Contrarian Finance

I’ll give you a few more reasons why oil isn’t coming down any time soon. Notice the textbook 'double bottom' at $88/bbl and then again at just over $100/bbl? Unless something fundamentally changes, and I can’t think what that would be, I can’t see oil below that $100 mark anytime in the next six months.

If you haven't already read this book, you should consider doing so. If you've been following my commentary on Petrobras, and the economy in general, you'll know that I think having a basic understanding of the fundamentals of how oil is discovered, produced, refined and distributed is key to understanding the global and local economy. This book will educate you well on the first two points, and give tremendous insight into Saudi Arabia as well.

First, what heck is a Dividend Reinvestment Plan or DRIP, anyway? Well, the short answer is that a DRIP is a specific type of investment plan, whereby the dividends you would be paid from a given stock (say, Citigroup) are instead automatically reinvested in the company’s stock. Typically you can also buy stock directly from the company (well, through their agent anyway), in varying amounts (very small to somewhat large). And best of all, the fees are typically quite low.

I originally got this via email, but I found it on the web here for you: How Subprime Really Works. It's a little long, but totally worth it.

Scary thing is, there's quite a bit truth in it too.

Check out this recent post, titled "Are Higher Oil Prices Passing Through?" on the Economics Blog on the WSJ. The Fed at this point seems to me to be either hopelessly lost or corrupt or both. Their basic strategy seems to be this:

1. We need to fight inflation, which is primarily driven at this point in time by rising fuel costs
2. The primary component of rising fuel costs is rising oil commodity prices
3. The primary component of rising oil commodity prices is the declining value of the dollar
4. SO, the we also needs to push the economy, so we'll lower the interest rate
5. Which in turn pushes the dollar lower, oil higher, gasoline higher, and feeds inflation

Am I missing something here? Seems to me the Fed isn't interested in fighting inflation at all.

I didn't want to clutter up the main post with all these links, but here are a number of additional articles you may find useful in doing your homework on Petrobras. I didn't spend much time in the original post on renewables, ethanol in particular, so I've included a number of those links here. Despite being a huge Oil and Gas company, Petrobras is actually quite green.

Each week I’m going to provide an in-depth analysis of one holding in my portfolio, starting with the Brazilian energy company Petroleo Brasileiro SA, more commonly known as Petrobras. It trades here in the U.S. on the NYSE as an ADR under the symbol PBR.

Petrobras is getting press again this week with the news of a potential new discovery in the Santos field that could total as much as 33 billion barrels. Now, mind you, I bought the stock (on a brief pullback) following the news of the Tupi field discovery, which is now estimated to be about 8 billion barrels.