The United States is in the middle of one of the greatest oil booms of all time. This is especially true in the states of North Dakota and Montana, home to the Bakken formation.#-ad_banner-#​ New drilling techniques are allowing companies to extract previously unreachable oil from this formation. The result is that the U.S. is on track to become the world’s largest oil producer by 2015, surpassing Russia and Saudi Arabia. Of course, producing more oil and importing less is a positive for the U.S. economy. One of the companies at the forefront of this… Read More

The United States is in the middle of one of the greatest oil booms of all time. This is especially true in the states of North Dakota and Montana, home to the Bakken formation.#-ad_banner-#​ New drilling techniques are allowing companies to extract previously unreachable oil from this formation. The result is that the U.S. is on track to become the world’s largest oil producer by 2015, surpassing Russia and Saudi Arabia. Of course, producing more oil and importing less is a positive for the U.S. economy. One of the companies at the forefront of this renaissance is Hess Corp. (NYSE: HES), the second-largest producer in the Bakken formation. With 640,000 acres in the Bakken, Hess produced more than 71,000 barrels of oil equivalent (BOE) a day from the region in the third quarter.  While those figures are impressive, they account for only 23% of Hess’ total third-quarter production of 310,000 BOE. In addition to the Bakken, Hess also has production operations in the Gulf of Mexico, the North Sea, Southeast Asia and Equatorial Guinea.  In the past year, Hess has been selling non-core assets. Last year, Hess sold $7.8 billion in non-core assets. Just last… Read More

Wilbur Ross is a man of large appetites. He doesn’t nibble around the edges with his investments — he consumes them with abandon.#-ad_banner-# At various points in his career, he’s committed almost all of his capital to one major investment, whether it’s distressed steel-making, out-of-favor textile making, or any other business that is flirting with bankruptcy but represent deep value through a corporate restructuring. His most famous move, as we noted last year: “Ross picked up numerous steel and mining ventures that had gone bankrupt. He sold his steel holdings for $4.5 billion in 2005 to ArcelorMittal, making $2.5 billion… Read More

Wilbur Ross is a man of large appetites. He doesn’t nibble around the edges with his investments — he consumes them with abandon.#-ad_banner-# At various points in his career, he’s committed almost all of his capital to one major investment, whether it’s distressed steel-making, out-of-favor textile making, or any other business that is flirting with bankruptcy but represent deep value through a corporate restructuring. His most famous move, as we noted last year: “Ross picked up numerous steel and mining ventures that had gone bankrupt. He sold his steel holdings for $4.5 billion in 2005 to ArcelorMittal, making $2.5 billion for (his firm) WL Ross and $300 million for himself.” That and other moves once led New York magazine to call Ross the “Bottom-Feeder King.”   These days, Ross has been unable to identify any major assets on the cusp of bankruptcy — the economy has been too healthy for that. Instead, he’s acquiring sizable stakes in companies that he views as severely undervalued. Though that approach continues to serve him well, one of his investments has been an utter disaster. Back in the third quarter of 2010, Ross bought nearly 2 million shares of energy… Read More

On Jan. 14 on StreetAuthority’s sister site ProfitableTrading.com, I wrote: “Gold and silver prices have taken a dive in the past two and a half years. Silver prices have been cut in half since their 2011 highs, while gold ‘only’ shed about a third of its value since then. Currently, silver is trading around $20 an ounce, and gold is trading at about $1,250 an ounce.”#-ad_banner-# Well, not much has changed in the past two weeks. Prices are slightly lower with silver at $19.70 an ounce and gold at $1,245.80. One company that is shielded from these… Read More

On Jan. 14 on StreetAuthority’s sister site ProfitableTrading.com, I wrote: “Gold and silver prices have taken a dive in the past two and a half years. Silver prices have been cut in half since their 2011 highs, while gold ‘only’ shed about a third of its value since then. Currently, silver is trading around $20 an ounce, and gold is trading at about $1,250 an ounce.”#-ad_banner-# Well, not much has changed in the past two weeks. Prices are slightly lower with silver at $19.70 an ounce and gold at $1,245.80. One company that is shielded from these fluctuations in prices is Silver Wheaton Corp. (NYSE: SLW). Based in Vancouver, British Columbia, the company basically secures long-term purchasing agreements associated with silver and gold around the globe at a fixed price. Currently, it has more than 20 agreements associated with 23 mines. This allows the company to pay dividends on a regular basis without worrying too much about fluctuations in metal prices. As an example, Silver Wheaton agreed to purchase 25% of all the silver produced by Goldcorp (NYSE: GG) at a mine in Mexico at $3.90 per ounce (remember that silver is currently at $19.70 an ounce),… Read More

I think Warren Buffett is the greatest equity investor the world has ever known. I’m not alone in my opinion. #-ad_banner-#His investing style is rooted in the value investing teachings of his mentor Benjamin Graham.  As Buffett would explain it, he just sits around and waits for fat pitches where a company is clearly worth a lot more than its stock price implies. When something is obviously mispriced (read: undervalued), Buffett buys — and he buys with conviction. It sounds simple, but it isn’t.   What Buffett fails to mention is that when something is obviously cheap… Read More

I think Warren Buffett is the greatest equity investor the world has ever known. I’m not alone in my opinion. #-ad_banner-#His investing style is rooted in the value investing teachings of his mentor Benjamin Graham.  As Buffett would explain it, he just sits around and waits for fat pitches where a company is clearly worth a lot more than its stock price implies. When something is obviously mispriced (read: undervalued), Buffett buys — and he buys with conviction. It sounds simple, but it isn’t.   What Buffett fails to mention is that when something is obviously cheap to him, it often looks cheap for good reason to the rest of us. In fact, Buffett’s most successful investments have often been stocks that the rest of us are afraid to buy. A perfect example: One of Buffett’s greatest investments was American Express (NYSE: AXP). In retrospect, his investment in this world-class company may look like a no-brainer. But at the time, it was a complicated and nerve-racking prospect.  In 1964, American Express shares dropped by 50% as the result of fears over potential liability the company had in relation to the infamous salad oil… Read More

Financial market prices are moved by participants anticipating changes in supply or demand, the fundamental forces of economic activity. Prices move based on what is expected to happen at some point in the future.#-ad_banner-#​ This is why markets often seem to move in the opposite direction many investors expect. The anticipation of a sharp change in supply or demand is often much more powerful than the actual confirmation of the change. The old market saying “Buy the rumor, sell the fact” is a great way to think of this concept. Nowhere is this better demonstrated than in the… Read More

Financial market prices are moved by participants anticipating changes in supply or demand, the fundamental forces of economic activity. Prices move based on what is expected to happen at some point in the future.#-ad_banner-#​ This is why markets often seem to move in the opposite direction many investors expect. The anticipation of a sharp change in supply or demand is often much more powerful than the actual confirmation of the change. The old market saying “Buy the rumor, sell the fact” is a great way to think of this concept. Nowhere is this better demonstrated than in the commodity markets. Rumors and forecasts of supply disruptions due to weather, government action or a host of other factors can send short-term commodity prices skyrocketing. Next, after the disruptive event occurs (or doesn’t), prices fall back to the norm. (Regular readers of Dave Forrest’s Junior Resource Advisor are kept abreast of potential changes in investors’ perception of supply & demand in the commodity markets.)   Recently, this is being witnessed in the natural gas market. Forecasts and the reality of an ultra-cold winter in the northeastern U.S. have pushed the spot price of natural gas prices from $3 per million… Read More

To profit from the short-term openings the market hands you, it takes the right strategy.#-ad_banner-# That’s a lesson I had to learn after correctly predicting that the U.S. would be in for a remarkably cold winter. Though temperatures in much of the U.S. have fallen to the lowest levels in years, the stock picks I suggested simply didn’t have enough leverage to weather as I anticipated. As I noted in late December, those picks rose only modestly as winter dug in, even as natural gas-focused exchange-traded funds (ETFs) fared a lot better. The explanation is straightforward. As I noted last month,… Read More

To profit from the short-term openings the market hands you, it takes the right strategy.#-ad_banner-# That’s a lesson I had to learn after correctly predicting that the U.S. would be in for a remarkably cold winter. Though temperatures in much of the U.S. have fallen to the lowest levels in years, the stock picks I suggested simply didn’t have enough leverage to weather as I anticipated. As I noted in late December, those picks rose only modestly as winter dug in, even as natural gas-focused exchange-traded funds (ETFs) fared a lot better. The explanation is straightforward. As I noted last month, “Many energy traders don’t trust quick moves in energy prices, and they assume that profit-taking will soon ensue. If gas prices move back below $4 per thousand cubic feet (Mcf), then these companies will generate a lesser benefit.” Since then, natural gas prices have kept surging, and these stocks still haven’t budged much. Yet a change in the weather provides a shot at redemption. Those rapidly surging ETFs appear set to reverse course, and you can even invest in this strategy without initiating a short sale. Plunging Storage The surge in gas prices is due to rising gas… Read More

Even after the push for renewable energy and the natural gas renaissance in recent years, oil is still the lifeblood of the global economy.  #-ad_banner-#According to the Energy Information Administration (EIA), world crude consumption grew by an average of 1.1 million barrels a day last year to a record 90.3 million barrels a day. The EIA is forecasting growth of 1.2 million barrels a day for 2014 and expects oil prices to remain in the $90 to $100 range for the short term.  Last year, offshore drillers lagged behind the market a bit — the SPDR S&P Oil… Read More

Even after the push for renewable energy and the natural gas renaissance in recent years, oil is still the lifeblood of the global economy.  #-ad_banner-#According to the Energy Information Administration (EIA), world crude consumption grew by an average of 1.1 million barrels a day last year to a record 90.3 million barrels a day. The EIA is forecasting growth of 1.2 million barrels a day for 2014 and expects oil prices to remain in the $90 to $100 range for the short term.  Last year, offshore drillers lagged behind the market a bit — the SPDR S&P Oil & Gas Equipment & Services ETF (NYSE: XES) logged a gain of 23.9% for the year, compared with the S&P 500 Index’s 26.4% — but 2014 is shaping up as a turnaround year for the sector.  The Gulf of Mexico in particular could be a potential “black gold” mine for drillers this year. A report by the U.S. Department of the Interior estimates that there is still around 48 billion barrels of oil that remain undiscovered, but the biggest catalyst could come from our southern neighbor — Mexico. Constitutional reform has gripped Mexico’s oil industry and broken up a long-running… Read More

There has been a lot of strong commentary this month about gold and gold stocks. Major firms are downgrading their outlooks while financial headlines are rife with calls that the bottom is in. Which is it?#-ad_banner-# I agree more with the latter than the former. Let’s say for now that the bottom really is in. Which stocks should be on your watch list, if not already in your portfolio, to take advantage of the early rallies? Working strictly from the technical side, this is what I want to see in a nutshell. I want stocks that have broken… Read More

There has been a lot of strong commentary this month about gold and gold stocks. Major firms are downgrading their outlooks while financial headlines are rife with calls that the bottom is in. Which is it?#-ad_banner-# I agree more with the latter than the former. Let’s say for now that the bottom really is in. Which stocks should be on your watch list, if not already in your portfolio, to take advantage of the early rallies? Working strictly from the technical side, this is what I want to see in a nutshell. I want stocks that have broken out on a relative basis versus the sector. In other words, I want stocks that have already shown technical strength, and therefore, greater demand from investors, even if their charts seem not quite ripe on an absolute basis. Should gold stocks as a group get moving to the upside, these “in demand” stocks should outperform. We have to start with the sector itself and the Market Vectors Gold Miners ETF (NYSE: GDX) as its proxy. It is no secret that this ETF suffered a steep bear market over the past two-plus years. The latest “proof” was a lower low set… Read More

After an exceptional five-year run, U.S. stock markets are now touching all-time highs. It follows that stocks here at home are not nearly as attractively priced as they were at the start of this run.#-ad_banner-# I’m not suggesting that the U.S. markets are going to collapse, but I do think that it is time to start looking around the globe for better valuations.      One place to start looking might be China. While the U.S. markets have roared back from the financial crisis, the Chinese market is only at a third of its pre-financial crisis… Read More

After an exceptional five-year run, U.S. stock markets are now touching all-time highs. It follows that stocks here at home are not nearly as attractively priced as they were at the start of this run.#-ad_banner-# I’m not suggesting that the U.S. markets are going to collapse, but I do think that it is time to start looking around the globe for better valuations.      One place to start looking might be China. While the U.S. markets have roared back from the financial crisis, the Chinese market is only at a third of its pre-financial crisis high. Investing in a Chinese company isn’t particularly hard. You don’t have to go to the trouble to obtain direct access to the Shanghai market itself. There are plenty of Chinese companies listed here in the U.S. One attractively valued Chinese stock I’ve been looking at is Kingold Jewelry (Nasdaq: KGJI). For good reason, U.S.-listed Chinese companies have gotten a bit of a bad rap in recent years.  There have been several instances where investigative work by savvy short sellers has revealed several U.S.-listed Chinese companies as nothing more than frauds. Now-delisted companies like Sino-Forest and Rino International spring to… Read More

There will be a number of earnings reports this week, and traders should start focusing on the trend in earnings. That could be bearish for the stock market. Weak Start to Earnings Season Puts Bull Market at Risk SPDR S&P 500 (NYSE: SPY) closed down 0.27% last week. Technical indicators are mostly bullish although bearish divergences are forming. The chart below shows Moving Average Convergence/Divergence (MACD) on a weekly chart of SPY, although a similar pattern can be seen with other indicators such as stochastics or… Read More

There will be a number of earnings reports this week, and traders should start focusing on the trend in earnings. That could be bearish for the stock market. Weak Start to Earnings Season Puts Bull Market at Risk SPDR S&P 500 (NYSE: SPY) closed down 0.27% last week. Technical indicators are mostly bullish although bearish divergences are forming. The chart below shows Moving Average Convergence/Divergence (MACD) on a weekly chart of SPY, although a similar pattern can be seen with other indicators such as stochastics or the Relative Strength Index (RSI). Bearish divergences are also visible on daily charts. A bearish divergence forms when prices move to new highs while an indicator fails to confirm the highs. Many technical analysts believe that divergences are eventually resolved with a decline in prices, but this belief is not confirmed by backtesting. Divergences lead to lower prices only about a third of the time in testing.#-ad_banner-# In testing divergences, I looked at various indicators and different time frames. Divergences that formed over eight weeks or more, like the current one shown in the… Read More