The Oil Factor: Protect Yourself and Profit from the Coming Energy Crisis

The Oil Factor: Protect Yourself and Profit from the Coming Energy Crisis | Stephen Leeb, Donna Leeb | Reader from nowhere is an ostrich

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The Oil Factor: Pr...

	The Oil Factor: Protect Yourself and Profit from the Coming Energy Crisis Stephen Leeb, Donna Leeb Business Plus, 2005 - 256 pages average customer review:based on 41 reviews view larger image
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highly recommended

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Perhaps the strongest comments I can make about this excellent book is to note that the only negative comments about the book strongly support the Leebs' argument. Read the one star review "an interesting piece of fiction" to see what I mean. Here a putative reader from Champaign Ill compares the Leebs to Rachel Carson and Paul Ehrlich. You have to wonder why this is negative. Carson's arguments changed the way we look at the environment and that Ehrlich continues to write provocative works as a chaired Stanford professor says it all. If you want to tear down an artist by comparing him to Picasso, you are saying a lot more about yourself than the artist.
The same reviewer notes that worldwide oil reserves have been raised to slightly over a trillion barrels. Again were that the case then the Leebs' arguments and I am sure they would agree would be even more telling as a trillion barrels would imply that we are already past the half way point and that oil production has likely already peaked. My guess is that Leebs would place current reserves closer to 1.2 trillion, which would be consistent with peak in oil production within the next two to three years.
I have to admit I am curious about the identity of the reviewer, who professes a familiarity with the Leebs's newsletter and notes its poor past performance for making predictions. I have been reading Stephen Leeb's newsletters for many years and would place them among the very best. Curiously the only letter the Leebs (husband and wife) have done together is the most recent one, The Complete Investor (TCI), which recently won the award for the best financial newsletter. However this newsletter is still less than a year old. Yet the reviewer claims TCI- despite its award winning performance - has a poor long-term record. Curious to say the least. Clearly this reviewer has an axe to grind. Maybe I am being too clever here but I can't help but note that the reasoning (very poor) and style (flippant) of the comments are not dissimilar from those of Leeb's former newsletter Personal Finance, which since Leeb has left has gone down hill in a big way. I dropped a 15 year subscription to it about six months ago.
I conclude by saying again that if the worst you can say about a book turns out upon closer analysis to support the book, then the book is probably a darn good read. I believe that Leeb, though not always right is one of the most prophetic and provocative thinkers on the investment scene. This book has a decent chance to become a true classic and I rate it a must read.

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Reader from nowhere is an ostrich

(...)Not fiction, but fact. We're using far more oil than we're discovering. Production is increasing, but discoveries have trickled off to almost nothing.

Now, you tell me, just how in hell do you think we're gonna support a population of 6 billion plus when oil discoveries have trailed away? Tell me, I'm curious.

There's no more oil to find, my friend, and when production declines begin--anytime after right now, actually--I hope you have a good solid hole to climb down into...you seem to already, to judge from your ignorance.

You think we'll be flying airplanes on solar power? Drive cars on coal? Running electrical grids with wind-power? If not, where exactly is the energy gonna come from? You tell me.

The population of this planet is *well* into overshoot even by optimistic calculations. You know how fast the dieoff will happen once the oil begins its decline to zero? Maybe you don't want to know, hence your denial.

5-10 years from now will tell who's right. Frankly, I wish you were right. But I know you're not. Get a clue and do a little reading in basic geology. And on sustainability. And on evolutionary biology.(...)

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Geologically Right, Financially Half Right

I've followed the oil depletion problem for a few years. What the Leebs predict is already happening, it's not some crazy doomsday scenario. U.S. oil production peaked in 1970, Russian production peaked in 1988, U.K. production peaked in 1999, and total world production may have already peaked in 2000. Nothing but a trickle will flow from ANWR or the Caspian Sea or South China Sea according to the latest geological reports. I agree with their suggestions to buy precious metals, but disagree with some of the other contentions. They believe that the Fed will keep interest rates lower than inflation in order not to burst the housing market. They point out that even long term interest rates were lower than inflation during much of the 1970's. The thing is, the housing bubble will burst due to rates the Fed does not control, namely the 10 year treasury bond rate which is market controlled. And no way will long term rates lag inflation like they did in the 1970's. Back then it was assumed the inflation was just a temporary phenomenon, which it was. Here we're talking permanent rising oil prices. Also, a staggering debt load does not mean that the u.s. economy will be forced to grow. Japan's debt soaked economy went through a decade with 1% annual growth and actual deflation. Lastly, keep a large portion of your portfolio in buy and hold positions despite what the Leebs insist. Not only do you avoid having to contend with timing the markets but the taxes and fees will crush you if you try to time too much. Best bet is to diversify into precious metals, real estate, REIT's, stocks, bonds. No matter what happens at least one of these sectors will benefit. Personally, I believe that if oil production declines 3% a year as demand rises 2% a year as some contend is in store, soon we'll be looking at World War III and it might not matter how rich you are!

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Beware of the Pivotal Role of Oil

The Leebs arm readers with an investment strategy to survive, what they see, as the coming energy crisis.

Energy is crucial to the world' economy. The Leebs believe we are transitioning away from reliance on oil and gas as our primary energy sources. As supplies dwindle, the price is experiencing an upside breakout, which will place inflationary pressures on the economy in conjunction with deflationary threats.

The Leebs predict the dwindling energy supplies will cause oil price will rise to $100 a barrel by the end of this decade, if not sooner. They observe that oil prices are the single most reliable predictor of stock market performance. That is why they urge investors to alternate between inflation and deflation positions using their "amazing oil indicator."

Generally, I am skeptical of simplistic investment approaches. In my experience these indicators work only for investors whom I charitably call "donators." Donators are a necessary market group, but I do not generally want to join. In this case, however, I agree with the underlying thesis. Energy is a non-renewable resource to which the world's economy is hopelessly addicted. As the world transitions, there will be disruptions. I doubt they will take the form of a short-term, neat, predictable package.

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reviews: 1, 2, 3, 4, 5, page 6, 7, 8, 9

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