Stocks to Invest in 2008

January 22, 2008

Investors are scared, people are trying to figure out if we’re really in a recession, and even President Bush is doing his part to help stimulate the economy. Instead of getting scared and jumping off the investing boat, just make sure that you have a diversified portfolio that can perform as well as possible because past recessions have not lasted longer than about a year and stocks are still going to do well in the long run. Five years from now, we will not be scared of subprime mortgages, credit crunch, or oil prices hindering consumer spending. Ten stocks that I am trying to buy or have already bought (every stock with exception of Aluminum Corp and Schlumberger) that I believe will do well in the long term are as follows (in no particular order):

1. Las Vegas Sands (LVS)
2. Wynn Casinos (WYNN)
3. Aluminum Corp of China (ACH)
4. Schlumberger (SLB)
5. Cemex (CX)
6. Wachovia (WB)
7. Trinity Industries (TRN)
8. Sandisk (SNDK)
9. Broadcomm (BRCM)
10. Valero (VLO)

With the list above, I believe I have a good combination of large cap companies, companies in various sectors, and most importantly, companies that have the capability to weather rough times. A truly diversified portfolio would require at least 25 different stocks (mutual funds must have 20 different companies in their investments according to the SEC) but not all of us have enough money to purchase that many different companies.

Also foreign revenue on average accounts for 30% of companies revenue and a good number of the above companies have healthy international exposure. It’s never a guarantee that they will all make money from this point in time, but I think it’s a portfolio with a lot of upside. At this point in time, Wachovia is the riskiest investment, but assuming they don’t cut their dividend, I’ll take their 8.3% dividend. Also I prefer Las Vegas Sands and Wynn Casinos over MGM because I believe their casinos are stronger and the growth in other countries are much better for the former two.

Speculation play: If Wynn Casinos is able to acquire a gambling license to build a mega casino hotel in Tokyo, it’s going to blow through the roof.

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Energy Basics: Fluctuations in the Price of Oil

August 23, 2007

Hurricane Dean made its way through Mexico for the second time and has been been downgraded from a monstrous category 5 hurricane to a more manageable category 2. Many people in Texas, Oklahoma, and Mexico breathed a sigh of relief as none of us want to see another Katrina or Rita. Asides from the National Hurricane Center and the residents that would be affected by Dean , oil investors also keep a close eye on hurricanes. Hurricanes that go through the Gulf of Mexico may disrupt refining, exploration, or production of oil. Companies like Exxon (XOM), Valero (VLO), and British Petroleum (BP) all may be forced to cut production on a major scale which would lead to an increase in oil prices.

Straightforward supply and demand of oil does not necessarily dictate the price of oil which currently stands at $69.26 per barrel. An actual threat to oil supplies does not even need to exist, only the anticipation or concept of a threat happening is enough to bolster oil prices. The latest news headlines at CNN or Fox News have an effect on oil prices whether it’s about the health of the Iraq war, weather, or relations with Iran. Many energy analysts claim that the price of oil should be lower but about $20 of the current price is expectations of worldwide political turmoil.

Finally, when analyzing oil prices you cannot forget about the influence from the Organization of the Petroleum Exporting Countries (OPEC), an eleven nation oil cartel including Iran, Saudi Arabia, Kuwait, and Nigeria. The primary goal of OPEC is to negate unnecessary fluctuation in the price of oil while creating a level of oil stability. At the same time, OPEC makes sure to keep in the mind the financial interest of oil producing nations. Recently OPEC came out in saying that they would like to see oil not top $80/barrel, but would be very concerned if oil dropped below the $50 mark. Therefore, they believe they have created a foundation for oil to fluctuate in a $30 range, without disrupting worldwide economic growth, barring any extraordinary global events. Below is some of the key news that oil investors look to in deciding whether to buy or sell oil commodities.

Causes of an increase in oil prices:
– Hurricanes that disrupt the oil infrastructure or delays oil production in the Gulf of Mexico
– Terrorism (especially on US soil)
– Extremely hot summers and chilly winters
– Geopolitical influence
– Strong economic growth (with a careful eye in China & India)
– Kidnapping of oil workers in Nigeria

Causes of a drop in oil prices:
– Unexpected increases of oil stockpiles
– Warmer than expected winters
– Majors moves to alternative fuels
– Peace in the middle east
– Gasoline conservation

Hurricane Dean may have not caused the price of oil to spike in the recent week but bear in mind, hurricane season did start June 1, but it doesn’t end until November 30.