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Danielle Park is a fire breathing market enthusiast. The President and Portfolio Manager of Venable Park Investment Counsel Inc., Danielle has the alphabet soup of accreditations that your typical fire breather has, LL.B., CFP, CFA on top of her duties as Partner, Portfolio Manager.

I can say one thing about Danielle, she sure knows how to articulate a critical market scenario in a way that compelled me to grab a phone to make a couple of moves in sympathy with her view that “Interest rates have never been lower. So, if you have debt, lock and load and get that paid off, use this opportunity to become debt free”
No kidding. Yesterday  (Sept. 6th) the 1 year Greece bond hits 88%. Now if you  juxtapose that with the United States 10 year Treasury bond at the same time touching the lowest EVER at 1.90 percent you really have to take Danielle’s advice seriously. Especially when you consider that the United States is happily teetering on the brink of economic suicide spending 3.456 Trillion on revenues of 2.162 Trillion. No wonder Obama doesn’t want to submit a budget, it would be the suicide letter.
Good call Danielle, hard to imagine a more brilliant time to focus on paying down high interest rate debt when our historically low interest rates are 2 percentage points above negative interest rates and 1.9% above zero. But that’s not all Danielle had to offer….
Danielle thinks that there are basically two groups of people. One is the accumulation group. folks that are still working and saving to amass capital.

“Then there is the other group which have already accumulated and they are trying to live off the stuff they’ve stored in the cupboard. So, the people that are trying to live off right now have a really hard goal because they cannot in my view take blind reckless risks with their capital regardless of what the politicians are trying to incent them to do. I think if we’ve learnt anything in this time, we’ve learned that the individual cannot put blind face in government politicians or federal bankers’ right? Bankers in general have led us astray, caused much of this problem and still have not got it. So, you have to deal with the reality of that and say okay, I have to look out for myself. Most financial advisors today are utterly useless in this climate. The learners will inherit the world here right? The learners are the people that understand there is huge seismic shifts going on and that you have to calibrate your approach for that, not some textbook idea of stuff that hasn’t applied for over a decade now. So, the buy and hold crowd, the passive allocators, that plough past the inequities and hope for the best, all that is rubbish. It’s hurt people, and it will continue to hurt people. For the people that get that, if you are in the accumulation stage here, what you need to do in my view is keep some powder dry.?

Powder Dry. Got it Danielle, another good reason to refinance that high interest rate debt.
Stresses in the Markets
Danielle’s team has done  overlays on the patterns that have developed lately in the markets in terms of the valuations price, relative strengths and the main trends that have taken place. When compared with the Japanese experience, the deflationary cycle and the major inflection points that they’ve had for the last 30 years she sees that in the North American and Global Stock Markets began a Secular Bear Market in the late 90’s. More importantly, while Danielle thinks the jury is still out she interprets the current market action as setting up for another huge downdraft like the one that swept through the markets in 2008-2009.
The good news
The good news is that despite all of the economic malaise going on in the world right now she’s “Actually fairly excited because we are basically setting up for the next buying opportunity in the secular bear. In our newsletter to clients this month, we were pointing out that every major secular bear that we’ve seen throughout history has a series of three significant down turns in the midst of three major recessions during that secular period. A secular period may be 15 to 20 years and during that, we got three severe sort of recessions that came roughly every three or four years in there. Well, if we are entering recession right now Victor, this could be the third and possibly final recession of this secular bear. For somebody who’s been dealing with this eyes wide open since the late 90s when we anticipated likely changing and from secular bull to secular bear. That we are going to be having these really challenging conditions to work through for that long a period. I’m personally excited to think that we might actually be getting to the end of this period where there’s been so much monkey business, so much baloney, so many unwise people leading the thing. If we can actually get a washout here, a third washout, it could potentially be the buying opportunity of our generation. That to me is extremely exciting.”
Getting from Here to There
Danielle thinks that we have had a credit boom for the last 30 years in Real Estate, Commodities, the Nasdaq Internet Boom when leverage between borrowers and lenders just got bigger and bigger. She’s a big fan of Gary Shilling’s “The Age of Deleveraging” whose essential argument is that we are going to go through a number of years of paying down debt, gearing back that will be countered by Government and Central Banks. The old I’m from the government and here to help you spending /bailouts of the Obama administration comes to mind. The leveraging also took root in the corporate world as CEO pay rose to 300 times the average worker during this period. We can’t forget either the wizards of leveraging at the Goldman Sachs of the world “when individuals were rewarded  handsomely for that magic stuff but now we realize that in fact that the added leveraging stir is not a magical potion, it is actually a very destructive force in the world eventually because it’s always taken to extremes. Credit derivatives extended the leverage, allowed leverage on planet earth to go into the universe.”. Danielle thinks all of that is now in the decline phase and that it is all very healthy.
Time Frame
In Danielle’s view the leveraging started into the stratosphere with the US housing market bubble that burst in roughly 2006. She thinks we started into the end game of the entire credit bubble at that time because “what happened was instead of letting that play it’s course the governments tried to intervene, which is typical by the way. Governments are not any dumber or smarter today than they have been throughout history, they are just people trying to do something because they are in a position of power and leadership and they are expected to do something. So they have tried to do things but what they’ve really done is depreciate the strength of the balance sheet, the fiscal strength over the last few years. So I think this phase when the crisis is coming back into bloom we’ll probably see a decline something like we saw in ’08.  Really fast and furious, it could be within six months from now where we’re significantly lower. I am saying the buying opportunity possibly could come within the next three to six months on things like stocks and commodities. If it goes sort of rapid fire”
Danielle Park has my attention. – Rob Zurrer for Moneytalks.net
Danielle Park is a Partner and Portfolio Manager for Venable Park Investment Counsel Inc.  She is also an attorney, finance author a regular guest on North American media and the author of the best selling myth-busting book “Juggling Dynamite: An insider’s wisdom on money management, markets and wealth that lasts,” as well as a popular daily financial blog: www.jugglingdynamite.com
Danielle worked as an attorney until 1997 when she was recruited to work for an international securities firm.  Becoming a Chartered Financial Analyst (CFA), she now helps to manage many million dollar accounts for more than 200 of North America’s wealthiest families as a Portfolio Manager and analyst at the independent investment counsel firm she co-founded Venable Park Investment Counsel Inc. www.venablepark.com.  In recent years Danielle has been writing, speaking  and educating industry professionals as well as investors on the risks and realities of investment behaviors.

Acceptance Is the Key to Profits in the Energy Markets

Posted by Kevin Kerr - Uncommon Wisdom

on Wednesday, 7 September 2011 13:18

The world keeps turning, and the resources keep getting used up. It’s really quite simple.

Despite that fact, the “experts” continue the debates over Peak Oil, and for that matter, peak food, and peak everything else! That’s about as sensible as rearranging deck chairs on the Titanic. The evidence that resources, especially energy, are running low is pretty clear, at least to this trader.

Learning from the Past

At the start of the new millennium 11 years ago we saw the oil and agriculture markets begin a more or less steady climb higher, at least until the global recession and pullback in 2008. The economic collapse sucked the wind out of the sails of most commodities, and everything else for that matter. But the climb continued and has continued even through the latest global economic meltdown.

Personally, I think we are about halfway to the new top for many commodities. That means oil could easily hit $200 within the next three years and gold could reach $2,500-$3,500, if not much higher. Rare earth elements are probably one of the best longer-term markets right now. The agriculture markets have even further to go, in my opinion.

There is so much incredible opportunity for investors right now. And the one thread all these commodities share: They all depend largely on energy for production, transport, processing, and so much more.

The Stages of Grief

Specific commodities are becoming more and more scarce … that is obvious. Therefore we can expect to see more suffering in the poorest countries first. Then the economic impact will work its way up to the middle class and wealthier nations.

The facts are fairly grim if we look at them closely. There is going to be less of everything, especially energy. Yet there will be more people who want those things. Just look at the number of Chinese and Indians who are driving now. And the rate they are adding vehicles to the road is mind-blowing! Let’s face it — wars have been fought over far less.

In her famous book, On Death and Dying, Elisabeth Kubler-Ross describes the stages of grief:

  • Denial: “It can’t be happening.” 
  • Anger: “Why me? It’s not fair.” 
  • Bargaining: “Just let me live to see my children graduate.” 
  • Depression: “I’m so sad, why bother with anything?” 
  • Acceptance: “It’s going to be OK.”

In my opinion, the American public is going through the stages of grief right now. Rising prices are just a market-based signal that we are losing our economic and resource abundance. As the American dream fades away, it’s like a death in the family.

While the global recession and credit crunch have severely impacted global demand for energy, it’s only temporary. They may just be a bit dormant at the moment, but facts reveal that the world’s problems haven’t gone away. Most likely, they’ve gotten worse!

So one thing is for certain, investing in energy is about as sure a bet as an investor can make.

chart

The problems that propelled oil to $147 haven’t gone away.

The idea of a world that no longer requires fossil fuels is a dream that is most certainly a long way off. And while there is still plenty of crude oil, it’s getting harder and more expensive to find, extract, and refine. This can all only lead to one thing: Higher prices.

Investors can use many excellent individual oil company stocks, drillers, and more. Names including Exxon Mobil (XOM), Halliburton (HAL), and Nabors Industries (NBR), just to name a few. Or you can choose to trade the big oil ETFs, such as USO.

In addition to these great ways to play energy prices, I like ETF options, which give you an added bonus: Limited risk.

They’re the tool I use to help my Master Trader members seek gains in any major asset class in the world — energy, stocks, precious metals, commodities, bonds and even foreign currencies — no matter what event or trend is happening in the world!

To learn more about ETF options and how you can become a Master Trader member, risk-free, click here.

Yours for resource profits,

Kevin Kerr

Kevin Kerr has successfully traded commodities professionally for the last 22+ years. His unparalleled expertise in commodity and resource futures, options, and equity trading, has made him a regular contributor to news outlets like CNBC, CNN, FOX News, CBS Evening News, Nightly Business Report and many others.

 

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Analysts say confidence is currently one of the biggest problems in the US. In the current investment environment, people want growth but many feel desperate for safety, especially when it comes to retirement funds.

Click here to read more…

BY JACK BARNES, Global Macro Trends Specialist, Money Morning


Potash Corp. of Saskatchewan Inc. (NYSE: POT) Is Reaping the Rewards of a Global Ag Boom

Not only are populations growing, but middle class consumers in emerging markets are developing a taste for meat as well. This insatiable hunger for more choices has resulted in greater demand for corn-fed livestock, which is taking a hefty chunk out of crop yields.
And when you include new biofuel demands, crops are now being used for feed, fodder and fuel.
Of course, there’s only so much arable land in the world, so fertilizer has become one of the primary drivers of increased crop yields.
When it comes to capitalizing on this evolving trend, Potash Corp. has the size and global diversity to dominate. That was clearly evidenced when the company reported record earnings in the second quarter.
So it’s time to buy Potash Corp. of Saskatchewan Inc.(NYSE:POT) (**).
Potash Corp.’s Record-Setting Second Quarter
Potash primarily mines and sells fertilizers in the United States and Canada. Its primary products are potash, phosphate and nitrogen-based fertilizers.
The Saskatoon, Canada-based company holds the right to mine 785,759 acres of land in Saskatchewan and 58,263 acres of land in New Brunswick.
Potash spent more than $7 billion over the last few years to ramp up its supply capacity. That was a smart investment, as record global demand has driven the company’s production to never-before-seen levels.
The company produced a record 2.6 million metric tons of potash in the last quarter. This gives Potash about 20% of the total global capacity.
Potash set a new record for second-quarter earnings as well, raking in $840 million, or 96 cents a share. That brought first-half earnings to a record $1.79 per share, which was 18% above the previous high set in 2008 and a 77% increase from the $1.01 per share earned in the first half of 2010. Potash expects to make $3.40 to $3.80 per share for the full year.
“The continuation of strong fertilizer demand combined with the limitations of global production, especially in potash, resulted in tight fertilizer markets and rising prices for our products,” said Potash Corp. President and Chief Executive Officer Bill Doyle in a statement. “With farmers committed to increasing yields and capitalizing on the unprecedented economic opportunity, we worked to keep pace with growing demand, which resulted in a record quarter for our company.”
Bottom line: The agricultural boom is a terrific opportunity for profit at a time of great uncertainty. I believe that so firmly I’ll be covering another agricultural company later this week in a Private Briefing. That company is making huge amounts of money selling tractors and heavy machines to farmers.
For now, though, stick with Potash.
Potash stock closed Tuesday at $59.05, up  1.08%. Its 52-week range is $44.22 – $63.97. The stock has a small dividend yield of 29 cents per share, equal to about 0.5%.

Action to Take: Buy Potash Corp. of Saskatchewan Inc. (NYSE: POT).

The volatility in global markets has had little effect on the global demand for food. That demand has delivered record earnings to Potash’s bottom line. This is exactly the type of investment we should be looking for in these tough market conditions.

Potash is large and its stock is highly liquid. Normally I suggest blending our entries and looking for pullbacks. But this time I am comfortable with just picking up a full position at current prices and using the options market if we want to generate additional cash flow from the position via covered calls later.
(**) Special Note of Disclosure: Jack Barnes has no interest in Potash Corp. of Saskatchewan Inc.
About the Writer: Columnist Jack Barnes started his career at Franklin Templeton in 1997. He started out in the company’s fund-information department – just as the Asian contagion infected the Asian tiger countries. 

Barnes launched his own shop, RIA, in 2003, just as the second Gulf War was breaking out. In early 2006, after logging a one-year return of nearly 83%, Forbes named Barnes the top stock picker in its “Armchair Investors Who Beat the Pros” competition. His two audited hedge funds generated double-digit returns in 2008. 

Barnes retired to the beach in the summer of 2009, and continues to write from there. He’s now the author of the popular blog, “Confessions of a Macro Contrarian,” and his “Buy, Sell or Hold” column appears in Money Morning twice a week. In his BSH column last week, Barnes analyzedAllianceBernstein Holding LP (NYSE: AB).

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