Sunday, May 11, 2008

Straight Shooting Mad Scientist

My favorite (mad) scientist/mathematician, Dr. Saif Lalani, wrote an article for and he sent me a copy by email for inclusion on my blog.

Important Disclosure: I am precluded from making specific recommendations as a registered/licensed securities professional with the SEC and FINRA. Other contributors to this blog are not. Nothing any contributor says should be taken as investment advice or trading strategy. Read at your own risk, and think for yourself. I operate this blog only to vent my spleen and shout into the wind, not to encourage you to do one thing or the other. This ridiculous disclaimer aside, and without further mealy mouthed B.S., here is Dr. Lalani in his own words...

I have always prided myself of being a straight shooter. In all my previous articles I have pulled no punches and did no double talk.

My previous recommendations included
Yamana gold: Up 85%
Transocean and Global Santa Fe: up 150%
Oil: up 150%
Corn: up 20%
Uranium: Down 10% (so guess what I am buying more of?)

I suggested staying away from emerging markets as they feel the full brunt of higher oil prices. Both the Indian and Chinese markets are down significantly from that point.
In spite of making calls that most analysts on wall street making 7 figure salaries don't make, I have failed to make my point to a lot of people.

So I am going to try to be a lot clearer.

1) The emerging stock markets are collectively done. It has nothing to do with the credit crunch (although that will continue influence things) and has everything to do with BTU availability.
2) There are people (including Puru Saxena) who think that emerging markets will somehow “emerge”. That is about the stupidest thing since Bernanke's first speech about the sub-prime market problem being “contained”.
3) Within a year shortages of oil are going to make people reconsider buying a car. After all, who would want to buy one when the supply is not guaranteed. GM Auto is going to become GM motorcycles and/or GM bicycles in 3-5 years.
4) Free market oil prices will rise to at least $165 this year, $225 next year and $250 in 2010. Mind you - these are base levels, surprises will be to the upside. Should India insist on building a strategic petroleum reserve, $500 per barrel oil is almost assured. The volatility in oil will make volatility in Google stock look pale in comparison. Hence expect the Joe Kernan’s (of CNBC fame) of the world to have at least one more “oh look, ma, the oil bubble has burst” cries.
5) Indian stock market will dive at least 20% from this point in absolute terms and at least 60% in Gold terms, i.e measured in ounces of gold, in 2 years. Infrastructure stocks will hold up better than other stocks. P/E compression will prove incredibly painful. Unless GDP can grow without increased oil consumption all of this is certain. Emerging markets may collectively limit how much foreign investor’s can sell in any given time frame as all the dumb “hot money” chasing “growth” simultaneously realize the oil GDP conundrum.
6) Nuclear, solar, and wind power generation will gain a lot more traction.
7) Corn prices will go to at least $10 a bushel sparking chaos in Mexico, among other countries.

I have been accused of making bold statements about outcomes way off into the future. To those people I say that I refuse to accept your intellectual laziness as my sin. These outcomes are about as certain as the fate of a wooden house in the eye of a category 5 hurricane.

Dr. Saif K. Lalani

Well, that seemed pretty clear to me...

Yours for a better (and clearer) world,

Mentatt (at) yahoo (d0t) com


Anonymous said...

Thanks for the very informative article, Mr. Jeffers! I am glad you can find 'mad scientists' who speak truth for those of us who get our info from credible sources. But I would like to point out that anonymous posts in your comments section may also be a valid source of info, especially if you write them...

I hope you keep shouting into the wind! Some of us are listening.


Greg T. Jeffers said...


I am always happy take credit for my own work. This post was contributed by Dr. Saif K. Lalani of Vanderbilt Univ. You can reach him at
but I warn you, you better tune up and put on your thinking cap... he has a great deal of horsepower under the hood (cranium)!