Monday Mailbag The Rude Awakening
Wall Street, New York
Monday, December 4, 2006 - A look at some prime movers in the resource markets,
- It goes up, it goes down…it keeps going down - where oh where will the dollar end up?
- The final countdown to crisis, five ways to play gold, turning up the Rudeness and plenty more…
Joel's Note: Today your fellow Rude readers offer their thoughts on investing in metals, the state of the Greenback and subtle sexism. Curious? You should be. These three subjects are very close to the hearts and minds of your Rude editors. Read on below and send any thoughts to your equal opportunity editor at: aussiejoel@the-rude-awakening.com As always, the opinions expressed in the emails below do not necessarily reflect those of your Rude editors, nor do we vouch for their factual accuracy. ------------------------- Meddling in Metals Dear Rude, Once again, you are spot on with your analysis. Nouriel Roubini's blog also confirms Abelson's conclusions. Further, I can confirm that there has been complete flight form reality. After your article on DSL, I started looking hard at similar "future casualties" of the cocaine mortgage syndrome. My first targets were FMT, who not only is heavy into cocaine mortgage, but Condo lending (I call them just plain toxic loans) as well and CORS, whose entire portfolio is in large toxic mortgages with a deadly concentration in South Florida, Las Vegas, Phoenix and California. I've bought "puts" on both expiring in March '07, but to date, am getting killed. I'm also targeting similar lenders BKUNA (who also has a portfolio of South Florida toxic mortgages), FED, LEND, NDE, NEW, & NFI (which I'd owned for a long time but sold after your article). Every one of these stocks is trading higher today that they did at the time of your DSL article. Go figure. Nonetheless, I firmly believe you are right about a 2007 recession that is going to be bloody, but I guess we're early. I still expect to make money off of this but will have to wait a bit longer before committing more money. On a happier note, the infrastructure stock I recommended, JLG, is being acquired by Oshkosh Truck (OSH) for $28.00/sh, about $10.00 above its price when I responded. The next possible punt I'm looking at is Southern Copper Corporation (PCU). It's a low cost producer of copper, has a strong balance sheet and generates sizable excess cash flow. Despite having a huge run up tracking the rise in copper prices, trades at a TTM PE of less than 9x, and has a dividend yield of 10.5% ($5.50/sh) at today's closing price of $52.75. Any thoughts? Regards! H. J. Weitzel --- Outstanding Investments ---
Considering getting in to the metals but not sure where to start? Allow Hulbert's #1 financial newsletter of the last five years guide you to triple digit profits with keen insight into the resource markets. The report below suggests five SPECIFIC ways you can cash in on gold's recent rally and one completely legal way you can get your hands on some bullion for a fraction of what other investors will pay. Learn all about it here. ------------------------------- Dollar Debacles Dear Rude, The dollar was strong during the depression because debtors scrambled for dollar liquidity to pay off $-denominated debts that were increasingly burdensome, and whether we have a weak or strong current account situation doesn't change that outcome. Debts now are far larger in every respect, and it is precisely that factor that will lead to the same scrambling for dollar to pay off dollar-dominated debts. If foreigners and dollars holders choose to leave the dollars, the choice is to let it collapse, disastrous for all, or to raise rates to defend it. Raising rates accelerates the debt burden. The sine qua non of a deflation is a huge debt overhang, and a negative current account doesn't change that, as the key is dollar liquidity, not deflating values based in dollars. If foreigners start selling dollar to buy stuff, rising rates will limit any increase in value as cap rates will go up, and the value of trillions of existing debts collapse based on NPV far outweighing the marginal effects of foreign buying. In time, I agree that the powers that be will panic, but the initial effects of debt liquidation are deflationary. Kevin S. --- Surviving the Dollar's Demise --- The Final Countdown to Economic Disaster These "Wealth Fortress" Investments Are Your Last Chance for Total Protection The clock is ticking - and three SHOCKING events threaten to wipe out investors by Dec. 31, 2006. But one of the world's most famous market analysts has revealed his favorite strategies for surviving - and thriving in - the crisis he sees ahead. This may be your last chance. Don't miss this rare opportunity to get rich while protecting your money. Get the details here. ---------------------------- Too Rude? Dear Rude, I have been reading Rude Awakening, EverBank and Strategic Investment newsletters for several years and value the core economic messages, not to mention the investment recommendations that have often proven to be lucrative. This is, no doubt, the reason most readers come to you. And I also enjoy that your points of view run contrary to the mob and mass media and that you usually arrive at the obvious long before the hoard. That you are expressing your own opinions in your own personal style is also obviously part of how you do what you do. However, it seems counterproductive for some of your readers to have to abide the occasional, but rather constant subtext that you are males writing the male reader. Of course it would be impossible for you to eliminate the maleness from your point of view, nor would the female reader wish you to do so. But when the exclusion is so obvious, one wonders why you would drop your sophistication and play into such an old system of sexism. It is this separation from the fold that has long disturbed women who do care to participate in the financial and business arenas. "The more we learn, the less we know. And, sadly, experience does not always promote knowledge. For example, our 47-year study of women…and war…and warring women…has produced more befuddlement than knowledge. Women and wars both continue to confound us."
I like your newsletter. And I will probably continue to subscribe, which I know will not make any difference to the writer quoted above. But maybe some of your opinion-makers can open the blinds and allow a little enlightenment to fall upon their white screens along with the coffee stains. Rebecca K. | 
