December 31, 2007
It seems like everyone alive is making predictions these days. So to take a different approach, I thought I'd list all the things I'll probably be wrong about. Here goes.
1.) Let's see... should we start with housing or oil??? Hmmmm.... Ok, it's oil. Will it be higher or lower? It's with us every day, in almost every purchase that we make. The most notable of course is when we fill up the tank. The world now consumes over 1,000 barrels of oil per second! Yes, per second. 60,000 barrels per minute; 3,600,000 barrels per hour or over 86,000,000 barrels per day!!! (see my Peak Oil Clock on IP). So the pundits are saying - oil is going to $150/barrel while others are saying it's going to $50. Pretty tight spread there. So the argument goes, the easy oil has already been found. The remaining oil, like the oil sands of Canada, costs more to squeeze out of the ground. But then, if we go into a recession (and we may be there already) or eeks, a depression, oil demand will drop, therefore the price will go down. Now let's see, many of the world's economies are growing at a far faster pace than we are, greater than any slowdown we might see over here. Translation, if oil production is basically at the peak level that it can reach (maybe the Saudis can pump more, but the biggest oil fields are in steep decline) and the economies of the world are growing, then whatever increase in oil production that can be attained will be sucked up by their growing demand. So if production is basically flat and economies are growing, what is really happening here? To me, it means that the amount of oil available for export has got to decline. And who's the biggest importer of oil? You guessed it, we are. So, where will the price go? I'll leave you to your own conclusions.
You didn't think I'd make it that easy for you?
2.) Housing - geez, if only I could put all the fraudsters and hucksters in jail and throw away the key. It will potentially be a very bad year especially in some markets. A friend of mine owns two condos in a tall building in Clearwater, FL. A condo on the top floor has just come on the market. Two years ago it sold for $654k. It's available for $309k. Should I buy it??? It will be interesting to see how we work out of this mess this time.
3.) The dollar - George Sorus, Jim Rogers and even Warren Buffett have almost totally gotten out of the dollar. So who's left? I guess the Chinese government that's purchasing $1 billion dollars each and every day of U.S. Treasuries. Someone has to keep the dollar from collapsing. The guys above don't want them, Iran (boo) doesn't want them, Kuwait (whose rear end we saved a few years back) doesn't want them and even China doesn't want them but they're stuck! Although, gradually they are moving away from the dollar. Now, Russian cab drivers are no longer accepting dollars but Euros instead.
So maybe I'll see if the companies that pay me dividends can pay me in a basket of Euros, Swiss Francs and Chinese Yuan! Maybe we'll go to a barter society again.
The Chinese are moving from bicycles to cars, maybe we're moving from cars to bicycles???
4.) Employment - All those folks losing their jobs at our big financial institutions will find lucrative jobs at Home Depot, Starbucks, Wal-Mart and McDonalds. Remember, you heard it here first! That means our unemployment figures will actually go down!
5.) Inflation - what's a little rise in the price of oil or the decline of the dollar making imports more expensive? Or health care, drug prescriptions, heating or cooling your home, pet food, etc. Inflation will obviously be a thing of the past.
6.) Iran and North Korea - we'll find out that their nuclear activities are strictly for heating their microwaves and powering their HDTVs!!!
7.) Pakistan - will become the world's bastion of democracy. Musharraf will play the lead in a new Broadway show.
8.) Russia - Putin will be found out to be Santa Claus in the guise of a KGB agent.
9.) Lastly, because I'm tired, I want to wish you all a Very Happy New Year. I have also decided that everyone that joined me this year and took a chance with Income Planner, will not have to pay any renewal fee in the future. I have been pleased with the fact that our dividends have been paid out but unhappy with the fact that the market has trashed most income oriented investments this year. We had a nice ride for many years and this year turned out to be the year that the markets turned against us. So we'll see what this coming year brings. I have a number of pages to update again in IP which just take a long time to do. I'd rather spend the time updating all of the selections and I'm still having a problem with the email archives which Network Solutions still doesn't have a solution for.
So have a fine day tomorrow.
Pete Lipke
|