Warren Buffett was recently featured on CNBC where he discussed oil depletion and the fact that we could be close to peak oil production.
He says that we’ve been “sticking straws in the ground” since the 1850s and all of the easy to reach oil has been tapped. We’re consuming 85 million barrels of oil every day and the demand from countries like India and China is just increased. Existing production is maxed out and the fields seem to be in sharp decline.
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Even though the markets were down today, my stock portfolio was up 3%. This was mainly because I’m heavily weighted in Oil and Gas Canroys and they were all buoyed today on news of a major takeover. Abu Dhabi’s state-owned utility company, National Energy agreed to buy out PrimeWest Energy(PWI) in a deal worth $5 Billion. PWI was up 30% on the news and all other canroys were up around 5% as well.
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The last time I wrote a post about investing in Canadian Royalty Trusts was a few months ago. Since then the price of Canroys has increased and the yields have dropped. If you missed that opportunity to invest, you might have been put off by the lower yields.
However, today’s 200 point drop in the Dow Jones Industrial average has provided another a good opportunity to buy them. Its also a good opportunity to invest new money into them.
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Posted in Investing, Oil & Gas on Apr 17th, 2007 6 Comments »
In our everyday lives we come across investment opportunities very often. Unfortunately most people are blind to them. In his book, One Up On Wall Street : How To Use What You Already Know To Make Money In The Market , Peter Lynch mentioned how easy it was to come across companies that were extremely popular and were doing well.
While I haven’t had any luck finding the next Gap or company that owns Pokemon, I have had decent luck identifying different investments.
Some of the best investment ideas are in your own newspaper!
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One of the basic criteria for the perfect investment is the ability to shelter your profits from taxes. If you can compound your money without having to pay taxes on it every year, you’ll become wealthier much quicker.
Normally investments like stocks, mutual funds and CDs are subject to taxes. But stocks and mutual funds can be sheltered from taxes by investing in retirement plans. Plans like a 401(k) or an Individual Retirement Account (IRA) avoid the tax hit when you put money into the account where it can grow tax-free until retirement. At that point, you must pay taxes on the withdrawals. However an account like a Roth IRA is the opposite. You pay taxes on the deposits, but the withdrawals are tax-free. Not only that, you need not wait until retirement either. After 5 years you can withdraw your deposits (but not the gains accrued) without penalty or taxes.
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