04/12/2006
The markets have been dominated by energy concerns of late, and with the price of a barrel of crude oil ascending toward the $70 mark, it's easy to see why.
Potential supply disruptions and an impending increase in demand due to the upcoming summer driving season are also pushing up gasoline prices at the pump. Higher gasoline prices mean a bigger bite out of consumers' wallets, and that means a little less consumer spending in other areas.
Higher gasoline prices also take a bite out of corporate profits, as an increase in transportation costs comes right off the top of the balance sheet. Rising energy costs usually result in a slowing down of the economy, and that, my friends, is not good for the stock market.
This week's spike in oil comes to us courtesy of our "friends" in Iran, who've returned to their nuclear saber rattling. On Tuesday, Iran's president declared the country had successfully enriched uranium for the first time. The world community has expressed concern about Iran's possible intention to develop nuclear weapons, with the U.N. demanding that it suspend its uranium enrichment program.
Now considering the lack of effectiveness the U.N.'s demands have been when dealing with militant governments from in the Middle East, I'm pretty sure that this whole issue isn't going to go away anytime soon.
But even if the situation in Iran is resolved, there are other oil supply disruptions to think about. Recent violence in oil-rich Nigeria has resulted in more than half a million barrels per day of lost production. Mother Nature is also going to have her hand in things, as the upcoming hurricane season is predicted to be as bad, if not worse, than it was last year.
We all remember the devastation Hurricane Katrina brought to the Gulf Coast, and let's not forget about the loss of refining capacity and the $3.50-plus gasoline prices she left in her wake.
Now I am not bringing this matter up to be a naysayer or to scare you. Rather, I want every one of my Making Money Alert readers to understand what's going on right now with energy and the markets.
I also want you to know that there is a way to capitalize on all of these goings-on in the energy sector.
Right now we are using several oil and commodity exchange-traded funds (ETFs) that go up when oil prices are rising. Both my Successful Investing and ETF Trader services are bagging big profits in several energy and energy-related sectors.
Want to find out more about these winning positions? Just follow the links below:
http://www.fabianssuccessfulinvesting.com/order.php?offer=12
https://www.fabiansetftrader.com/order.php?offer=18
If you've been a long-time listener to my radio show, or even if you've just started tuning in, you've probably already heard me singing the praises of exchange traded funds.
I absolutely love ETFs for a multitude of reasons, not the least of which are low fees, objective management, ease of trade and no restrictive holding periods like the ones imposed on you by traditional mutual funds. Now, however, I have a few more reasons to love ETFs.
On Monday the first ETF that allows you to invest money directly in the price of crude oil debuted on the American Stock Exchange. It is the United States Oil Fund, ticker symbol USO.
USO is designed to provide exposure to the total return movement of light, sweet crude futures contracts traded in the U.S., and will provide access to crude oil without requiring individuals to trade on the futures market. In its first day public, USO traded over 3.8 million shares.
This latest commodity ETF is part of a larger industry trend toward providing ETFs of all stripes and for nearly every investment taste. The first commodity ETF was StreetTracks Gold Trust (GLD), which began trading in late 2004. So far in 2006, GLD is up over 15%.
The iShares Comex Gold (IAU) followed shortly afterward. It too is up over 15% on the year. The success of both gold ETFs has investors eagerly awaiting the launch of the first silver ETF. That ETF is due to come out soon, as it just has to pass a few more regulatory hurdles.
Maybe the best illustration of the move toward commodities ETFs is January's debut of the Deutsche Bank Commodity Index Tracking Fund (DBC). This ETF's investment goal is to mirror the performance of a diverse basket of commodities. This ETF has gained nearly 6% over the past four weeks.
Right now the commodities bull is in stampede mode, with oil and gold hitting historical highs. If you've been looking for ways to profit from this trend, you need to check out these commodity ETFs.
I'd be remiss in my duties as a financial talk-show host if I didn't provide you with a painful reminder that it's crunch time for doing those federal taxes. The usual deadline of April 15 has been pushed to April 17 because the usual tax cutoff day falls on a Saturday this year. So, if you haven't done so already, bite the bullet, fill out those forms and send in that check.
In the meantime, here's a little quote I found from one of our more thoughtful representatives in Congress.
"April 15th, our national tax day, comes this year just as Congress prepares to pass the 2007 federal budget. If you think paying taxes was painful this year, I've got some bad news: the new budget is a grotesque illustration of everything wrong with the federal government. At $2.7 trillion, it's the largest budget in U.S. history by a long shot. Like it or not, the pressure to raise your taxes will be enormous in coming years no matter who controls Congress. The amount of money government spends, borrows, and prints simply cannot be sustained."
-- Congressman Ron Paul (R-Texas)
Ron Paul is known for his "maverick" stance on all sorts of issues, but chief amongst his concerns is the growth of federal spending. I like Ron because he's not afraid to challenge the status quo when it comes to how things are done in Washington. We need more challenging figures like Ron Paul in national politics, and on Wall Street.
Wisdom about money, investing and life can be found anywhere. If you have a good quote you'd like me to share with your fellow Making Money Alert readers, send it to me, along with any comments, questions and suggestions you have about my radio show, newsletters, seminars, or anything else.