The Oil Factor: How Oil Controls the Economy and Your Financial Future
by Donna Leeb and Stephen Leeb
Essentially, this book is an investor's guide for those who believe that the Peak Oil theory has credibility. When I read it sveral months ago, it was exactly what I had been looking for; it is well written and gives specific advice down to the level of individual stocks.
So what investments did they recommend? I shouldn't give away the store, but they are generally bullish on the large and independent oil companies, not so bullish on the oil service companies and they like gold. An entire chapter is devoted to the virtues of Berkshire Hathaway and its ability to make money in both inflationary and deflationary environments. The book is written from a realistic and nonpolitical standpoint, and they are quite open with their opinion that defense stocks will do well as the United States will need to flex its military muscle to ensure access to diminishing oil production in the future, not only in the Middle East but also in places like Nigeria and Venezuela.
Alternative energy is recommended as well; they think that General Electric will be well positioned for the advent of wind power, although I am somewhat skeptical of this because of the relatively small impact that this division would likely have on the company's overall profits. Toyota Motor Company is recommended as a possible alternative energy play because of their technological leadership in hybrid vehicles. The authors are bearish on just about all of the other automobile manufacturers, particularly the European and American companies.
A basic premise of the book's recommendations is their prediction that we will soon be in inflationary environment caused by the spiraling price of oil. They have an interesting model, the premise of which is that if oil prices are 80 percent or less greater than the previous year's oil prices we should be investing with the expectation of inflation, if oil prices increase more than 80 percent within a one-year period we should begin readjusting our portfolio to hedge against deflation.
The book is an interesting read, and I would recommend it. I made a number of investments last year based on the advice that is given in the book, with very favorable results.
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