price range by year-end. We are well on pace for that. In fact, as markets are prone to do, we will probably overshoot the $80 price target I put on oil. While traders are feeling that pain, those with cash on hand and a longer term outlook are about to have some amazing opportunities. One stock I am close to recommending is the most efficient driller in America. This company is on the verge of being a free cash flow machine and it is clearly a takeover target in coming years. Subscribers will get this pick soon.
I apologize for the long delay here. I began writing this page in the middle of August and got stuck and set it aside for vacation. I generally take the last two weeks of August through Labor Day off and this year fell behind with investment management clients so had to focus there the past couple weeks. That sort of thing will happen a few times a year and frankly is why this letter is so cheap. The investment picks I'm putting out here have crushed the market on aggregate, making the ultimate value of the American Resource Boom Letter much higher than what I charge.
Through the end of September, new subscribers can still buy in at $99/year and have that rate guaranteed until the end of the boom which I foresee sometime in the 2020s. Come October 1st, the price for new subscribers will be $149/99/yr. I am also planning to put a hard cap on the number of subscribers to the letter as I don't want to move the markets on some of the smaller companies we invest in or the options markets we use.
On to this week's letter which should twist your noodle a bit.
After the initial rebound from the financial crisis people almost immediately started talking about the "rest" of the collapse to come. So far they have been very wrong as central banks have acted together to counteract the liquidity crunch that occurred. They have been so successful that there has been enough cash floating around to meet any stock market weakness with buying.
For well over a year now, really about two, many of the same people who missed the crash - granted about 95% of people - and then called for a post-crash crash, have been calling for a severe correction. They have continued to be wrong.
Last year on MarketWatch I talked about what would trigger a correction. The main thing would be the reduction in Fed QE (quantitative easing), i.e. excess money printing. Since last December, the Fed has been "tapering" their money printing. They are loosely scheduled to end the latest quantitative easing in October. The result has been a slight uptick in volatility. That begs the question: are we due for more volatility and a correction?
For the first time in a long time, bad news is starting to overcome good news in market direction. July was the worst month in over two years for the stock market. The Dow Jones and Russell 2000 both sit slightly negative year to date, and Standard & Poor's 500 benchmark is just a few points positive as large companies have outperformed.
The S&P's out performance is indicative of late cycle behavior. In particular, the recent run in utilities and resource stocks is typically late cycle stuff. I don't own any utilities at this point and recommend selling most. As I indicated a few weeks ago, being even more cautious than usual is warranted given what is going on globally.