|Dow||+59.54 to 16,979.13
|S&P 500||+4.91 to 1,986.51|
|Nasdaq||-1.03 to 4,526.48|
|10-YR Yield||+0.021 to 2.426%
|Gold||-$4.50 to $1,292.20|
|Crude Oil||+$1.59 to $96.07|
Many investors think it’s easy to make money from the energy markets.
If energy prices are going up, they figure they can just log on to their online brokerage account … buy 100 shares of Exxon Mobil (XOM, Weiss Ratings: B+) or Chevron (CVX, Weiss Ratings: A-) … or maybe an oil Exchange Traded Fund like the United States Oil Fund (USO) or ProShares Ultra Bloomberg Crude Oil (UCO) … and go back to doing what they were doing.
But they couldn’t be more WRONG!
You see, today’s energy revolution isn’t being led by those lumbering energy giants. It isn’t taking place in some far-flung Saudi Arabian oil field, or in the deep waters off Africa or Brazil. It hasn’t even needed dramatically higher crude oil and natural gas prices to generate huge profits.
Instead, this energy revolution is happening right here.
It’s unfolding in our very own backyard.
And that means the biggest winners of today’s energy revolution are completely different from the biggest winners of yesteryear!
Or stated another way, if you want to be a successful new energy investor, you have to tear up your old playbook. Throw it in a garbage can in the backyard … spray some lighter fluid on it … toss a match on top … and move on.
I’ve spent the last couple of years learning everything I can about America’s energy renaissance, and I can tell you in no uncertain terms that it’s a whole different ball game from the last boom. That one was driven by a surge in crude oil prices from around $50 a barrel in early 2007 to almost $150 a barrel in mid-2008.
“This is having dramatic ramifications for investors like you.”
This one is being led by companies exploiting the boom in domestic oil, natural gas, and natural gas liquids exploration, production, transportation, storage, refining and export. Thanks to good old-fashioned American knowhow, and the dramatic surge in more-efficient and productive fracking and horizontal drilling, America is leading the charge once again.
This is having dramatic ramifications for investors like you. Consider: You could’ve bought Chevron last October, and racked up a profit of around 11 percent (including dividends). That’s not bad.
Or there is the barge and railcar manufacturer and leasing firm that’s making money hand over fist from a new trend in this energy renaissance. You see, tons of oil are being discovered in new locations that aren’t adequately serviced by existing pipeline networks. I knew that meant much more crude would have to be shipped by rail — putting this company in the catbird seat, so I recommended the stock some 10 months ago.
|It’s an entirely new world for investors in the world’s energy sector, with much of the action right here in the U.S.|
Those who bought in on that aren’t sitting on gains of around 11 percent like with Chevron. They’re sitting on open profits of around 111 percent.
The way I see it, you have two choices as an energy investor …
- Buy the names everyone has heard of, the lumbering giants of yesterday. You might make a few percentage points here or there that way, which is better than nothing.
- Focus on the new energy leaders — the companies uniquely positioned to rake in life-changing profits from the surge in domestic production, transportation, storage, refining, and export.
What are you thinking about this energy revolution? Is this the next, great profit opportunity for investors? What are some of your favorite energy investments, in addition to the MLPs we’ve discussed before? Anything you see that could derail this trend? Use the Money and Markets website to sound off and help your fellow investors out!
|OUR READERS SPEAK|
My column on wages — and the lack of growth over the past few years — touched a nerve with many of you. When it comes to the cause of the stagnation, you had several diverse views.
Reader Anonymole said: “Labor has no voice these days. So why would corporate America bother to actually spread the wealth down to those who actually do the work? Look at share buy-backs for the last few years. Why do this?
“First off, corporations don’t have to pay higher wages as the work force, for the time being, is not shrinking, but growing. Boomers are not retiring in droves as was predicted 10 or 15 years ago. But the stats don’t reflect this as, frankly, the stats are twisted … Secondly, corporations are incentivized to keep their stock prices high such that bonuses remain high.”
Reader Allistair added: “There are too many unemployed job seekers that companies can pick and choose from, eliminating the need for them to pay their existing employees more … and most employers are just too uncertain about growth prospects, or are too hampered by regulation, to pay more.
“Employers KNOW that much of the ‘positive’ reports about the economy are generally big LIES (the government is putting out false/fake reports on employment and the economy to give the appearance that there is a recovery — to make the U.S. economy seem stronger than it is).”
Another interesting perspective came from Reader Nevada, who said: “It’s still a buyer’s market for labor. Companies have been hiring more, but there are still more than two unemployed people for every job opening.
“Specialized or highly skilled workers such as programmers, engineers, welders and plumbers are scarce in some areas, which gives them an unusual ability to demand concessions from employers. But there’s a labor glut in many other parts of the economy. It’s almost impossible for employees to demand higher pay or better treatment when there’s a line of illegal immigrants who would gladly take their place — and put up with lousy treatment.”
Bottom line: You generally agree that wage growth is a problem, that the rich are just getting richer while average Americans are falling further behind, and that it’ll take a stronger economy to give wage earners a leg up. Here’s hoping that’s exactly what we get!
More comments are always welcome at the website, so make sure you stop by and leave yours.
|OTHER DEVELOPMENTS OF THE DAY|
American journalist and hostage James Foley met a sad and tragic end at the hand of ISIS militants. He was beheaded in a gruesome video posted online. ISIS also threatened more attacks in response to American airstrikes in Iraq — as well as the beheading of another hostage, journalist Steven Sotloff.
Markets are pausing to catch their breath after a big run. The key reason? Concerns over what Federal Reserve officials like Chairman Janet Yellen will do or say at their Jackson Hole, Wyoming, confab over the next couple of days. Yellen speaks at 10 a.m. on Friday.
Just what exactly happened in Ferguson, Missouri, to touch off several days of rioting, looting, and violence? Different witnesses and participants are reportedly giving different explanations. What happens next depends on what comes out in the multiple investigations of the shooting.
With the release of its iPhone 6 reportedly right around the corner, Apple (AAPL, Weiss Ratings: A+) broke above the century mark in the past 24 hours. In fact, the benchmark tech stock briefly flirted with its all-time, split-adjusted high (just shy of $101, set in September 2012).
On the other hand, the car rental company Hertz Global Holdings (HTZ, Weiss Ratings: B) tanked after it was forced to withdraw its 2014 profit guidance. Costs associated with vehicle recalls and an accounting review hurt results.
The meeting minutes from the Fed’s July 29-30 gathering were released, and they were relatively upbeat on the economy. Not only that, they indicated some increased concern about the stickiness of inflation and greater optimism about the labor market than we’ve seen in a while. All of that further validates my view — that the Fed will be forced to raise interest rates sooner than the market expects. But we will have to see what Yellen says on Friday, of course.
Reminder: You can let me know what you think by putting your comments here.
Until next time,
P.S. Did you check out my Energy Stock Alert service yet? I sure hope so! It’s designed to deliver more profits like the 111 percent you could’ve made investing in the leading railcar manufacturer and leasing firm I identified 10 months ago. Just go here or call us at 800-291-8545 for more details!