The Rude Awakening
Budapest, Hungary
Friday, July 20, 2007 ------------------------- - Food and energy up, housing and the dollar down,
- Ben Bernanke defines "fairly significant,"
- The new traveling circus, the Dow trapeze act and
plenty more…
------------------------- Joel Bowman, feeling slightly poorer than yesterday, reports from Budapest… Yesterday the Dow surged back over the 14K mark, rallying 82 points to rest on the precarious palindrome of 14,000.41. It was the geeks leading the way this time with strong gains for IMB (4.3%), Hewlett-Packard (2.67%), Microsoft (1.91%) and United Tech Corp. (2.14%). Another day over 14K. Not bad, right? Surely, then, investors should be feeling a little richer today. No? Why is it that American's catching the financial headlines on the radio during their afternoon commute don't seem to be taking to the streets to celebrate these new landmark victories for their stock market? We don't know, of course…but we have a few guesses. Perhaps they just filled up their tank in Chicago for three bucks sixteen a gallon. Or perhaps they are one of almost a million homeowners to be forced into foreclosure so far this year - that number (926,000) is up a staggering 56% over first half figures from last year. Would that be enough to flatten the fizz of the champagne celebrations? Probably not by itself… Maybe they just heard Ben Bernanke define what he meant when he said subprime loan losses were "fairly significant." Yesterday the Fed chief told the Senate Banking Committee that, "Some estimates are in the order of between $50 billion and $100 billion of losses associated with subprime credit problems." How are those party-poppers going now? All the "oohs" and "aahs" uttered at new record highs in the market sound a little dubious to us. It's kind of like people laughing at a joke they don't really get. They're sure a certain reaction is due, but they're not really sure why. Maybe, as some analysts assert, the flailing U.S. dollar has something to do with the equivocal elation around the punchbowl. Sure, crashing through 12, 000…then 13,000…and now 14,000 would be great news if everyone in the world spent only U.S. dollars. Instead, much to the chagrin of anyone drawing a U.S. dollar-denominated paycheck, the Aussies prefer their Aussie dollars and Canadians and Brits are quite content with their loonies and pounds. And why wouldn't they be? Just this week the Aussie dollar traded at 88.12 cents in New York, near an 18-year high against the beleaguered greenback. The pound seems to have found a comfortable place above the two-dollar mark and the Canadians are wondering, with their dollars backed by such a massive endowment of natural resources, when they will be able to take those budget vacations south of the border. A few more greenbacks in the pocket just doesn't fuel the same bravado it did back in the good old days of gold-backed currency, it would seem. Again, we can muster only guesses as to why this might be the case. Usually, when confronted with such perplexing questions, we would place a Skype call to our senior editor, Eric Fry, and pepper him for answers. Unfortunately for us, it's 3am in Laguna Beach and we're not sure Eric would appreciate our enthusiastic research at this particular moment. Fortunately for you, however, Eric will be awake and chipper at next week's Agora Financial Investment Symposium in Vancouver. The theme of the event is "Crisis and Opportunity in the New Asian Era," and there is bound to be plenty of nifty ways for American investors to take advantage of the roaring markets across the Pacific Ocean. If you are attending the shindig and would like to ask Mr. Fry a question or two, send them to aussiejoel@the-rude-awakening.com and we'll dutifully forward them along. Perhaps Eric can offer some more insight into the Wall Street circus and, in particular, opportunities for savvy investors looking to position themselves in the Asian markets. As for your junior editor, we'll be remaining in Hungary with the hope of stretching our dissipating supply of greenbacks a little further. In today's Rude Awakening, resident small-cap guru, Greg "Gunner" Guenthner has some insights on a different kind of circus. It's not the kind where carnies showcase freakish acts of contortion…or where investment bankers showcase freakishly contorted mortgage backed securities. Nor are you likely to be wowed by high-flying trapeze artists…or similar acts of gravity defiance from the Dow Jones Industrial Average. "There's a new show in town," observes Greg, "one that's attracting countless visitors and pulling in $30 million a year and growing." Read on below for all the details… --- Options Hotline Special Alert --- Double Your Money Average On Every Trade With this kind of impressive hot streak going…you could have racked up $513,964.02 in gains since Aug. 8, 2004, with a $5,000 initial stake in each play! Here's your chance to get in on this jaw-dropping profit ride - absolutely risk-FREE for the next 30 days. Details Here. ----------------------------------- A Titanic Resurrection
By Greg Guenthner It's been a source of fascination for anyone who has ever set foot on a boat. The world watched as this enormous craft pushed its way toward New York Harbor from Southampton, England, on April 10, 1912. Eighty-plus years later, a multimillion-dollar Hollywood recreation of its maiden voyage forever sealed the sinking of the RMS Titanic in our popular culture. What caused it to sink like a sack of bricks after colliding with its fateful iceberg became an instant mystery. In fact, even its underwater location remained a mystery for the better part of a century. Its 2.5-mile depth made its location virtually impossible to find with the World War I technology available. Finally, 73 years after its enormous stern was last seen disappearing into the black, early morning waters of the North Atlantic, its disfigured remains were found on the ocean floor. On the first dive in 1987, 1,800 artifacts were recovered. Any number of things could have been done with them: cleaned, cataloged and collected in boxes in some dark basement of a museum; parted out to the highest bidders, separating them forever; or even broken up in some laboratory for experiments. Instead, one small company decided to showcase these historical treasures in traveling museum shows… The show usually stays for six months, feeding off the fascination and curiosity of the hundreds of thousands of visitors, all the while charging around $20 per ticket. After the shows, the company sells merchandise, adding even more cash to its top line. This idea of an insanely profitable traveling museum might seem a little far-fetched. After all, there's nothing especially innovative about a traveling show. But there's much more to the story… People can't get enough of these exhibits. From '94 until now, there have been over 18 million visitors and counting. The company has orchestrated seven separate dives to the wreckage, recovering over 5,000 artifacts to use in these exhibits. Currently, there are seven separate Titanic exhibitions showing for an average of six months at various venues before moving to new ones. Obviously, some of this worldwide interest has been spurred from the Titanic movie in 1997, but the number of visitors has not slowed in the slightest since then. In fact, the company has added more exhibits to keep up with demand. Thanks to a 1994 federal district court ruling that gave company "salvor-in-possession" status, they now have complete control over the Titanic wreck site. No one else can either photograph or take artifacts from the site. The title grants the company a legal monopoly on pretty much everything associated with the wrecked Titanic. Think about this for a minute. In 1910, the Titanic cost 1.5 million pounds to build. In today's dollars, that's over $200 million. And thanks to some curious scientific minds, what remains of the Titianic could be worth even more today…Sure, some of the materials in the ship are useless now, but most are worth even more as collectors' items. In the 1990s, a theory was started - and is still widely believed today - that it was faulty rivets that caused the ship to sink. Apparently, the rivets used in the Titanic were made of the wrong distribution of materials. Because of this theory, Titanic enthusiasts have been reported to offer $10,000 for a single rivet. At those prices, this small company could part out the Titanic and make more than its own market cap. But this isn't even half the story. The company turns a whopping 72% of its sales from something else, which is still only 2 full years old. Not satisfied with only sub-Atlantic artifacts, the company decided in 2004 that the they needed to expand into new forms of exhibits, to protect itself in case something would cause a decrease in interest all things Titanic. The form they found was in bodies… These exhibits are plasticized cadavers and body parts, some cut into cross sections, showing the science of anatomy and even various diseases, such as the effects of smoking on human lungs. This operation isn't some poorly orchestrated sideshow. In fact, these exhibits have become extremely popular, attracting everyone from anatomists to elementary school field trips. This kind of show has been controversial among certain religious groups for many years. But people from both sides of the issue have viewed these exhibits, generating even more public interest. In only two years, the company has expanded to 11 Bodies exhibits at one time, seven of which show at two locations per year, bringing in around 550,000 visitors per exhibition per year (550,000 times 18 exhibits = approximately 9.9 million people per year). With these future projections for this and the next year, and an average ticket price of $20, the company would come in with almost $200 million in sales for the Bodies exhibits alone. That's 565% higher than the total company revenue of last year! You can only imagine what this means for investors. Joel's Note: Rude readers familiar with Greg's writings of late may be starting to detect a fancy for subterranean investments opportunities from our small-cap guru. Last week Greg wrote about a new boom in California's geothermal industry and recommended a tiny player that's set to lunge forward on the back of the Govinator's green energy fixation. While we are unable to divulge the names of the companies Greg researches (they're simply too small and illiquid for this forum) we hope to give you an idea of the kind of outlying stock stories that present massive upside potential for out-of-the-box investors. If you're interested in learning more, we'd suggest taking a look at Greg's newly released Bulletin Board Elite service. Due to the nature of the "jumper" investments Greg shares with his readers, there is a strict cap on the number of subscribers he can let in. If you're interested, click here for more information. Greg Guenthner's Bulletin Board Elite -------------------------------------- Rude Endnote: That's all for another Rude week. Remember to forward along any questions you wish Eric to address at the Agora Investment Symposium in Vancouver next week and, of course, keep an eye out for your 5-Minute Forecast arriving soon. Cheers, Joel Bowman
Rude Awakening aussiejoel@the-rude-awakening.com | 
