Forget the election, the fiscal cliff, and Petraeus. Here’s today’s biggest news…
There hasn’t been much to like about the stock market since the election results came in. With the exception of a one-day rally on Monday, the Dow Industrials Average has been mostly red. It has lost 700 points, or around 5%.
What’s worse, the stock market has had a tendency to show some strength in the early going, only to give way to late-day selling. This suggests the large, institutional investors are paring down their positions.
The last few minutes of trading are always considered the most important. The big players can hide their actions, pump stocks up, or otherwise offer head fakes during the trading day — but they must accomplish their goals by the close of trading.
So when you see late declines, it often means there will be more declines to come.
Right now, there’s more bad news out there than good news…
The looming fiscal cliff, recession in Europe, a sharp drop in the Philadelphia Fed’s manufacturing survey, a sharp spike in unemployment claims after hurricane Sandy.
And then there’s the escalating divisiveness about the presidential election results.
But I’m not here to whine and moan about what’s wrong. That’s not going to help anyone make any loot…
Stay Focused, My Friends
The simple fact is it’s not all doom and gloom for America. In fact, the conditions for an era of American prosperity are laying before us right now.
Much of the media has ignored it as they focus on the election, the fiscal cliff, and disgraced General Petraeus…
But you can bet your bottom dollar that we at Wealth Daily didn’t ignore the most important recent news:
- A shale-oil boom will thrust the U.S. ahead of Saudi Arabia as the world’s largest oil producer by 2020, a radical shift that could profoundly transform not just the world’s energy supplies but also its geopolitics, the IEA said.
- Last week ConocoPhillips CEO Ryan Lance predicted North America — the birthplace and currently the most aggressive exploiter of shale oil and gas production — could be energy self-sufficient by the year 2025.
- Citing recently updated geological surveys of U.S.-held shale formations alone, the Institute for Energy Research (IEA) has placed total shale oil reserves as high as 2.6 trillion barrels, or close to 10x the total reserves of Saudi Arabia.
This is a long-term trend that’s going to be playing out over the next several years.
And the thing most investors overlook is drilling techniques continue to evolve, raising the amount of recoverable oil and natural gas.
The IEA’s estimate of 2.6 trillion barrels of recoverable reserves will almost certainly be raised in the future.
The best part of this for investors is much of these reserves aren’t controlled by the Exxons and BPs of the world, whose U.S. operations are diluted by their very size.
No, the shale oil and gas charge is being led by small, dynamic companies that have the very real potential to become major players. And they are cheap.
My favorite of these companies produced an average 1,290 barrels of oil in 2010 and had revenues of $31 million. By the end of this year, this same outfit will be producing 27,000 barrels of oil a day and revenues will hit $430 million!
That’s growth by a factor of more than 20 in just two years — and its forward P/E is just 8, because it is expected to grow revenues from $430 million this year to $825 million in 2013.
Investors will wake up to this story one of these days…
In the meantime, stocks like this one can be bought on the cheap.
Until next time,
Briton Ryle
for Wealth Daily
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