Monthly Archives: February 2015

borrow, baby, borrow

Before I get into blogging, I’d like to thank all the people who have written to me about Dead Companies Walking. I’m sorry I haven’t been able to respond to most of the messages, but I do try to read every email that comes in and it’s a thrill to hear that people are enjoying the book. Thank you for buying it and thank you for reading it!

Okay, on to this week’s blog:

Possibly the greatest surprise in 2014 was the decline in government bond yields. Ten-year treasuries fell from 3 percent to 2.2 percent by year’s end. Last month, I said that yields were unlikely to fall much further. Guess what? They did just that, dropping to 1.8 percent last week after hitting 1.65 percent two weeks ago. This surprisingly rapid drop in rates didn’t just prove (yet again) how silly it is to make financial predictions, it also has two important implications for investors:

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drilling down

[Note: I have a piece up on CNBC.com today about RadioShack’s impending bankruptcy. Click here if you’d like to check it out.]

Judging by the last few days of trading, it looks like oil prices might (emphasis on might) have found a bottom. That would be bad news for big oil consumers like airlines–not to mention ordinary Americans, who’ve been enjoying a de facto tax break at the pump–but it would come as a major relief to anyone hoping for our incredible domestic energy renaissance to continue.

Last week I attended a one-day energy conference in Denver. Sponsored by a West Coast brokerage, 25 institutional money managers and I visited six E&P (exploration and production) companies at their downtown headquarters. Four of the firms drill in the Niobrara, which is the basin underneath Denver that extends to the Wyoming and Nebraska borders. The fifth drills in the Bakken, which is the relatively new basin underneath North Dakota; and the sixth drills in the Texas Permian basin, the largest oil field in the lower 48 states.

The mood in those offices didn’t quite give me flashbacks to my early days in the investment business, when I watched the entire economy of Houston implode during the Great Texas Oil Bust of the mid-1980s, but I definitely experienced a few minor bouts of deja vu.

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