Wednesday, May 21, 2008

All Lubed Up

For a guy I haven't followed much, I'm going to reference T. Boone again. He's prominently featuring his mug all over CNBC ala Warren Buffet-Man o-the-people recently. After this oil expert repeatedly said oil was going to pop and drop back into the 80s, he recently began showing up and saying, "hey, what did I know, this stuff is clearly heading to $150." Thanks, dude, so, you were only off by 87% initially, very helpful for the clones (thanks, Rome) who shorted oil on your sage advice. For those of you following this humble investor, you could've bought COP under $70 several times and watched it climb to $95 today. You also could've bought PXJ at $21 and watched it climb to over $33 today. But hey, I'm not the oil billionaire.

Dennis Gartman, "renowned" commodities trader, has also been making almost daily appearances on CNBC. Good call on both the oil and gold bubbles as well, as gold has rallied 10% in the last 2 weeks....hmmm, about the time I recommended it. Up to $930 today.

CPI numbers were not taken well, when core inflation (bogosity that doesn't include housing, food, or energy) rose more than expected. In addition to the John Williams article I recod 2 weeks ago, try reading Kevin Phillips' recent article in Harper's. He puts the CPI at closer to double digits and explains the tricks that have allowed the govt. to lower unemployment and inflation numbers drastically, particularly since Reagan took over. Scary stuff.

BAC and other lenders have pulled out entirely from the student loan business. New entries have been blocked due to the delay in post-graduation repayment with no guarantees of success. Another loan debacle that adds to this debtor nation's delinquency....

My diesel review is not complete but I looked at both Eaton and CDTI yesterday. Eaton is very solid and has exposure to several industries, all with international exposure giving it a nice currency hedge. Also, they have made several large sales of their hybrid-diesel engines and have penetrated China. I like these guys and they are still 15% off their 52-week high. CDTI is a different play. They have multiple patents for cleaning diesel and other emissions. They are also developing biodiesel fuels to compete with ethanol. A positive, no debt. Negatives, no earnings and multiple failed auctions recently to raise liquidity. But, with a 300% increase in sales last year and trading at $14, more than 50% off its highs, CDTI presents a high risk-high reward situation. Cummins dipped into the 60s yesterday and has bolted 3% today. I am reviewing them now.....

Hope nobody's planning on flying American. If you are, travel light. $15 for first bag checked...others will follow suit. Days of discount airlines are over. Book now.

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