Friday, May 2, 2008

End of Week Thoughts/Why it Pays to Take a Risk

Kind of a wild week on Wall Street as investors displayed newfound confidence. It got a jump start from positive GDP numbers for Q1. We're seeing new leadership leading us higher. Financials, tech, and homebuilders. Although many of these companies are struggling, many feel we've reached a bottom and are looking for that "easy move" where the quick money is made. I spent the week pondering whether these are really good investments right now. I'm still more comfortable re-loading into some weaker dollar plays. I'm looking to enter National Oilwell Varco (NOV), Prologis (PLD), Vale (RIO), Arcellor Mittal (MT), and maybe a clean energy ETF. I'm a believer that we will see some more disruptions in the stocks that led this week and a reversion to strength in the weaker dollar plays.

I'm concerned about inflation, although our leadership doesn't seem to be. Over the past few months, they have sacrificed inflation to fight off recession. They have increased liquidity to banks that needed it, but I'm afraid it isn't helping individuals much as "everyday interest rates" haven't dropped much.

I don't usually talk politics on the blog, but I'll say right now that I will vote for a candidate that can propose an energy policy that makes sense. Right now we really don't have an energy policy. It is "let's up production at our refineries." Or "let's lift the federal gas tax for the summer." Okay, but that sounds like someone who will be out of office soon talking. We're still importing oil from unstable parts of the world, and it is costing too much. Thomas Friedman wrote a nice piece about it this week in the New York Times.

We need to give tax breaks to companies that are developing solar, wind, and geothermal energy. Their progress will mean huge progress for America, not only for the environment, but economically and politically. We need to again be a leader in technology and the world will come to us to buy these technologies and products. Why not institute a Manhattan Project for a sustainable energy solution? Hire a group of scientists to exclusively work on it until its done. It can be done if Washington gets out of its own way. It will take a long time for the free market to come up with solutions, especially without tax help. Visionaries like Richard Branson are offering rewards to those who come up with sustainable alternative energy ideas. This is the kind of thinking we need.

I'll end with a nice interview with Google Co-Founder Larry Page. It talks about the importance of people who are working not just to get through the day but to make things better for the future, and why its important to take risks to achieve our goals. I think there are some important lessons to be learned here not just for investing, but for everyday life.

Have a great weekend!

No comments: