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.
In his Bloomberg article The Secret Goldman Sachs Tapes, Michael Lewis (Liar's Poker, The Big Short, Boomerang, Flash Boys) outlines the complete breakdown of the Federal Reserve's regulation of the big banks, in particular Goldman Sachs. The article discusses The Secret Recordings of Carmen Segarra, a former Fed regulator, which were documented in the This American Life radio show on September 26th. If you ever had any doubts about the cozy relationship between the big banks and The Fed, well, you shouldn't anymore. This is "must listen" stuff.
The meat of this letter will focus on a different structural issue. Federal Reserve Chairperson Janet Yellen recently openly wondered whether the slow growth economy was structural in nature and not cyclical? As I have discussed on MarketWatch in brief and quarterly letters at my firm website, I have a one word answer for her query: YES.
I wrote this article for one of the best new financial websites out there. It is very appropriate for what we do here which is longer-term trading and investing.
I know a lot of people are convinced that they can swing or day-trade the markets to get rich. In a few cases that's true, I will make that concession up front. For most people though, it doesn't hold up. Most folks who attempt to day or swing trade fail to beat the markets and quite a few lose dramatically in sudden wipe-outs.
There is a simple calculus at work here. The more decisions you are making, the less likely you are to be right enough of the time to make the work worthwhile. In fact, most of the work you are doing, probably wasn't enough to get all the work done well, so many of your decisions are made on sparse knowledge, an emotional belief in a vulnerable system (think of a gambler) and gutting it out of desperation.
In addition to the mathematical and emotional problems of frequent trading, there is another obstacle to making enough money to be worth the time of trading frequently. There exists a very professional group of sophisticated traders that most "regular" folks are not a part of. Those "pros" for the most part wax the small folk's back side on a regular basis. It's not necessarily because they are smarter, but they are more connected, more experienced, better heeled, less honest and, in many cases, more ruthless than folks at our end of a nice two screen set-up in a spare room.
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.