Monday Musings

I'm reading Erasmus' famous book - Praise of Folly - written circa 1500. [Folly personified is the Greek Goddess of Folly who gives a wonderful speech in the book.] I think Folly would have really enjoyed parodying these market gurus like Sutty, who is on Bubblevision now. Maybe she would have just lumped them into her parodies of the grumpy philosophers. Or perhaps she would have taken credit for them as entertaining Fools ;-) In either case, they are such a joke.

Brent crude prices keep moving up. I think North Sea oil must be having real production problems. That's one of those huge finds of 25 years ago that is running out. Ditto Mexico. And, mirabile dictu, the oil industry now says production from convention sources will have trouble keeping up with demand. I think the "peak oil" theory is mostly right, viz., "annual production" has peaked. That's NOT saying the world is running out, just that no more production can be recovered every year, due to the losses from old, huge fields. New finds are offset by old field declines.

For the commodity story, you really have to stop being US-centric. Until China and India say "STOP", I think the oils & miners will do well. For new production, I think the companies with US Gulf of Mexico deep water exposure are the ones to hold, viz., CVX and DVN and the deep water drillers - DO, GSF, RIG and NE. They are all way up, so get a good entry. XOM does seem to have big fields in Angola and new refineries in China, too, so I like it, too.

The S&P cash chart looks fine. Those two days of closes over the old high mean it's real buyers. The Nazz 100 looks strong. The Rut looks weak. What does that mean? The true ultimate real buyer is pushing this move - index fund buying. Maybe Q2 saw money being pulled from beefers and put into indexes? That would have been smart, but we'll see. There are anecdotes of such funds shifts, though.

Year to Date:
Krypto Fund: +7.3%
Alpha Fund: +51.1%
Commodities: +28.6%

It's a Bull Market.
The Trend is Your Friend.
Buy Dips.
Use Time Diversification.
Find Strong Stocks in Leading Groups.

PS: I sold the S&P futures long trade. See comments for details. Still 150% long in Alpha Fund.