Powering Up The Rude Awakening
Montclair, New Jersey
Thursday, January 25, 2007 - An eternity in New Jersey,
- Powering-up the world's electricity grid and…
- The exciting side of boredom…
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Eric Fry, reporting from Montclair, New Jersey… "Wow!" your editor exclaimed to his companion, while gazing out the window of a taxi en route to Montclair, New Jersey. "That's a pretty big graveyard." The companion nodded politely. "Imagine that," your editor continued, "an eternity in New Jersey!" "Yes," the companion joked, "just in case one lifetime is not enough. But actually, if I lived in Laguna Beach like you do, I would be content to spend eternity in New Jersey." "I don't know," your editor replied. "Doesn't an eternity in Laguna sound appealing, simply in exchange for a few short years in New Jersey?" "Not an eternity underground," the companion insisted. "In fact, you've inspired me. I think I'll seek a few short years above ground in Laguna, after which I would be content to spend an eternity in New Jersey." "Sounds like a plan," your editor replied. "I would be happy to do the same, provided that New Jersey would not be the ultimate destination. I mean, New Jersey would be just fine; I would not quibble with that. But I was imaging something a little more heavenly." "I'm afraid to ask what your heaven would look like," the companion said. "Well, I'm not really sure," your editor continued, "since I was not part of the design committee. But it would certainly feature nice lighting and comfortable chairs and tolerable espresso…" As it turns out, dear investor, providing "nice lighting" here in the material world is not as effortless as it would seem to most of us. In, fact, as Chris Mayer explains in the nearby column, the global effort to "keep the lights on" is going to cost tens of billions of dollars over the next few years. China and other Developing countries, for example, will be spending billions to expand their woefully inadequate power generation and transmission infrastructures. Meanwhile, the United States and other Developed countries will be spending tens of billions of dollars, just to renovate and repair their existing power grids. Chris calls the resulting boom a "perfect storm" of infrastructure investment, as he explains below… ---------The Gold Angel--------- LOST for 22 Years and Recently Discovered: St. Michael Slays the Dragon With a Pure Gold Sword I'm talking about breathtakingly beautiful gold coins that proudly bear the image of the dragonslaying angel… These forgotten British Gold Angel coins are the first edition of the coin series - and they're graded in nearly flawless condition. Only 384 coins of this type and grade are known to exist. For more information on how to obtain these historic gold coins…  ------------------------------- Powering Up
By Chris Mayer
The Perfect Storm dramatized the events surrounding a powerful nor'easter that raged over the Atlantic Ocean in 1991. The storm was the product of some fluky weather patterns, all of which converged to create a monster of a storm. The movie focused on the ill-fated travails of a small fishing boat, the Andrea Gail of Gloucester, Mass., which was lost at sea. It was a good movie, I thought. You could almost smell the fish and salty sea air, even while tossing back kernels of popcorn.
The film's success helped to introduce a new phrase into the English lexicon: A "perfect storm" describes any combination of events which, taken individually, would have produced far less powerful effect. The idea of a "perfect storm" comes to mind when I think about the world's need for new electrical power grids. Major blackouts already occur about once every four months on average in the U.S. And that includes only those blackouts that affect at least half a million homes. Of course, power shortages and blackouts occur in locales all over the world. If only North America were experiencing frequent blackouts, electric infrastructure would not seem like such a powerful investment theme. But it's the nascent boom in power infrastructure construction and renovation is a global phenomenon. Not surprisingly, China is an important part of the picture. I recently read a fascinating book entitled, From Wall Street to the Great Wall , which further brings home this point. In China, the authors note "electrical power shortages are chronic…Blackouts are not uncommon, and manufacturing is affected directly." Later, the authors quote a story from The Guardian: "China is on the biggest power plant building spree the world has ever seen." Hydroelectric dams, coal-fired generators and nuclear facilities sprout like weeds throughout China. "The equivalent of Britain's entire electrical output is being added to the capacity of the country's national grid every two years." Really, the power story is only one part of a major investment opportunity. The world's infrastructure needs span the gambit from power generation to electricity transmission to telecom to water. What we're talking about is a major long-term boom in all facets of infrastructure construction and renovation. India, often paired up with China in these kinds of stories, has its own infrastructure problems. "The nation's capital is bedeviled by the same sort of cramped airports, rough roads and frequent power outages that recall the darker days (often literally) of China's own economic opening," the Wall Street Journal notes. The infrastructure build-out in China and India may be grabbing the headlines, but similar trends are unfolding throughout the smaller emerging markets as well. Consider the African continent. There is an old joke told in many parts of Africa. It goes like this: "What did we do before we used candles?" Answer: "We had electricity." War, poor management and under-investment have crippled infrastructure in many parts off the continent. And while the infrastructure of Africa crumbles, the population has tripled since the 1960s. Investment dollars, though, are trickling back to Africa. There is the promise, for example, of the great Congo River. Harnessed, it could generate over 40,000 megawatts of electricity. That's more than all of what South Africa produces today. Given a decent power station and linked to a modern power grid, the Congo River could satisfy much of Africa's power needs for a long time. The nation of Congo is typical of much of Africa. At Inga, Congo, there are two hydropower stations. The more modern one has eight hydroelectric turbines. However, years of neglect have left only three working. The Dark Continent - a term used originally to describe unexplored Africa - truly earns its name. But the lights in Africa are starting to come back on, thanks, in part, to an unlikely investor: China. Because of China's growing hunger for natural resources, it has taken a big interest in the African continent. The Chinese have already committed $10 billion to finance various infrastructure projects. They've already built roads, railways, ports and more in Africa. China's approach to Africa is a pragmatic one. But even when the dollars don't come from China, the World Bank or other places abroad, they come from within. For example, in South Africa, investment in infrastructure is a top priority. The government plans to spend $49 billion on roads, ports and power plants over the next three years. This is an admittedly brief look at Africa. I could also tell you similar stories about the Middle East. Or I could talk about Southeast Asia (in particular, Vietnam and the Philippines). All of them plan to raise, or have raised, billions and billions of dollars for building the basics - things like power grids. It's all part of the perfect storm I see shaping up in the world's infrastructure boom - especially in power generation and transmission. And now comes the universal and coldly pragmatic question, "So what?" In response to that question, I offer you ABB Ltd. (NYSE: ABB), a stock I recommended about two months ago to the subscribers of Capital & Crisis. The stock has advanced about one dollar since then, but I still like it at current levels as a practical way to take advantage of the global infrastructure boom. The company operates on a global scale and routinely adds contracts from locations all over the world. In fact, ABB recently won a $130 million contract in Poland. Keep an eye on ABB, and buy on any market weakness. In the meantime, I'll keep digging for other possible ways to take advantage of this "perfect storm." Eric's Note: Electric power infrastructure might seem like a dreadfully boring and unsexy investment opportunity. But that's just the way Chris likes it. During his tenure at the helm of Capital & Crisis, Chris has led his subscribers to a number of very profitable opportunities in a number of very boring industries. "Opportunity always resides among the unloved and overlooked sectors of the stock market," Chris explains. That's why a short list of Chris' recent winners includes a fertilizer company, an airport operator, a shipping company, and a pipe maker. If boring success excites you, check out Capital & Crisis. -----------The Only Stock------------ Investor Alert: You Need ONE Stock for the Next 10 Years This company is not yet a household name -- but America's most famous investor has already made over $550 million on it, and holds $839 million more. Get this stock now, and you could enjoy a river of profits for the next decade. So what's the stock? Click here to learn more. | 
