Wednesday, November 19, 2008

An Important Article - Economize, Localize, Produce

A friend of mine from TheOilDrum.com, Jeffrey Brown (otherwise known as Westexas in the community) wrote an EXCELLENT article about the best course of action in the coming environment.  And at the time, well before the financial crash and the spike and subsequent crash in Oil, people thought he was being silly.  An alarmist.  After all, what could he know?  He was a geologist, not an economist/sociologist.  (One of the problems with credentializing EVERYTHING is that folks absent the credentials are discourage from THINKING about and CONTEMPLATING issues within the credentialized field.  Whatever happened to problem solving?)

This is where I was going in my previous post.  

Remember the "New Economy" BS from the dot com era? There is going to be a new economy alright.  Finance, Insurance, and Real Estate is going to see its employment contract.  The market will direct employment and opportunity to where it is needed.  

Get there first.

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The economy might have gone through a bout of credit contraction, and that bout might last a bit longer, but at some point the Fed and Treasury's actions will have the desired effect.  I remain long high dividend paying energy stocks and Gold.  If/when the Fed/Treasury succeed I believe that this is the place to be.  I know Treasuries are the darlings of the Market now, but do you really want to own a security with a .25% coupon with 4% inflation?  Sounds like a government guaranteed loss to me.  Of course, this where we all should have been in August... 

Speaking of Gold.  I don't give investment advice in this forum.  Gold, is a hard currency as well as a commodity and I am not precluded from discussing Gold.  So...

Gold, unlike Worldcom or Enron, will NEVER go to zero.  Too, Gold will never pay a dividend nor interest.  Gold is a store of value, not an investment.  One ounce of Gold will only be worth one ounce of Gold.  Therefore, it is all in the price you pay whey you buy.  Good luck with that.  I always try to add to my Gold position after periods of steep decline.

Good Luck!

Mentatt (at) yahoo (d0t) com

4 comments:

bureaucrat said...

Where exactly are you finding high dividend-paying energy/oil stocks?? XOM, COP CVX didn't pay much before and probably still don't. I have T (not an oil stock) and TEG (NG distribution). They are around 5-6% yield now. But name for me one oil company or any oil-service company that pays a real dividend, please.

Greg T. Jeffers said...

British Perto pays over 7%, and Royal Dutch Shell pays nearly 7%. The MLP's pay big time, and have been killed.

I would not add positions now, and I make no specific recomandations. I have more to say in my next post.

Anonymous said...

The vast majority of people in this country can't afford gold. Plus it's impractical. Try using an ounce of gold to buy groceries or gas.

Anonymous said...

I've used an ounce of silver to buy groceries before. Easier to get change from. ^_^