Coal Play

Coal is:
- the largest source of energy for the generation of electricity worldwide.
- the largest worldwide source of carbon dioxide emissions.
- a major contributor to environmental destruction and it’s by products from production can be hazardous to both people and the environment.

- A good stock play.

Why?
- One, it is relatively inexpensive to mine.
- Two, developing countries, usually strapped with cash and investment capital, need it to generate electricity and further develop and sustain their economy.

Today, one of the biggest players in the coal market is China. The United States and former Soviet Union have the largest reserves, followed by China and Asia and associated Oceana areas.

This sets up a few very interesting plays on coal.

- One is obviously the demand for Coal through out the world and the increasing demand for it in China and the rest of developing Asia. This would mean taking a look at some of the major Coal producing and selling companies.

- Secondly, since Coal is in such demand and yet has obvious environmental impacts, the business of making Coal production ‘Greener’ should also see increased demand.

- Third and last but not least is the obvious transport of said Coal around the world.

According to Peabody Energy, "Coal's best days are ahead," fueled in part by exports of coal from the Powder River Basin in Montana and Wyoming that Portland General Electric taps for its Boardman plant. Peabody has also been looking to establish a new West Coast terminal to aid in expanding exports.

Among the better Coal energy stocks to look at are:

Peabody Energy Corp. (BTU)
Natural Resource Partners LP (NRP)
Puda Coal Inc. (PUDA)
Arch Coal Inc. (ACI)

Another interesting play on coal, mining and the natural resource field of investments in the Asia and South Pacific region is:

BHP Billiton Limited (BHP)

This diversified natural resource company in Australia has been particularly impacted, as have many Australia Companies, by the recent floods and in my mind is presenting an opportunity to buy in at a discounted price.

Since Coal production is so prevalent and in such good demand, it also stands to reason that finding new and better ‘Greener’ ways to produce it would also be in demand. One such stock popped up on my January watch lists.

Sino Clean Energy Inc (SCEI).

If you are looking for more diversification, perhaps less risk and exposure to potential alternative and clean energy plays within the Coal industry you can look at investing in an ETF such as (KOL).

As I mentioned before, obtaining the coal to sell to the world is one play. The other is transporting it around the world. In order to do this you need a fleet of cargo ships.

Some of the stocks and ETF that come to mind for this are:

DryShips, Inc. (DRYS)
Claymore/Delta Global Shipping (SEA)


Disclaimer: Currently invested in SCEI.

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Better late than never

My 2011 Goals.

You'll notice not one of them is being on time ;-)







1) Eliminate Non Housing Debt

I gave this one a good start in 2010 but ran into some added expenses which set me back.
I have a monthly plan in place and I am going to stick with it. Hopefully I will be able to put a much bigger dent into my balance this year. Knock on wood . . .





2) Beat Averages

Last year I increase my return average 50% to set a new goal. That was ambitious. For 2010 I did beat all the averages but feel short of the 24% mark. If I increase my 20% return by 50% that would push my goal up to 30%. That is a bit too ambitious even for me. This year I am going to keep my “beat the averages” goal with a stretch goal of 24%.

3) Cut Expenses by 10%

One way to increase savings and add to paying off debt is by taking a long hard look at your expenses and “cutting the fat” as they say.

We currently do “OK” but I know we can do better. Especially in the area of finding and shopping for deals. Some of the phenomenal success stories of the past year has been the rise of sites like Goupons and Couponmom. This year I am going to take a more serious look at saving with coupons and actively look to “trim the fat” from our daily / monthly expenses.

4) Double followers

I currently have 24.
I’m actually going to split this one out to 36 followers with a stretch goal of 48.





5) Win Fantasy Football

I came oh so close to this but fell short in the end.
I may never actually accomplish this but hey, I’m keeping up the hope and the goal.
OK lets split this one too:

- East Coast wins the championship
- With a stretch goal of me winning.


6) Fence and Shed clean out Garage!

A few months ago, one of my favorite shows – Criminal Minds – had a quote at the end of the show regarding a statistic which stated before 1960, there were virtually no personal storage units in the US. Today, there is more than 2.35 billion square feet of self storage in the U.S., or a land area equivalent to three times Manhattan Island under roof. It seems that the U.S. certainly has become the land of excess sometimes and personally I would like to do my part in reversing that trend.

Now, we are nowhere near as bad as compulsive hoarders or anything like that, but like many people we have “collected stuff” over the years. Stuff we probably do not need nor use or even know exist anymore.

Welcome to my garage.

Part 1 of this goal is to declutter my life and garage. The decluttering should help in finances, free time and finally getting at least one of our cars into the garage.

Part 2 of this goal: Putting a shed in the backyard will help with storing outside yard tools and stuff like bikes and sleds.

Part 3 of this goal: Putting up a fence will help with keeping said shed stuff from finding little feet and ending up cluttering the neighbors yards and provide our dogs some true running room.

Speaking of dogs . . .

7) Get Lola a Forever Home

My daughter, Alaina, will hate me for putting this up here, but hey, maybe it will ultimately inspire her to add a 2011 goal for herself.

Lola is our current resident foster greyhound.

Current Resident, because she has been here about 7 weeks. This is almost an all time record for us keeping a foster before getting him or her adopted.

Foster because she is a foster, which means the intent is to find her a forever home (other than ours).


As you can see, she is a very cute black and white greyhound. And trust me she is very affectionate and playful and will make a good addition to any home.

Her original racing name was Rico's Hailey and though many greyhound agencies frown on renaming a foster we took that liberty because, well, she simply was not a Hailey or Rico.

We tossed around several potential names like Betty; if you are familiar with Ram Jam or Leadbelly you will know the reference, but thought it better to avoid potentially politically incorrect names for a black dog. Lola seemed to be a name that she responded well to and, well, it makes for one or two rather good Kinks songs too.

Oh, There is just one little caveat.

There seems to be a condition which has come up recently that says if Alaina gets a job, she can keep Lola as a pet. Hmmmm – I wonder who came up with that one. So, perhaps Alaina will add getting a job to her 2011 goals. This will go a long way towards giving her some much needed money, added responsibility and convincing me to actually keep Lola.

But until then . . .

Please contact the Virginia Greyhound Adoption Society for more information.

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An Educated Investor?

There is a marketing ad by SYMS that states “An educated consumer is our best customer”.

The theory behind this is that an educated consumer would know value and quality when they see and hear it and know to come to SYMS for the best advice and deals.

Does this also hold true in the investing world?

Is an educated investor the best investor?

This time of year you can search countless sites and articles about what to invest in for the coming year.

There are plenty of “experts” out there who give advice. Some, well - actually most, give some sort of value added education to their customers so that they can make informed decisions and realize that they are getting valuable, quality, investment ideas from “the pros”.

But how good are the experts?

And

Can an individual investor do just as well or even better?

Well, since I am NOT a psychic and can NOT predict the future, I can NOT tell you how well these “experts” will do in 2011.

But, I can tell you how well they did, and did not, do in 2010.

I searched for 2010 stock picks from various sites and came up with a fairly diverse list of expert picks and their results for 2010.


Editor Paul Goodwin -17.73%
E-House China(EJ)-20.21%
Gafisa(GFA)-15.24%

Alan Gayle -14.15%
Adobe Systems (ADBE) -15.83%
Hewlett-Packard (HPQ) -19.03%
Microsoft (MSFT) -7.58%

Editor Byron King -5.61%
Cameco (CCJ) 20.68%
Gammon Gold (GRS) -31.90%

Newsletter Sound Advice +0.70%
Boston Scientific (BSX) -13.09%
Maxim Integrated Products (MXIM) 14.49%

Marc Johnson +3.11%
McDonald's (MCD) 22.86%
Medtronic (MDT) -16.64%

Kiplingers +4.85%
UPS (UPS) 25.01%
Kimberly-Clark (KMB) -1.66%
PepsiCo (PEP) 7.35%
Paychex (PAYX) -1.06%
Western Union (WU) -4.40%
Sysco (SYY) 3.01%
Chevron (CVX) 16.10%
Broadridge (BR) -5.59%

Howard Ruff +5.76%
Barrick Gold (ABX) 26.86%
Rydex Inverse S&P 500 Strategy Fund (RYURX) -15.33%

Chris Temple +6.22%
Matrix Service (MTRX) 11.00%
PowerShares DB US Dollar Index Bullish (UUP) 1.44%

editor John Buckingham +9.20%
Palomar Medical Technologies (PMTI) 33.04%
Navios Maritime (NM) -14.63%

Channing Smith +15.39%
Yum Brands (YUM) 41.46%
Procter & Gamble (PG) 6.77%
Wal-Mart Stores (WMT) -0.26%
PetSmart (PETM) 51.55%
CarMax (KMX) 33.01%
Quest Diagnostics (DGX) -10.14%
McKesson (MCK) 12.49%
Abbott Laboratories (ABT) -11.77%

Mike Avery +20.70%
Monsanto (MON) -19.77%
Apple (AAPL) 51.53%
Nike (NKE) 30.34%
Value Line Survey 21.81%
American Tower (AMT) 16.19%
Weight Watchers International (WTW) 27.43%

Rich Howard +31.92%
DuPont (DD) 46.03%
Barrick Gold (ABX) 26.86%
Newmont Mining (NEM) 22.86%

Jerry Jordan +32.49%
National Oilwell Varco (NOV) 46.54%
Halliburton (HAL) 31.25%
PowerShares DB Agriculture (DBA) 19.68%

The Street.com +33.29%
Amazon.com (AMZN) 34.01%
Comcast (CMCSA) 31.94%
Microsoft (MSFT) -7.58%
Red Hat (RHT) 49.06%
Research In Motion (RIMM) -13.88%
VMware (VMW) 106.18%

Editor Dan Sullivan +42.23%
Massey Energy (MEE) 24.97%
Teck Resources (TCK) 59.49%

Editor George Putnam +51.04%
US Airways Group (LCC) 105.58%
Global Crossing (GLBC) -3.50%

The overall average for all these sample experts is 14%. Not too shabby. But some, obviously did better than others.

This chart does tell us that some of the experts did quite well in choosing stocks that would perform well over the whole course of the year. A pretty amazing feat considering how volatile the stock market was in 2010.

What this chart does not tell you is that some of the experts who seemingly got it wrong, really did have it right, but just not for the whole year.

Hint: this is where the education comes into play . . .

Couple cases in point:

RIMM: A well run tech company that fell out of favor from April – September, mostly due to the advancement of the competitions “smart phones” and even a couple political land minds from countries who wanted access to the secure transmissions and threatened to ban sales of RIMM products. Good companies who also by the way have market share will successfully navigate these land mines and down trends in sentiment and eventually “surprise” the market and come back into favor. This “out of favor” slide sent the stock from a high of $75 in March to $45 in September. I believe the analyst in picking RIMM as an investment for 2010 said something along the lines that it was too smart and agile of a company which also happened to “invent the smart phone” to permanently fall to the competition.
Well, that analyst was and is correct and the company has since surprised the market with good reports, new popular products and a reasonably strong future and now sits at a price of about $60. That is a 30% return up from its low point. Yet for the year, the stock and analyst seemingly got it wrong with a -13% YTD return.

UUP: A fund that rises and falls based on the strength or weakness of the dollar. The analyst recommending this stock for 2010 had it exactly right and , unlike this chart, an educated investor would have made a decent profit by following his advice. You see, he saw a short term uptrend in this dollar index fund but recommended selling once it got near the high 20’s. And low and behold, that is exactly what happened. The fund rose from $23 to $26 during the first six months of 2010 then fell back down to where it is today.

So, what sets a good investor apart from a bad investor?

Education.

The more you learn about how the market works, what makes a company a good company or bad company or even a good company out of favor, the more you can make educated decisions and hopefully good decisions on investments.

Unlike year end stock predictions, where the last 12 month results of a particular company is passively listed, educated investing is an active process.

Are you or the experts going to get it right all the time? No. Are you and the experts going to make mistakes? Yes. Are you and the experts going to get it right some of the time? YES!

The important thing is to study and watch the market. Learn from your mistakes as well as your successes.

An educated investor may not be the best investor, but he or she will be a smarter investor and actively involved with the market instead of passively investing in yearly expert lists.

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