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Weekend Edition

The Best of The S&A Digest
Saturday, March 15, 2008

Oil hit $111 a barrel on Thursday. That means a big payday for Canada.
 
For years, Alberta, Canada has been "the" place for oilsands deposits. But close by, Saskatchewan has similar geology, fewer people, and much cheaper land. And it won't be long until Big Oil discovers this gem.
 
In Thursday's DailyWealth, commodities expert Matt Badiali explains why "resource nationalization" is making it harder for players like ExxonMobil and Chevron to find large new deposits, and why Canada is looking so attractive. Matt has found a penny stock that will directly profit from Saskatchewan's boom. 
 
More of the same for the greenback... The big news this week is the dollar dropping below 100 yen, a 12-year low. And on cue, gold hit the much-anticipated $1,000 mark.
 
And what does the government have to say about our failing currency? Nothing... At last Friday's White House press briefing to discuss the U.S. economy, economic advisor Dana Perino was tight-lipped. When asked about $105 oil and the falling dollar, Perino responded:
 
I'm under strict instructions, and have been from the beginning, to not talk about the dollar, and I'm not going to get fired to satisfy your question.
 
The blog Marginal Revolution reports: "Over here in the Netherlands, court proceedings are starting this week on the biggest speculation fraud ever..." Investors have lost tens of millions of euros in what turned out to be a big pyramid scheme. Any idea what these people were investing in? Tulip bulbs. No kidding.
 
We think it's ironic that the Dutch were caught up in another mania involving tulips. The first tulipmania hit the Netherlands in the 17th century. It was one of the earliest examples of an economic bubble. Tulip bulbs were so valuable at the time that people traded them for houses and livestock. You can read about it in Extraordinary Popular Delusions and the Madness of Crowds by Charles Mackay.
 
Left unanswered in the Eliot Spitzer saga... Why isn't there any privacy left in banking? Spitzer's bankers turned him over to the federales because he was wiring $5,000, from time to time, in his own name. Keep in mind, Spitzer is independently wealthy. Tax documents show he made $1.9 million in 2006. Why would a millionaire spending $5,000 from time to time trigger a federal investigation? And why would that level of spending convince a judge to issue a warrant for a federal wiretap?
 
As you know, the Federal Reserve has begun to accept private mortgages as collateral for 28-day loans, furthering its policy of expanding allowable collateral that began last August.
 
Here's what I want to know: How can borrowing more money against dodgy collateral help these businesses, which are on the verge of bankruptcy precisely because they've borrowed heavily already against these mortgage assets? If anyone can explain to me how allowing Freddie Mac and Fannie Mae to borrow still more money (they're already leveraged 28 times and 18 times, respectively) is likely to help their shareholders, please take the time to jot me a note.
 
Steve Sjuggerud has said it a million times... Wait for an uptrend to buy. The same applies to going short. Betting against trends is a costly game. Boone Pickens learned that the hard way when he shorted oil and natural gas last month. Pickens' hedge fund is down 14% so far on the trade.
 
From a reader: What's the best way to take advantage of the VISA IPO?
 
Few things are as reliably bad as investing in IPOs. In short, if you can get shares, you shouldn't buy them because they're sure to be hugely overpriced. While I don't know anything about this particular IPO, I've learned to avoid the entire IPO market.
 
Jeff Clark wrote it. Did you buy it?
 
The S&P 500 rarely strays more than 30 points above or below the magnetic pull of the 20-day EMA. When the average drifts too far away, then traders can bet on a reversal. Right now, the S&P 500 is almost 55 points below the 20-day EMA. So it needs to close that gap, and the odds are it will do it by rallying sharply over the next week or two. At least, that's how I'm going to play it.
– March 11 Growth Stock Wire
 
That day, the S&P 500 gained 3.71% – the biggest rally since October 2002 – on the Fed's $200 billion injection. Jeff Clark was in for the rally. Were you?
 
Regards,
 
Porter Stansberry and Dan Ferris




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Date Range:3/6/2008 to 3/13/2008
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