STOCKOF THE WEEK IS MYERS INDUSTRIES

Kupsky chose Myers Industries for our Stock of the week. Myers manufacturers various rubber products which are used for automotive parts and construction equipment
Myers had record earnings for the 3rd quarter and anticipates teh same results for the end of 2005. Get a full report on Kupsky's reasons behind her choice at our Stock of the week site. The Stock of the week picks outshine other investments with a simple return of 39% in the last year.

Economy - Oil Discovery in Shabwah

DRIP BY DRIP!

New discoveries of oil are happening. Many are just drops in a big bucket but drip by drip the bucket is starting to fill up. January 20, 2006, Shabwah discovered oil in the Al-Kala Block 52. It will only produce 5,000 barrels per day in 2006 and will peak at about 32,000 barrels per day in 2009 but this represents another significant drop in the bucket.

When sanity reigns in the US Congress, 1 or 2 million barrels per day will be developed in ANWAR. The discoveries last month in the Gulf of Mexico and in Brazil were significant but, together, not as big as ANWAR.

One of the many substitution effects that is gathering steam is the movement of suburbanites to "down-town". This effect is happening all around the world. In Winston-Salem NC, with 800 new residences planned in the down-town area, plans are being made for building a grocery store down-town. I worked at the A&P down-town in 1967 when it was on its last legs.

Drip by drip, oil is being saved or found. A new company in NC will start production on LED home lighting this year. The head is the former head of CREE. These new semi conductor lights put out the same light as a 60 watt bulb and use only one third the electricity.

In the early going, new homes and new businesses will be the targets for the new lights. One should not plan to throw away old fixtures. However, in 10 years, the new lights will be very common and the energy savings will be very large.

Canada has announced the expenditure of $150 million to increase capacity at one refinery. Duke Power is one of many firms busy selecting sites for nuclear plants.

Velero Energy looks to be a good short. Velero Energy depends on demand for sour crude but the world is currently awash in plenty of sweet crude. Current fundamentals suggest that oil should be trading below $50 per barrel. The premium in the price is related to the Iran "risk". This problem with Iran will not go away quickly but, before the problem is over, storage facilities are going to hit their maximum capacity.

The next move in crude is back to the $55 range. My personal bet is still on the airlines. CAL and AMR have traded up in recent days. My family added more shares while the price was down. We are encouraged to know that AMR, United and CAL are all increasing business and luxury seats and decreasing the number of coach seats. United is having great success with it luxury flights from NY to LA. The planes only hold 110 passengers in luxury seats but the tickets range as high as $4,500.

Drip by Drip oil is being found or saved. Business demand for travel is growing steadily. Seats are no longer being sold to the high consumer bidder on the on line auction. Those cheap coach seats are being replaced with high dollar business and first class seating. If you want a "free" meal, you need to book your business or first class seat well in advance because demand is pushing supply very hard.

Economic Report: U.S. GDP slows to 1.1% annual rate in fourth quarter - Bond Market - Economy

A slow down in the US economy bodes well for low interest rates. This is good news for many industries, including housing.

The real estate bubble never popped. Some air was let out of the balloon but lower interest rates will heat the balloon air and cause the balloon to rise again. The market is ripe for a strong up-move. The decline in economic growth will cause many to worry too much. The proverbial wall of worry is pretty much in place. The market will climb this wall in fits and starts over the next year or more.

MIND SETS

Good investors should learn about "mind sets". For the past 5 years, my wife and I have dealt with the very complicated business and legal matters required to "un-wind" and sell a small business. During the process several parties declared that "'so and so's' (people in a certain professions) are idiots". Marilyn and I, with the benefit of hindsight, have learned how naive (perhaps stupid is the correct word) we have been about certain matters. In other matters we have been very careful and very smart, for example, we dated for 5 years before marriage and have been married almost 34 years. We have used good judgment in the most important decisions in our lives. We have worked at being faithful servants and good parents. Although we managed to build a successful business, we allowed it to grow to large and it came close to ruining our lives. It was over ten years ago when the business virtually took control. Having fought negative cash flow for 10 years perhaps helps explain how I can see value in AMR and CAL. Those who have fought negative cash flow know all about the task of fighting alligators while trying to drain the swamp. The good news is that we and the business survived and that, in general, we have lead happy and fruitful lives. Naive and stupid at times, yes; idiots no!

When one runs a small business, one makes countless mistakes. Most of the mistakes are small but one occasionally does something really dumb. A good friend recently explained that those in other occupations are not idiots but that they simply see things from their "mind set". An accountant, a banker, a government employee, a lawyer, a business owner and an investor all see things trough glasses of different colors. One businessman might understand and appreciate why a businessman took a certain course while a lawyer or accountant with different frames of reference, may have a hard time "walking in the businessman's shoes" and vise versa.

Another good friend took me to task yesterday for misleading him. He was right to do so. He made me realize how poorly I sometimes communicate. I did not misinform him on purpose but, when I told him a set of facts, I focused on what was important in my "mind set". After he took me to task, I realized, even more, how dumb a decision I made in an important matter about 5 years ago.

The interesting thing is that, while I consider this friend to be one of the smartest people I know (off the chart IQ smarts), In my opinion, he is a poor investor. I could be wrong because I don't really know his holdings. I simply know that at various times over the years, when I was very confident about good investments that proved to be smart choices, he was typically going in the opposite direction. I don't believe he reads this blog. I know he makes a great deal of money but, as far as I know, much of it goes into ultra conservative investments inside his 401-K.

When CAL and AMR were at or around $9 to $11, I tried to convince him and others that these companies had made the "turn". The "national mind set" in regard to airlines was so negative that, even those knowing my investment track record, could not believe I had a clue about AMR and CAL. I think my friend is like so many others who don't add beta to their portfolio until after the economic outlook is rosy. They get burned by adding beta near tops and they then find it emotionally difficult to be aggressive near bottoms.

The good news is that I have gained much "perspective" in recent weeks. I have lived through the most stressful time of my life and I believe I am a better person for it. I have often written about Ken Fisher's belief that if you can find where the majority of folks have the wrong mind set about something, then there is the opportunity to make a lot of money. The airline business is a great example as I believe AMR and CAL are on their way to $100 per share in relatively short order. However, the point of this article is that when you have dealings with those in other occupations, it is important to realize that you must listen and speak very carefully to communicate with them. When dealing with lawyers or government officials, one can easily believe there is understanding when there is not. A lot of things that are very important can very easily get lost.

Learn about mind sets. Study human nature and realize that investing is not just about the numbers. Investor psychology is very important. Right now, investors hold about 5 trillion dollars in short term "safe" investments. Investors are also stocking up on gold as if they believe modern civilization is about to end. There is opportunity in this market. Remember that when the over riding mind set is one of fear, one should invest aggressively and when the over riding mind set is one of greed, one should be cautious. The fundamentals say that oil is in ample supply and yet the price is staying very high due to fear. Avoid oil investments, near the top, and build positions in other areas as an explosive "market melt up" is near.

BE PREPARED

I decided to sell some Google in the past few days. I still like the stock for the long term but have decided to keep a little powder dry until the Iran crisis is over.
I believeGoogle has much potential ahead but I wanted to be prepared

STOCK OF THE WEEK: TAKE A CAT BY THE TAIL

STOCK OF THE WEEK: Arctic Cat

The stock pick of the week has now been posted on Stock of the Week is Arctic Cat,
Arctic Cat, based in Thief River Falls, Minnesota, designs, engineers, manufactures and markets snowmobiles and ATVs along with related parts and accessories.

Stock of the Week performance continues to return successful numbers. We are currently returning 34% on Stock of the Week investments.

A FRIEND OF A FRIEND IS YOUR FRIEND!

This morning a friend forwarded an email that was from her good friend. The email included the bible verse that I have included in my email signature for many years; Mark 9: 23-24.

It reads as follows: Jesus said unto him, "If thou canst believe, all things are possible to him that believeth" and straightway the father of the child cried out, and said with tears, "Lord, I believe; help thou mine unbelief." Verse 23 is similar to another favorite verse; Philippians 4: 13. This verse has been on my mind often for the past few years.

Yesterday and today, my good friend lost his sister-in-law and mother-in-law to cancer. My heart goes out to him, his wife and his family.

Marilyn continues to have “hypertension episodes” and my children are under much stress. "At times like these" it is easy to "cry in ones soup".

I thank the friend of my friend for her email. A friend of a friend is a friend indeed! Oh! What a friend we have!