Economic Survival in the 21st Century - the Three Key Questions to ask

Written by Henry To, CFA


Continued from page 1

The situation is more alarming when one considers thatrepparttar combined population of China and India makes up over 1/3 ofrepparttar 112400 world’s population. The number of unemployed workers in China is greater thanrepparttar 112401 entire labor force ofrepparttar 112402 United States. The competition for relatively unskilled jobs will continue, and it promises to accelerate going forward. The average American who does not stay ahead ofrepparttar 112403 curve or does not keep pace ofrepparttar 112404 trend will find his or her job being outsourced – not to mentionrepparttar 112405 average wage being driven down by global competition. I, for one, believe that this continuing trend of globalization will makerepparttar 112406 world a better place, as hundreds of thousands of people will finally be empowered as they climb out of absolute poverty (again, over half ofrepparttar 112407 world’s population currently live on less than two dollars a day) – and asrepparttar 112408 prices of consumer goods are driven down still further. The average American will probably disagree, butrepparttar 112409 trend of globalization and “offshoring” will not stop. The last timerepparttar 112410 United States adopted economic and military isolationism we had a Great Depression and subsequently, World War II. I sincerely do not think that this was a coincidence.

The trend ofrepparttar 112411 general aging population and globalization will have a profound impact on all Americans. Ultimately, I think all Americans will benefit – although it may not be clear to people who are losing their jobs today. Forrepparttar 112412 initiated and nimble, you will not only survive but thrive in these “interesting new times.” Imagine a market for your product that is over ten timesrepparttar 112413 size ofrepparttar 112414 population inrepparttar 112415 United States. China and India has historically disappointed – asrepparttar 112416 citizens of those countries have historically been too poor to consume much U.S. goods and services. Globalization and offshoring will change all these. A world more equalized economically will also mean a much more secure and less conflictive world.

Now, I want to address a similar concern of all Americans – asrepparttar 112417 era of cheap energy (basicallyrepparttar 112418 cheap energy prices as experienced by Americans forrepparttar 112419 last twenty years) comes to a close. While I think oil prices will decline inrepparttar 112420 short-term (i.e. forrepparttar 112421 next few months), I am longer-term bullish on both oil and natural gas prices (I will only discuss oil in this commentary). Considerrepparttar 112422 following:

  • The world supply of oil is flattening out. Readers may not know this, butrepparttar 112423 United States today still produce enough oil to satisfy approximately 40% of total domestic demand. The United States also had 22.7 billion barrels of proved oil reserves as of January 1, 2004, eleventh highest inrepparttar 112424 world. According torepparttar 112425 Energy Information Administration (EIA),repparttar 112426 United States produced around 7.9 million barrels per day during 2003. This is down sharply fromrepparttar 112427 10.6 million barrels averaged in 1985. The peak of domestic oil supply occurred sometime duringrepparttar 112428 1970s. Today, total domestic production is at 50-year lows – and still falling.
  • While Saudi Arabia (the world’s top exporter and contains 25% ofrepparttar 112429 world’s reported reserves) has claimed that there are and will be no supply problems forrepparttar 112430 next few decades, they have not been transparent with their reserves data. According to Simmons & Company International, five to seven key fields in Saudi Arabia produce 90% to 95% of its total oil output – all but two fields are extremely old – withrepparttar 112431 last major find reported in 1968. The last publicized reserves data was in 1975 – when Saudi Aramco was still managed by Exxon, Mobil, Chevron and Texaco. In that report,repparttar 112432 world’s best experts determined that allrepparttar 112433 key fields at that time contained 108 billion barrels of oil in recoverable reserves. If this holds true, thenrepparttar 112434 peak of supply in Saudi Arabia will come soon. Moreover, ifrepparttar 112435 report is correct, then there is really no “plan B” (unlike duringrepparttar 112436 1970s whenrepparttar 112437 center of power shifted fromrepparttar 112438 Texas Railroad Commission to OPEC due torepparttar 112439 peaking of supply inrepparttar 112440 United States) – crude oil prices will soar.
  • The “last frontier” forrepparttar 112441 production of oil (namelyrepparttar 112442 North Sea, Siberia, and Alaska) is now aging. Most companies are now struggling in order to even maintain their current production levels.
  • World oil demand continues to grow. Oil demand inrepparttar 112443 early 1990s stayed relatively flat (at around 66 to 68 million barrels per day) but overrepparttar 112444 next ten years to today, world oil demand increased 14 million barrels per day. Today, total world oil demand is greater than 82 million barrels per day. The energy “experts” who inrepparttar 112445 early 1990s predicted a flattening of oil demand growth and who wrote off demand growth in developing countries were dead wrong.
  • No new refineries have been built inrepparttar 112446 United States forrepparttar 112447 past two decades, even as refineries have been closing every year during that same time period. Refining capacity from 1981 torepparttar 112448 mid 1990s also dropped drastically (this author estimates a drop of approximately 6 million barrels per day in refining capacity during that time period). Since 1994, however, an expansion in refining capacity at existing refineries has contributed to an increase in refining capacity from 15.0 million barrels per day to 16.7 million barrels per day (as of today). Despite this expansion, however, domestic refining capacity is still stretched torepparttar 112449 limit, as utilization at U.S. refineries is now averaging nearly 90% -- leaving no cushion room if something unforeseen happens.

To seerepparttar 112450 entire article, please go to: http://www.marketthoughts.com/z20040624.html

Henry To, CFA is the managing member of Independence Partners, LP, a SEC registered hedge fund. He is also editor of the investment website, www.marketthoughts.com.


How to create wealth in the stock market

Written by Charles M. O'Melia


Continued from page 1

The second example is (unfortunately) in my book, also. I say unfortunately because my book is inrepparttar final copy edit stage, so no one has had a chance to read and benefit from it, and since a buy-out offer was made forrepparttar 112399 stock last week or so,repparttar 112400 stock will no longer exist (this means a rewrite for me, before publication). The company in question isrepparttar 112401 Rouse Co. (RSE), which was just purchased by General Growth Properties (GGP). Oddly enough, you’ll find GGP in my book, also – if you bother to pick it up. Anyway, that’s neither here nor there - RSE, onrepparttar 112402 takeover bid jumped over $16.00 a share in one day! Whew! Why couldn’t they have waited a couple of months until my book was released? RSE hadrepparttar 112403 opportunistic trait of raising their dividend every year since 1993 and I was quite content with its performance throughrepparttar 112404 years.

Well, that last paragraph blew my train of thought on this article. All I can think about atrepparttar 112405 moment is my rewrite.

I would like to take this time to explain something to you. I have never considered myself a writer nor am I a stock market professional. I am simply a man with 39 years of experience and a passion forrepparttar 112406 stock market, trying to share what wisdom those years have given me. When I sit down to write an article, I seldom have an idea on what I’m going to say. It wasrepparttar 112407 same way when I sat down to write my book. I just meant to put down a few words on paper for my 18-year old son so he would have a sound, concrete plan for investing in those companies that make uprepparttar 112408 stock market (quite frankly – I didn’t want him to blow his inheritance). Whether you find merit in what I say, I have no idea. What I do know is that life is just too short to learn everything you need to learn by yourself, withoutrepparttar 112409 help of others.

There, now I’m satisfied with that ending!

For more excerpts fromrepparttar 112410 book ‘The Stockopoly Plan’ visit http://www.thestockopolyplan.com

Charles M. O’Melia is an individual investor with almost 40 years of experience and passion for the stock market. Author of the book ‘The Stockopoly Plan’, soon to be released by American Book Publishing.


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