Saturday, June 13, 2009

Last Decade: Buy Gold. This Decade: Buy Energy.

It's not technically a new decade yet. But if the trade of the last decade was to sell stocks and buy gold, then maybe the best trade for the next ten years is to sell bonds and buy energy. Gas, coal, oil, conventional, unconventional, renewable, alternative. You have a whole portfolio of choices.

By the way, last year at the Agora Wealth Symposium in Vancouver, one of our colleagues took the stage to point out that your editor was complete moron. In this particular case, it was for being bullish on gold.

He said that gold hadn't done much adjusted for inflation since 1980. What's more, he said that it's worth less ― adjusted for inflation ― than it was twenty years ago. How, he speculated, could anyone take the advice to buy gold seriously when it had performed so abysmally?

Well here are the facts. The gold price bottomed in October of 2000 at $263.80. At that time, the S&P 500 traded at 1,379. Since then, the S&P 500 has fallen by 31% (closing yesterday at 942.43) while the gold price is up 262% to $956.

We've asked Kris Sayce to bring this small fact to the attention of our colleague when he attends this year's Vancouver show next month. The theme of this year's show is "Ten Years of Reckoning," celebrating the tenth anniversary of the Daily Reckoning. Kris will be spearheading the Australian delegation. More details on that later this month.

In any event, it seems pretty obvious, that for the last ten years anyway, selling stocks and buying gold would have been a good trade/strategy. Stocks ended an 18-year bull market in 2000 and gold ended a 20-year bear market. One asset class was at a cyclical low. The other was at a cyclical high. In fact, you might even say that one was at a generational low and the other was at a generational high.

Gold is no longer as low as it once was. But it's still not as high as we expect it to go before it starts to look foolish. Meanwhile, today's government bond market looks an awful lot like the stock market circa 2000. You're seeing a generational high in bonds. It's another version of the "high-low" strategy.

This time around, though, we would add energy stocks to the mix, along with gold. Crude oil climbed to an eight-month high over $70 on Tuesday. Bloomberg says the weakness in the U.S. dollar is, "bolstering the appeal of energy as an alternative investment." Sell bonds, buy energy. Pretty simple.

There is probably some truth to the fact that oil's latest move is driven by investment demand more than, say, demand growth in the real economy. But investors ARE looking for ways to profit from U.S. dollar weakness. Oil is liquid and popular. In the long-run, it's the smaller-than-expected oil supply growth that will drive the market.

One thing Kris will probably be making clear to U.S. dollar-based investors is just how relatively attractive Australia's position is in the developed world. "Even as Australia's challenges increase, it will still be the envy of the developed world," writes William Pesek at Bloomberg. "Even in its worst moments... Australia is among the least unsightly economies anywhere," he adds rather optimistically. We'll see about that.

Finally, we meant to write a bit about other possibilities in China today. That is, we were going to explore collapse scenarios (financial, political, and societal). But we did not realize it would be ambitious to try that in a few hundred words. So look for something more considered later this week in the essay spot.

And there you have it, Shooters. Dan Denning is officially not going to be in Vancouver nor will he be on the Whiskey Bar panel.

We won't get to see Dan walk onstage with a bikini top this year, but I'm sure it's still going to be a hoot. Read more here.

More bad news: Patrick Cox will not be tending the bar this week…but you will learn below why my knee's perfect health is so vital to me and why I'm so willing to be a stem cell test subject.

Now to your letters! We'll start with the outpouring of response to Linda Brady Traynham's report on the coming tobacco legislation…

Hear, hear!  The federal government just increased cigarette prices here about a dollar a pack (to pay for SCHIP, do it for the children!). Now it's over $100 for 2 cartons and that's in the cheapest areas of the state. The CA state legislature is supposedly debating whether to add another $5 or another $9 to each carton.  It was worse when I visited AZ a couple months ago, over $8 a pack and that was before the fed tax kicked in.  The level of hypocrisy is astounding, what will they do when we all are forced to quit?  My wife and I were looking at over $300 a month to continue smoking so we are quitting at the moment. However we are getting crankier and crankier and purchasing loads of 12-gauge and .45 ACP ammo with the money we save. I got a ticket for a seatbelt violation the other day for pulling out from a parking lot onto the road way as I put the seatbelt on. I was wearing the seatbelt when I was pulled over.  I have just about had it with this level of crap from government. I have lived my life far more responsibly than the fed or state government, but they are determined to criminalize us all in one manner or another.

Thanks for writing.

Hi Gary and Linda,

In response to Linda's Wednesday essay on tobacco taxation and regulation, I wouldn't worry too much about the economic effects of what I agree is the true goal ― prohibition.

People are accustomed to tobacco being relatively cheap, and there will be a relatively low limit on their tolerance for tax-and-regulation driven price increases.  This will put a natural and rather low ceiling on the revenue that the Washington pirates can realize from tobacco.  No matter, because a far more lucrative prospect is on the horizon.  One which, coincidentally enough, is also consumed by smoking it.

Ounce for ounce, marijuana on the black market (and is there any other at the moment?) is far more expensive than tobacco.  Our enterprising masters in DC, in their never-ending and increasingly desperate quest for plunder, will eventually realize that they could legalize pot, establish a price significantly lower than today's and composed predominantly of taxes, and literally make out like the bandits they are.

It will start with low-key trial balloons from the government "health" establishment, calling into question through "new and more advanced research" the previous declarations from that same establishment which declared the unequivocal menace of marijuana.  A wise investment strategy might be to short tobacco companies for the immediate future, but to take said trial balloons as a sign to go long.  After all, who will be better equipped for large-scale production of cannabis for purposes other than Woody Harrelson's hemp sandals?  Note carefully that this will have exactly nothing to do with the God-given right of every competent adult human being to decide for him/herself what substances will be ingested into his/her own private and personal body.

I'm calling it:  Within 10 years, tobacco will be a prohibited substance (and for that reason a black-market bonanza) while reefer (with a government-certified THC content) will line the shelves behind the cash registers of every Quikkie Mart in America. 

BTW, I appreciate Linda's byline from "The Republic of Texas."  I hope to live long enough to earn the privilege of citizenship in said independent Republic, under the benevolent guidance of President Ron Paul.

Best regards to all of the Agora crew!

Many happy returns. And thank you for writing. See you in Texas!

Gary, as a physician, I believe that anyone who chooses to smoke is a bit addled, but as a constitutionalist I will ardently defend his choosing to do so, although I would prefer that he do it somewhere I'm not.

Sounds pretty good to me.

I agree with Linda.  But, when I first heard of this bill, I read that RJR and Altria were in favor. This seemed odd of course, so I searched it out.  The bill also proposes that cigarettes would be deemed "unmailable".  This means that folks who buy smokes online or by mail order from Native Americans or tobacco co-ops will no longer to do so.  Of course this would pretty much put them out of business and largely favor "big tobacco".  And then of course there is the loss of revenue to the Postal Service.  A legal, taxed product that cannot be mailed.  Freedom is going up in smoke.

Freedom's always going up in smoke. I have some scientific evidence that indicates that 90% of humanity is genetically inclined to hate individuality and personal liberty. A small minority of us is born with a tendency to do as much for ourselves as possible and only trade fairly for what we don't have or can't do ourselves…without the force of the state behind us.

We'll discuss the evidence I have and my conclusions another time…

I drink on a regular basis and I welcome increased taxes on alcohol and believe smoking, sugar, corn syrup, etc should be taxed more too.  These are luxuries and also lead to health problems so I have no problems with an added tax.  If the government tried to outlaw them completely that would be problematic but as long as there is choice I see no reason to complain about some people scaling back or being priced out of a luxury good.  If you believe everyone is entitled to luxuries then maybe the government should subsidize yachts, luxury cars, etc so everyone can get one. 

A better solution than higher taxes on smokes would be to ban anyone that smokes from using government assisted healthcare for any illness/condition that has a high probability of being caused by smoking.  You can get treatment if you can pay out of your pocket otherwise it's between you and God. 

The same could be done with all the illegal drugs.  Make them legal, tax them and refuse government sponsored medical care to anyone with a history of drug use that is probable in the cause of the condition.  The government could grow revenue, reduce medical, court, prison, and police expenses all at the same time.  Next stop the wars, reduce military spending and we can make a big dent in the budget shortfall.  I realize more is needed but it is a damn good start from where I sit. 

It should be pretty damned obvious to all your Shooters that in this bar we really don't care what you put in your body ― nicotine, alcohol, cocaine, crack, smack, needles, razors… We just don't think it's anybody's business but yours.

But then you have people who think like this…

I don't smoke and I resent the hell out of having smokers foul my air.  I have a right to breathe clean air and they really don't have a right to foul the air I must breathe.  Your comments are full of venum.  I hope this reaches you because with these kinds of comments, I really want to respond.  I have a lot to say.  They can tax it all they want and I could care less.  By the way, I live in North Carolina and the health benefit the state pays to care for sick smokers amounts to more than the industry pays the state.

"But your nasty smoke is fouling my air." And the nasty exhaust from millions of vehicles and industrial civilization in general are polluting my atmosphere and warming my earth (maybe…I guess…). You don't see me complaining.

When I left NYC, smoking had been illegal in bars for a couple of years. So instead of the smoke remaining in the bar (where the patrons CHOOSE to go and ingest drugs on enclosed private property), all the smokers were forced by law to spill onto the street and blow their smoke into the faces of passersby.

No big deal because Congress will soon mandate that all smokers be rounded up and shot anyway. This is Modern America, after all! No one will have the right to do anything that has the potential to annoy other people…on pain of taxes and eventually death.

Now for the final word on this in today's Shot…but first a little explanation…

Your editor recently began a competitive powerlifting career after years of trying to get bigger and stronger in the gym. He spends an inordinate amount of time actually training and posting on training forums on the Internet.

If one trains seriously with a barbell, then by now one would have heard about Mark Rippetoe. A few years ago Coach Rippetoe co-authored a book by Dr. Lon Kilgore called Starting Strength that has gone on to become THE book on the form and mechanics of the basic barbell lifts, particularly the most important lift in the universe: the barbell back squat.

Coach Rippetoe is an avowed classical liberal from the Republic of Texas with an inimitable style and a way of phrasing tings. His online forum focuses on training, but he often allows the occasional political thread to blossom. Smoking and training came up a while back.

Here were Coach Rippetoe's last words on it, edited for more delicate readers. The emphases are mine…

Just so you'll know, I hate smoking. My parents smoked and I remember being a powerless little kid in the back seat unable to breathe. It stinks, it creates trash that I seem to always have to pick up, it causes health problems (which of course are your own business unless your f*****g government makes me help pay for them), and it adversely affects performance. I grew up with people that smoked, and I think that the VAST majority of people who smoke started because "their friends were all doing it", and that the VAST majority of people who still smoke do so because they are pussies who cannot make themselves quit (I'm sure that there are ex-smokers here that will have an opinion about that). I had to watch my father die of COPD because of smoking, having been rendered rather useless for several years prior. Nobody hates it worse than I do.

The ONLY thing I hate worse than smoking is the government telling me that I can't, in whatever form this coercion may take. If you want to "enjoy" your tobacco, go ahead. "Enjoy" it wherever you want to and wherever the owner of the private property allows you to. And God Damn to Hell the busybodies who want to make laws that tell me how I have to use my property that I paid for and pay taxes to keep. The post office and the municipal building are one thing, but local bars and restaurants, and even my gym, are quite another.

I realize that this is a different discussion, or that at least it should be, but don't confuse my hatred for your bad habit with a desire to keep you from doing it. I just wish it killed you faster so I didn't have to smell it as long. But I would NEVER use the power of government to make you act like I wanted you to.

Not much more I can add to that…except this…

Whiskey tenet number four: Taxes are either theft or coercion, usually both.

We got some response to that abiotic oil issue, too, but I think we've argued enough today. We'll be returning to the topic very, very soon, however.

Byron King will be stopping by tomorrow to show us how very hard oil is to get in the first place. Hope to see you then.

Beat the Market Without Penny Stocks

Today, we told you about the 10 best-performing penny stocks so far in 2009. Tonight, we wanted to tell you about another group of investments that have been absolutely on fire this year.

So far in 2009, our colleague has already given his readers the chance to cash in eight different triple-digit gains and six more double-digit winners. Possibly more impressive than that: Not a single one of his picks lost a dime of money.

He isn't doing something different this year. He's done this well every year for almost a decade. In just five years with him, you could have turned $5,000 into $1 million. If you were with him from the beginning, that $5K would be worth nearly $1.9 million.

Because of his success, we want to share with you how he does it.

Since Steve Sarnoff, options guru, relaunched his elite e-mail Alert Service, Options Hotline, on Oct. 24, 1999, with an initial recommendation to buy Barrick calls...the profit opportunities for his readers have just doubled and tripled and quadrupled...again and again and again.

If you had invested $5,000 in that first recommendation and in every recommendation that followed, you could have grown that small sum into to a quarter of a million by Dec. 3, 2000.

Then half a million dollars by Sept. 30, 2002.

And then to...$1 MILLION by Dec. 2, 2004!

His track record: 100% winners in all of 2008, 2007 and 2005!...92% winners in 2004! 90% in 2003! Steve's record just keeps getting better and better!

WOW! $1 MILLION in a little over five years with a startup investment of just $5,000 in each pick! I'm so sorry you missed the ride. But get ready. Because you're invited to:

Join Steve as he shows you the way to the next $1 MILLION...it's simple and straightforward and we'll show you how with Steve's one weekly option buy recommendation

His readers call him "prophetic." Read on to find out why.

The best stock market of the past few years has produced very few millionaires. You just can't make a million dollars with a $5,000 initial investment on a nine-year average annual return of 1.63%. To do so would take you more than 400 years. . You'll never live to see it, and neither will your grandchildren, great-grandchildren, even your great-great-grandchildren.

Hello, I'm Steve Sarnoff, recognized options expert and the editor of Options Hotline. I'm here to tell you that even if you've never traded options before, you can do it. In fact, it's quite possible you could grow over $1 million richer...just by buying one option a week...in as little as five years. My proven system is all you need.

In the time it takes you to read this letter, I'm going to show you step by step how you can trade options with a minimum of risk and a maximum chance of profits.

Just ask one of my subscribers, Mr. Eckert: "My very first trade using your service was the GE August $30 call. I couldn't be happier with the 116% profit in just three weeks!"

Or Donna, who says, "I am very pleased with your recommendations, especially with the Bank of America. It's unbelievable for it to be up more than 200% in just a few days."

Mr. Abbott, another one of my happy subscribers, confirms, "Joining Options Hotline was the best decision I've ever made...since I joined -- three months ago -- I have doubled my money."

Why are we getting such rave reviews? Simple. I have the track record to prove it: My wins have overpowered my losses, and my small group of readers has had the chance to reap $1 million in profits in just over five years.

And I'm not talking about a million-dollar portfolio that looks good on paper...I'm talking about the type of wealth you have only imagined. Seriously...$1 million on just one investment a week!

Enjoy Doubling Your Money! We have a track record with more than a 100% average gain on every pick since November 2006.
Compare that to the pitiful average yields of the S&P and Nasdaq! Here are a few highlights from my decisively winning trading record:

Of the 8 options I recommended in the final 10 weeks of 1999, 7 were winners, ranging from a 17% gain on DJX puts to a 628% gain on Intel calls. You could have made $87,000 on those 8 picks...and lost only $5,000 on one trade.

In 2000, I recommended 32 options that triggered (meaning the option reached the price I recommended for buying). That year, readers had the chance to pocket $173,214.55 in total profits with only $5,000 into each play - MORE THAN DOUBLE what we saw in 1999

In 2001, the year of the terror attacks, I made 45 recommendations that triggered. We had some big winners. GM puts gained 1,202%, or $60,000! Pfizer puts, 431%! Biopure puts, 341%! Total profits that year could have been as high as $216,164

In 2002, we crossed the HALF-MILLION-DOLLAR MARK when the 3M puts recommended on Aug. 16 of that year gained 103%! Total that year - $205,101!

How can I claim such amazing track record gains year after year? Simple. I look at the highest price the option gets to after I recommend it and that's the gain I record in my portfolio. So, you can be sure that the gains I talk about here are the biggest and best possible. And the potential profits are the best you'll see.

Are you noticing a winning pattern here?

In 2003, only 4 of the 39 triggered picks I recommended lost. Readers could have racked up $189,463.32 by investing $5,000 in every pick.

In 2004, I cut my losers in half! Only 2 out of 36 lost! And we HIT THE $1 MILLION MARK on the iShares 20+ Year Treasury Bond Fund calls first recommended on July 16, 2004. You could have added $221,300.36 in total profits to your income that year and lost only $363.50! That certainly shows how your wins can overpower your losses.

In 2005, we simply stopped picking losers at all! Every pick was a winner! A 100% win rate. You could have added $217,523.58 by selling your options at the high mark.

In 2006, we picked 36 options that triggered. All but three were winners. The most profitable pick at its peak was a whopping 300%! You could have added $150,375.28 by selling at the right time.

In 2007, our winning streak continued! Every pick a winner. Nearly 40% of the picks were triple-digit winners too. You could have added another $202,635.16 to your bank account ― without losing a single penny!

That's right! Since hitting the first million-dollar mark on July 16, 2004, we've given readers the chance to make another $892,043.04 in profits since. We're closing in on our next million dollars, and I'd like to invite you to join us in this upcoming profit bonanza.

An unbelievable record: I haven't picked ONE loser since November 2006! Steady consistent winning on only one pick a week ismy No.1 million-dollar strategy.
It works. If you follow my recommendations, it can be your killer strategy, too!

In fact, my win rate for 2004 was 92%. That's right, 92% of the weekly picks I recommended could have made money. In 2003, it was 90%.

And in 2005, 2007, and 2008...I didn't have one losing pick. I was 100%!! You simply won't find a better record anywhere else.

In 2008, for example, I had 36 picks that triggered. Only five did not. My average gain was an astounding 127% ― with total gains possible of over $229,000!

You can even check it out for yourself. I've attached my personal Pick-by-Pick Proof Sheet that lists every recommendation I have made since 2006. Like I said before, the gains are calculated at the highest point of each of my actionable option recommendations (meaning the ones that triggered) after I have alerted my readers. You'll see what happened!

While I do not issue specific sell recommendations, with my proven selling strategies, you'll learn how to minimize your risk and lose as little money as possible.

In fact, when we reviewed the over 110 examples of winning options recommended in the past three years and how well they could have done, we found that …

The average gain was over 100% on each recommendation. That's doubling your money on every play! The highest gain was a monstrous 611% on the Newmont Mining December $45 calls in August of 2007. That's enough to turn your one $5,000 investment into $30,550!

The top 39 winners of the past 3 years were all triple-digit baggers! Winners like

472% on Bed, Bath & Beyond February $40 put, recommended on December 18, 2005

420% on Newmont Mining June $40 puts, recommended on April 10, 2005

399% on Qualcomm August $35 calls, recommended on July 10, 2005

366% on SPY November $152 puts, recommended on October 29, 2007

300% on Bristol-Myers March $25 calls, recommended on November 19, 2006

283% on TLT September $89 puts, recommended on March 5, 2007

266% on Newmont Mining March $55 puts, recommended on January 25, 2006

210% on FedEx July $110 puts, recommended on May 1, 2006

205% on Coca-Cola September $55 calls, recommended on August 2, 2007

366% on SPY November $152 puts, recommended on October 29, 2007

569% on Citigroup July $20 puts, recommended on May 25, 2008

439% on QQQQ December $43 puts, recommended on Sept. 21, 2008

These triple-digit winners have been great. Big winners like this are a real high, and when I make any recommendation, that's certainly my goal. Over one-third of all my recommendations from 2005 through 2008 were triple-digit home runs.

But the real secret to making a million dollars with just one pick a week...is not just hitting the triple-digit home runs now and again, it's the solid base hits and the steady stream of winning picks...9%, 21%, 40%, 62%, 80% gains on almost every one.

It's why acting on only one play a week can work. You're not wasting time and risking large amounts of money taking a scattershot approach of buying dozens of options hoping one will sell big for you. Instead, you could be focusing on the one winning trade that matters...week after week after week.

IN FACT, if you were to average out the gains on my picks for the past 9 years since 1999, you'd get about a 115% average gain on each and every play. That's more than double your money average on every pick!

That's enough to turn a $5,000 investment into $10,750 on every play!

Compare that to the pitiful returns of the S&P 500 and the Nasdaq for the same time period:

S&P 500: 1.63 % average annual return from 1999-2007! Actually, from January 1999 through December 2007, the S&P's TOTAL cumulative return has only been 14.7%! 14.7% in 9 years. It's pathetic!

The Nasdaq has done worse....0.64% average annual return and 5.8% cumulative return in that time. That's worse than a savings account …

And forget about 2008! The markets fell up to 40%, sometimes whipsawing around with volatile swings of 3-5% a day!

Just how fast do you think you could build real wealth with those sorts of returns? Perhaps your entire life. It would take more than your and my lifetime of investing combined to even hope to get anywhere near a million dollars on 1.63% and 0.64% returns.

I think you'll agree that my way of trading options is certainly the fastest and easiest way (and it's less risky too - more on that in a moment) to make your FIRST MILLION DOLLARS.

So now you may be asking...

What are options... and why doesn't everyone invest in them?

For far too long, options trading has been shrouded in mystery for the average investor. But no longer. I've been studying options my entire life (my dad, Paul Sarnoff, was a brilliant master options expert), and I have to tell you it's the one investment that truly offers limited risk for unlimited gain.

Many people don't invest in options, because they've listened to all the misconceptions or myths of options trading. Perhaps the No. 1 myth of options trading is that options are too risky, but that simply isn't true. In fact, you can make money trading options in up, down or even sideways markets.

Trading in the actual underlying best stocks to buy is more risky, as more of your money is on the line when you purchase a best stock. You can buy an options contract for as little as $100 and see it double in price in a short period of time. You certainly don't see stock prices of 2010 doubling very often or witness the spectacular gains in stock prices that you do in options.

Another big myth is that most options expire worthless...but as you'll soon see from my profit-building strategies, you should sell the option long before the expiration date to maximize your profit or minimize the loss.

So don't stay on the sidelines and miss out on the huge profit potential of options any longer...not when you allow me to be your expert guide and I have an astonishing "double your money" potential in average gains on every pick since 1999! Just take a look at my year-by-year gain-and-loss chart. The proof of success is in the numbers!

I won't give you a detailed explanation of options, because frankly, at this point, you don't need one. Right now, you just need to know how they work and how to profit from them. (I am offering TWO FREE BONUS REPORTS that will serve as your crash course in options. You'll get both of these gifts just for trying out Options Hotline.)

Simply stated for our purposes...an option gives you the right to buy or sell 100 shares of a specific top stock to buy at a certain price within a set period of time.

If you expect a best stock to rise in the future, you buy a call, the right to buy the best stock at a certain price. If you expect a best stock to fall in the future, you buy a put, which is the right to sell the best stock at a certain price. You're not actually buying or selling the best stocks for 2010, just the "option" to do it.

And that's what makes option trading a real profit shield against disasters and world events...hurricanes, oil shortages, high gas prices, terror bombings, sluggish consumer sales...whatever! If the best stock market goes bearish, then I start looking for puts to recommend to take advantage of the down market.

And we've seen some pretty hefty wins on puts recently. Take a look:

366% on SPY November $152 puts

52% on FedEx October $100 puts

68% on MetLife September $60 puts

130% on Allstate April $60 puts

569% on Citigroup July $20 puts.

And you don't actually have to exercise an option to make money. In fact, all of these staggering gains could have been made on buying and selling the option!

The secret of "SUPER-LEVERAGE"...and how it can make you far richer in a short period of time!

"Super-Leverage" is, quite simply, the potential to make large profits from changing prices while strategically limiting your risk. The instruments of Super-Leverage are nothing fancy...just exchange-traded puts and calls. It's the simplest strategy, but most often, it's the most effective.

The BIG advantage to you is that you don't need to be a financial wizard or have large sums of money to participate. Remember, you can purchase an option for as little as $100!

The disadvantage is that options are wasting assets. And if the underlying security doesn't move enough to give you real value before a specified date, your options will expire worthless. It is a risk...but you're only out the price of the option.

Here's a play from 2007 I recommended that shows you the power of Super-Leverage at work:

On September 17, 2007, I recommended to my readers that they..."Buy the Johnson & Johnson January $65 call, for $200 or less, good this week".

What this means is that I'm recommending readers buy one options contract at $200 (or less) for 100 shares of Johnson and Johnson stock at $65 a share sometime before the third Friday in January. Options always expire on the third Friday of the month.

Now, if the Johnson & Johnson stock climbs higher than $65, your option starts to increase in value. Why? Because you have the option to buy them at $65 a share when others are willing to buy them at a much higher price.

Say Johnson & Johnson rises to $70...that means you can "exercise" your option and buy 100 shares at $6,500 and sell them for $7,000, for $500 in profit minus the $200 (or less) you paid for the option - or $300 net profit. Not bad - a 4% potential return on your investment!

But if you sell the $65 call option (instead of exercising it), in fact you could have sold your option outright for a maximum of $425 and pocketed a return of 112%! Since I suggest a $5,000 investment, at a 112% return, you could have sold it for $5,600 in net profits.

Now that's Super-Leverage, and why options are so profitable...and why you need to risk only $5,000 on my one weekly recommendation.

Here are a few more plays I recommended that produced the HUGE Super-Leverage gains in just a few days, like Mr. Carson's:

Coca-Cola Sept $55 calls, 206% in 8 days

FedEx October $100 puts, 52% in 1 day

Exxon Mobil May $80 calls, 107% in 4 days

UPS July $70 put, 48% in 1 day.


You see why there's no need to buy a lot of options and risk a large amount of your money and hope for one big win to make up for all the losses. I closely look for the one option to buy each week that can make you huge profits in a short time. It's my full-time job...not yours.

My dad Paul Sarnoff was one of the legends in options trading for more than 40 years. Wall Street turned to my dad for the best in options trading advice. He is to options what Warren Buffett is to best stocks to buy - a genius! In fact, it was my dad who started Options Hotline, his private options advisory service available only to a select few, back in 1989.

About 30 years ago, my dad brought me into the "family business" - sort of a Sarnoff & Son. For years, I literally soaked up every word he ever spoke about trading options for big profits. I watched him trade. I listened carefully to his reasons. I analyzed his every pick. I did what he did. It was awesome to watch a master trader at work.

As his apprentice, I saw firsthand how my dad raked in profits. And I'll always remember what my dad said to me nearly every day: "Son, options are the best...perhaps the only way to get rich very quickly."

While I was learning trading secrets from my dad, I also earned my college degree, worked on the floor of the Commodity Exchange and founded my own research company, developing my own charting and analytical techniques to build on what my father had taught me.

In 1995, Dad asked me to join him as co-editor of Options Hotline. I was proud that this options genius felt I was ready to join him as his equal. Sadly, my dad passed away in 1999, but his legacy lives on through me and the ongoing success of Options Hotline.

My first solo recommendation was Barrick Gold calls on Oct. 24, 1999. Not my best pick, with a 100% loss, but I made up for it with my next four picks ...

Home Depot calls, 289%

AMEX calls, 150%

Disney calls, 315%

Cisco calls, 386%.

In fact, my next thirteen recommendations were all double- and triple-digit winners!

As a subscriber to Options Hotline, you'll get more than 50 years of my dad's options experience...combined with my over 30 years of technical analysis...for 80 years of options experience you can depend on to give you the winning picks.

I just don't know where you would find a more authoritative source for profiting from options. But don't take my word for it.

Triple-digit gains without buying, selling or owning a single share of stock! That's Super-Leverage in action!

To illustrate that point, one of my subscribers, Earnest L., told me, "My very first trade using your service was a 50% gain. My second trade is hard to believe, a 750% gain in one working day."

Even though I have had a 100% win rate since November of 2006, I want to make sure that you know losses occasionally do happen. I had three in 2006. But also remember...your risk with options is LIMITED to the cost of the option...not the underlying best stock to buy.

But again, you have my promise that I'll show you wins will overpower our losses and you will steadily and surely get the chance to make money - week after week, month after month, year after year...more on this promise later...

To pick the steadily consistent winners, it takes me a week of painstaking research. I thoroughly study the market technicals, the economy and the impact of events upon the market's direction. I diligently research the companies whose underlying best stock to buy is the foundation of our options picks.

It's why I only make one solid recommendation at the end of the week. It's the one pearl among swine. And it's why my track record is so good. Quality, not quantity.

Plus, I don't stay in just one area of the market. You can see by my Pick-by-Pick Proof Sheet that I'm researching whatever sector of the market has the potential for big profits...commodities, hi-tech, retail, financial, consumer products and services, health care and others.

This all-around diversity immediately minimizes your investment risk, so you're never heavily weighted in one area of the market. In other words, your investment eggs are all over the place...dodging risks and discovering profits.

And I also employ a unique charting system with a proprietary computer screening program that I personally developed that allows me to be just a little bit "prophetic" in picking the options that can return single, double and triple the gains...90-100% of the time! I am unable to reveal the details of these systems, but again, you can see that they work on my undistorted Pick-by-Pick Proof Sheet.

Don't waste a minute wondering what option to buy...
I'll pick 'em. You decide if you want to play 'em. And together, I'll help you make a million dollars!

Obviously, the hardest part about trading options is picking the right options...BUT you don't have to worry about that at all. With my personal Options Hotline Alert Service, you'll get one extremely well-researched recommendation per a week on Sunday night, in plenty of time to call your broker by the opening bell Monday morning if you feel confident in my play.

I suggest you follow each and every one of my recommendations. That's the one proven way I know of that you can be sure that your wins overpower your losses. If you were to cherry-pick week to week, I would be unable to maintain my promise to you of steady incremental gains week after week after week. But the choice is ultimately yours.

The main reason people fail at trading options is that they play too many of the wrong options, hoping for one winner. But one trade per week is all you need. You can clearly see by my attached 2006-2008 Pick-by-Pick Gain Sheet that this strategy DOMINATES! 100% in 2008, 2007, and 2005! 92% wins in 2004...94% in 2003.

Action Item No. 1 toward your MILLION-DOLLAR GOAL: Think it over and call your broker first thing Monday morning and make the play I told you about Sunday night. You won't be sorry.

Now here's how you can make the Million-Dollar Plays to help you achieve Super-Leverage profit potential on every play.

Up until now, I've told you about the importance of buying the one option every week that I recommend. That's the "pick 'em" side.  

Now, let's talk about the "play 'em" side. Here are a few of my proven million-dollar plays to make sure you MINIMIZE your risk and MAXIMIZE your profit potential. If you decide to trade, follow these simple rules. 

The trick to making money with options is simply to play...and to keep playing. I would suggest that you don't pick and choose what recommendations I offer. Be consistent and play each recommendation every week. Staying in the game will help you have your wins overpower your losses.

Take the emotion out of your selling. You'll lose for sure if you get too attached to any trade. So decide on a profit target based on the price of the underlying best stock to buy, not the option. To help you, each option recommendation I offer includes a target price for the best stock to buy.

You'll discover all of my trading strategies in my TWO FREE BONUS REPORTS I'm offering to my new subscribers: Secrets of a Master Trader: Tips and Strategies for Making a Fortune in Options...AND The Options Buyer's Handbook.

Find a time in the day to review your options and stick to it. It may take you only 15 minutes or up to an hour each day...but do it! As my track record proves, I don't know too many jobs where you can work 15 minutes a day with the potential to make over $200,000 a year!

In options trading, greed is always whispering in your ear, saying, "Hang on, don't sell. It's going to go up/down even more." Don't listen! Be disciplined. Be smart. Grab your profit targets when you reach them and sell.

There's always another winning option coming to you next week. Remember the old adage and believe in it with your heart and soul - maybe even embroider it on a pillow...

No one ever lost money taking a profit!

You can see by my record that I find every winner I can. And you can too!

If you faithfully call your broker every Monday morning and buy one contract, 10 contracts, 100 contracts - whatever you're willing to invest (I suggest $5,000 a trade, but talk to your broker about what's right for you) - on the one recommendation I have made that week...

...and then monitor your open options position at least 15 minutes a day, following your predefined, well-established playing strategies I've outlined above...

...then you can calmly, consistently, increasingly...add profits to your bank account...all the way to a million dollars and more!

My readers have already had the opportunity to do just that in just over five years...with just one option a week. It's not too late for you to start.

Some days, you could add tens of thousands of dollars. Other days, a few hundred dollars. Now and again, you may take a hit...but judging by my undeniable record of picking winners, it won't be that often.

Are You Ready to Become a Millionaire?If so, then send for my next recommendation immediately.

Are you ready to start making consistent gains on my winning recommendations? Isn't it time you joined the savvy readers who read Options Hotline and start building a million-dollar bank account...and retire rich beyond your wildest dreams?  

Mr. Kinsey knows. He e-mailed me this happy report: "Profits, Profits, Profits!!! In Friday at $1.55 and out Monday at $2.20. That is a quick 41% profit in less than two trading days. It just doesn't get any better than this!"

And Mr. Greene made even more: "I am more than happy and very much satisfied with a net 185% profit in only 13 days!"

The question is...are you ready for mind-boggling profits? Or are you content to invest in the paltry annual returns of the best stock market and live in fear of outliving your savings? It's your decision, but...

I think you're ready for my next winning recommendation. Here's how you get it:

Make More Money Than You Ever Thought Possible...

You've been selected to receive this offer because I believe you have what it takes to make a fortune in options. Remember, the hardest part is knowing the right option to buy. The rest is just strategy.  

And with your subscription to Options Hotline, I tell you the EXACT OPTION to buy and teach you the profit-playing strategy and discipline you need to squeeze every drop of profit out of a play without risking a lot of money. This service is not for everyone. You need to have confidence that you can exit the play at a good time for you.

All you have to do is call your broker with my once-a-week recommendation, determine your selling strategies and spend at least 15 minutes a day monitoring your open positions.

In just weeks, days or months...you could be making more money than you ever dreamed possible.

With annual potential returns averaging over $180,000 a year, you'd think I'd ask you for at least 10%, or even 5%, of the take. Well, the subscription price is nowhere near that. In fact, it's only $750...less than 1/2 of 1% on the historical average annual gains! Not much of an expense when you think of the wealth possibilities awaiting you.

Absolutely Zero Risk To Try Us Out!

Plus, you have an absolutely No-Risk 100% Money-Back Guarantee. If for some reason you're not happy with Options Hotline, you can always change your mind and cancel within 30 days. You can start slowly. Consider buying just one contract of whatever I recommend next Sunday night. 

Then buy next week's recommendation and the one the week after that. Or just play on paper.

See where you are in 30 days. That should give you plenty of time to see if my service is working for you.

And if you're not happy with the results in those 30 days, then call us and cancel. No questions asked. You'll get a full refund on your subscription.

If you want to have a little more time to decide if Options Hotline is right for you, sign up for my automatic and convenient quarterly billing - only $260 a quarter. That way you can cancel at any time. It's a great way to take my service for a proper test-drive. We'll bill your credit card every quarter until you tell us not to. No hassle. You just stay with us for as long as you're happy.

And if my amazing winning track record is any kind of predictor...then I predict you'll be with us for a very long time.

If you're wondering if it's worth it, then just read what my subscriber J. Atwood says: "Thanks to you, I made 190% on the eBay call in 32 days and 198% on the Qualcomm call in 16 days. Keep up the good work."

For such an affordable service, here's what you get:

 Options Hotline Delivered Sunday Night via E-Mail

This is the very core of my service...and your chance for big profits! Your one- or two-page Options Hotline Alert is delivered Sunday evening in plenty of time for you to read it, digest the information and phone your broker first thing Monday morning.

You'll find my recommendation of the week, written out exactly in the words you can say to your broker, to ensure accuracy. You'll also get my "behind-the-scenes" thinking about why I believe this recommendation is a potential double- or triple-digit winner, and a brief overview on what's going on in the best stock market of 2010. I'll also review the status of our open positions, to help you plan your selling strategy. 

Midweek Updates on Open Positions

Since options can move fast, I've also included midweek update Alerts so you can review again where you are on all of our open positions. We'll talk about the direction of the option price, the underlying stock price of 2010, resistance and support levels (concepts thoroughly explained in your TWO FREE BONUS REPORTS) and where I see it all trending.

This expert information will guide you to making your smart selling decisions. Look for these midweek Alerts every Wednesday afternoon in your e-mail inbox. 

Frequent Recommendation Update Alerts on Fast-Moving Options

Sometimes, underlying stock prices and options are moving so fast I can't wait for the midweek to get a notice out to you. So I'll send out a very brief "heads-up" on a best stock to buy for 2010 so you won't miss the move. This Alert is sent "as needed," so I can't tell you how frequent they may be. But these Alerts are another layer of information to help you make your most profitable selling decisions. 

Important Bonus! Exclusive Free 24/7 Access to My Subscriber-Only Web Site

With the Internet, you're never out of touch. You get unlimited access to the Options Hotline Web site 24hours a day, every day. This password-protected members-only access is FREE with your subscription. Here you can download the latest recommendations, midweek updates and frequent Alerts from any computer - very convenient for when you're traveling.

You can also review my past recommendations as well. Plus, you'll have online access to a wealth of information about options and options trading from a comprehensive glossary of terms to special bonus reports and FAQs. Answers to your options questions are just a click away, so check in at any time.

It's a valuable offer that can put you on the road to a million dollars in profit.

Subscribe now and I'll also give you...

Two BONUS GIFTS That Are Your Crash Course on Options!

In addition to the comprehensive source of information you will find on our subscribers-only Web site, I'm offering you two FREE handbooks that will help you use the Options Hotline service to its fullest. Separately, each handbook will give you a working knowledge of trading options, but together, they're the perfect crash course on options.

Start your options education today with these easy-to-read guidebooks, both written in everyday English, so you're up to speed on options in no time:

1. The Options Buyer's Handbook
Click the subscribe button below to join and download this FREE handbook immediately. Inside its pages, you'll discover just what you need to know about buying options. Learn the basics of options, how they work, when to buy and sell and what it all means in this informative handbook...FREE and instantly available with your subscription.

2. Secrets of a Master Trader: Tips and Strategies for Making a Fortune in Options
The secret to winning at options is to keep playing. Options are not like the lottery or the luck of the draw. It all boils down to your selling strategies (especially since I'm telling you what to buy each week). To really succeed, you need a plan of action. And Secrets of a Master Trader is your playbook. It contains the secrets of two of the best options analysts the business has ever known...my dad, option genius Paul Sarnoff, and me.

You can't get secrets like this at any bookstore or Web site. They're reserved only for subscribers to Options Hotline. You'll receive these exclusive Secrets via e-mail the moment I hear from you.

Read the details about how my TWO FREE BONUS GIFTS will give you the chance to profit trading options on the enclosed flyer. Please don't pass up this chance to profit on the unlimited potential (but limited risk) of options trading with your subscription to Options Hotline.

 

The Proof Is in the NUMBERS. Take a Look at...Steve Sarnoff's Options Hotline 2006-2008 Pick-by-Pick Gain Sheet
Here's a complete list of Steve's closed picks since his last loserback in November 2006.
Gains range from 4% to 611%. Judge the six-figure results for yourself.



 

Date Recommended



 

Play Recommended



 

$ Risked



 

% Gain/Loss*



 

$ Gain/Loss

November 12, 2006

Plantronics February $20 call

$5,000

80%

$4,000.00

November 19, 2006

Bristol-Myers March $25 call

$5,000

300%

$15,000.00

December 3, 2006

American Standard April $45 call

$5,000

220%

$11,000.00

December 3, 2006

J.C. Penny January $75 put

$5,000

4.44%

$222.22

December 10, 2006

Alcoa January $30 call

$5,000

10%

$500.00

January 8, 2007

Microsoft July $30 call

$5,000

50%

$2,500.00

January 22, 2007

Newmont Mining June $45 call

$5,000

88.46%

$4,423.08

February 2, 2007

Cameco March $40 call

$5,000

19.23%

$961.54

February 5, 2007

Intel July $22.50 call

$5,000

224.8%

$11,240.00

February 12, 2007

Allstate April $60 put

$5,000

130%

$6,500.00

February 26, 2007

Monsanto April $55 put

$5,000

165%

$8,250.00

March 5, 2007

TLT September $89 put

$5,000

282.86%

$14,142.86

March 12, 2007

Panera May $60 call

$5,000

20%

$1,000.00

March 19, 2007

Pan American Silver July $30 call

$5,000

DID NOT TRIGGER*

---

March 26, 2007

QQQQ June $45 call

$5,000

96.8%

$4,840.00

April 2, 2007

Boeing April $90 put

$5,000

26.19%

$1,309.52

April 16, 2007

Exxon Mobil May $80 call

$5,000

106.67%

$5,333.33

April 23, 2007

UST October $60 put

$5,000

DID NOT TRIGGER*

---

April 30, 2007

UPS July $70 put

$5,000

48.39%

$2,419.35

May 7, 2007

DIA July $130 put

$5,000

8.57%

$428.57

May 14, 2007

Toyota July $120 call

$5,000

DID NOT TRIGGER*

---

May 21, 2007

Verizon October $45 call

$5,000

44%

$2,200.00

June 4, 2007

Schlumberger August $80 call

$5,000

151.28%

$7,564.10

June 11, 2007

3M July $85 put

$5,000

38.24%

$1,911.76

June 18, 2007

Target October $65 call

$5,000

122.22%

$6,111.11

June 25, 2007

Hecla January 2008 $7.50 call

$5,000

262.16%

$13,108.11

July 9, 2007

General Electric December $40 call

$5,000

114.19%

$5,709.46

July 16, 2007

Merrill Lynch August $90 call

$5,000

65.71%

$3,285.71

August 2, 2007

Coca-Cola September $55 call

$5,000

205.88%

$10,294.12

August 6, 2007

MetLife September $60 put

$5,000

67.8%

$3,390.24

August 20, 2007

DIA September $130 put

$5,000

80.83%

$4,041.67

August 27, 2007

Newmont Mining December $45 call

$5,000

612%

$30,575.76

September 9, 2007

Citigroup October $45 put

$5,000

45.41%

$2,270.27

September 17, 2007

Johnson & Johnson January $65 call

$5,000

136.11%

$6,805.56

September 24, 2007

FedEx October $100 put

$5,000

52.17%

$2,608.70

October 1, 2007

Disney January $35 call

$5,000

28.57%

$1,428.57

October 8, 2007

Marathon Oil November $60 call

$5,000

66.67%

$3,333.33

October 16, 2007

Amgen January $60 call

$5,000

8.84%

$441.77

October 29, 2007

SPY November $152 put

$5,000

366.1%

$18,305.08

November 12, 2007

Merrill Lynch December $55 call

$5,000

137.14%

$6,857.14

November 19, 2007

Starbucks January $25 call

$5,000

33.33%

$1,666.67

December 17, 2007

Walmart March $50 call

$5,000

80%

$4,000.00

December 26, 2007

SPY January $150 call

$5,000

14.22%

$711.11

January 14, 2008

Barrick February $50 put

$5,000

176.19%

$8,809.52

January 21, 2008

Wells Fargo April $25 call

$5,000

318.18%

$15,909.09

January 28, 2008

Caterpillar March $65 put

$5,000

28.85%

$1,442.31

February 3, 2008

QQQQ April $47 call

$5,000

7.14%

$357.14

February 11, 2008

Barrick Gold March $50 call

$5,000

28.86%

$1,442.86

February 25, 2008

Wachovia April $35 call

$5,000

24.32%

$1,216.22

March 3, 2008

Chubb March $50 put

$5,000

88.89%

$4,444.44

March 11, 2008

Baxter April $57.50 put

$5,000

88.57%

$4,428.57

March 30, 2008

DuPont July $50 call

$5,000

170.97%

$8,548.39

April 6, 2008

Crocs June $20 call

$5,000

52.73%

$2,636.36

April 13, 2008

CSX August $55 put

$5,000

8.05%

$402.30

April 20, 2008

Qualcomm May $42.50 put

$5,000

45.63%

$2,281.25

April 27, 2008

Newmont Mining June $45 put

$5,000

50.00%

$2,500.00

May 11, 2008

Chevron June $95 put

$5,000

12.90%

$645.16

May 20, 2008

Duke Realty September $25 call

$5,000

22.22%

$1,111.11

May 25, 2008

Citigroup July $20 put

$5,000

569.35%

$28,467.74

June 14, 2008

General Electric July $30 call

$5,000

44.83%

$2,241.38

June 22, 2008

JP Morgan Sept. $40 call

$5,000

379.59%

$18,979.59

June 29, 2008

Cigna August $35 call

$5,000

255.83%

$12,791.67

July 13, 2008

SPY August $125 call

$5,000

131.12%

$6,555.94

July 20, 2008

Coca Cola November $50 call

$5,000

146.21%

$7,310.61

July 27, 2008

TLT December $88 put

$5,000

20.83%

$1,041.67

August 17, 2008

SPY October $130 put

$5,000

300.00%

$15,000.00

August 31, 2008

Cisco October $25 put

$5,000

153.85%

$7,692.31

September 5, 2008

Exxon October $75 call

$5,000

177.78%

$8,888.89

September 14, 2008

Goldcorp January $30 call

$5,000

151.35%

$7,567.57

September 21, 2008

QQQQ December $43 put

$5,000

439.20%

$21,960.00

October 22, 2008

QQQQ November $30 put

$5,000

140.00%

$7,000.00

October 24, 2008

Intel December $15 call

$5,000

142.55%

$7,127.66

November 2, 2008

General Electric December $20 call

$5,000

183.93%

$9,196.43

November 2, 2008

QQQQ December $32 put

$5,000

183.93%

$9,196.43

November 9, 2008

Caterpillar December $40 call

$5,000

74.55%

$3,727.27

November 16, 2008

Wal-Mart December $50 put

$5,000

40.00%

$2,000.00

December 7, 2008

Archer Daniel Midland March $30 call

$5,000

16.36%

$818.18

December 14, 2008

Bristol-Myers March $25 call

$5,000

22.40%

$1,120.00

December 21, 2008

TLT January $120 put

$5,000

20.00%

$1,000.00

2006-2008 TOTAL GAINS: $582,275.63

If you enjoy the thought of making six-figure gains every year, then you're cordially invited to join my small, elite group of subscribers and start making gains from options trading. Just one investment a week and $5,000 per trade is all you need to trade your way to a million dollars in a few short years.

*DID NOT TRIGGER means the price I recommended buying the option at was not
reached, therefore a trade could not have been placed or triggered.

Please Note:
Gains are based on all triggered picks, assuming exit point at peak option value. Percent gain represents the percentage change at the subsequent high value, from the trigger price. Profit calculations do not factor in commissions and taxes. Any dates not mentioned in the portfolio signify weeks when the bulletin was not published. All other dates and recommendations are included.

Get a THIRD FREE bonus report with your No Risk Trial Subscription to Options Hotline.

Simply sign up in the next three days and I'll send you a third FREE bonus report, my Options Hall of Fame.

Go deep inside 5 of my top options picks and discover how easy and inexpensive trading in options can be...even for the most timid of investors. Gain insight into the big profit plays that can not just double or triple your profits...but I'm talking almost nine times the profit potential on just one option play!

You'll see superleverage in action in these 5 hall of famers and understand how to apply it you your own million dollar plays. Remember, each of my weekly options play may be the next double, triple...almost quadruple digit profit play!

See the details below to get your free copy of my Options Hall of Fame.

It's the Easiest Decision You'll Ever Make!

As my track record proves, my subscribers consistently have the chance to make money from Options Hotline. If you're having any doubts at this point, please review one more time the above 2006-2008 Options Hotline Pick-by-Pick Gain Sheet. 

And remember, the gains are piling up on just one top-notch option pick a week. You're not out there spread thin or confused with multiple plays happening. You're focused on just what I've recommended. I know options trading is not your full-time job.

One pick a week and monitoring your open positions for 15-30 minutes a day will be simple enough to add into your busy lifestyle. And I'll make it easy and efficient for you to build a million-dollar cash portfolio.

I guarantee you will benefit from a subscription to Options Hotline or your money back. This service is one of the oldest of its kind in the industry...almost 16 years of offering winning options picks to my readers. First, with my dad, and then solo with me since 1999.

Since going solo, I gave my readers the chance for their first million dollars on July 16, 2004. Now, I can't give you an exact date in the future when I'll hit the second MILLION DOLLARS. But I know it's out there and it's coming very soon. And I want you to be with me on the day we hit it.

And with my 30-day Money-Back Guarantee, if you're not satisfied, you can cancel within the first 30 days and receive a full refund.

So click the subscribe button below and join my thousands of happy, rich subscribers, like longtime options trader Jack Grossman, who says, "I had subscribed to many newsletters, but none was as concise, to the point and, above all, made money almost all of the time. Thanks a bundle. Keep up the good work."

Now, it's your turn to make a million dollars!

Don't Put off Your Million-Dollar Lifestyle Anymore!

Click the subscribe button below to get started. You'll get your first recommendation via e-mail this Sunday. Or if you would prefer, you can fax your order to 410-558-6362.

Just think...you could be richer by this time next week, even dramatically wealthier by this time next year. After all, we've seen on average hundreds of thousands a year in potential profits. There's no reason why you can't achieve the same success as my current readers have.

Now I'm inviting you to join my small, elite group of readers who will profit most from the world of options trading. This group is now experiencing a lifestyle they only once imagined. Your invitation is risk-free. You have 30 days to cancel for a full refund...or sign up for quarterly billing and cancel at any time.

Only one option pick a week is all you need and I'll send you my first recommendation this Sunday night, via e-mail. Then look for my one recommendation every Sunday night thereafter (except for Christmas, New Year's and my two-week summer vacation).

Introducing the Energy Internet

"$700 billion in new electricity generation will be needed over the next 20 years."

"Overall transmission modernization, including new higher capacity lines along with the communications technology, could cost as much as $1 trillion."

"A promise of $4.5 billion in economic recovery money for smart grid development, much of it going to help pay for installing new meters, has produced a rush by utilities and technology companies to start or accelerate projects."

All that came from just one Associated Press story this week.  

You think there's a bit of interest in the smart grid?

Everyone's trying to get a piece of this thing.  

For investors like me (and my readers), who have seen this coming for a while, taking profits has never been easier.  It's really been like shooting fish in a barrel.  We've had more double-digit winners in 2009 than weeks in the year.

And the media is pumping up the smart grid like crazy. . . selling it like an infomercial.

Here's how the AP categorized business interest in the opportunity:

"Hundreds of technology companies, fledgling venture capitalists, longtime corporate icons and almost every major electric utility company want to be part of [smart] grid modernization."

Given the serious implications for savvy investors, you should want to be a part of it as well.  

This Is the Energy Internet

The technology the smart grid will usher in is also making mainstream news.

Here's how the same AP article described the future you've been waiting for:

. . . Home thermostats and individual appliances that adjust automatically based on the cost of power, and water heaters that can draw power from a neighbor's rooftop solar panel. They see a time when, on a scorching hot day, a plug-in hybrid electric car charges one minute and a few moments later sends electricity back into the grid to help avert a brownout.
Also coming are utilities that get instant feedback on a transformer outage or shift easily among energy sources from wind turbines to coal-burning power plants and back to the turbines when the wind begins to blow again.

And, from miles away, power companies will peer into homes and businesses, then automatically lower thermostats or adjust power use, depending on demand and prearranged agreements.

Indeed, the technology is impressive. Bob Gilligan, a VP at GE, says, "It's the marriage of information technology and automation technology with the existing electricity network. This is the energy Internet."

And according to Michael Jung, director of the highly successful smart grid start-up Silver Spring Networks, "The hurdles are not technological. They're really policy hurdles."

But even those are being worked on as Uncle Sam shows his support for the smart grid.  

The stimulus alone dedicated $4.5 billion to the cause.  And the DoE recently opened the funding gates when they raised the individual grant limit to $200 million. . . from just $20 million.

Plus, the energy bill working its way through Congress contains a minimum nationwide efficiency standard that will bolster the effort.

Bureaucratic bigwigs are also flexing their muscle.  Obama and Biden have offered dozens of sound bites on the subject. Energy Secretary Chu has called implementing the smart grid an "urgent national priority."

That's not the only thing that's urgent— so is staking your claim.

I'm not joking when I say some of these smart grid stocks have gained 300% since Obama was elected. Take a look:

smart grid stocks

I've guided Alternative Energy Speculator readers to multiple double-digit wins in this sector.

Taxing Tobacco Stocks

The great financial minds in Washington are at it again, starting another war. As usual, it is "for our own good" and will make twenty-eight per cent of the adult population miserable while destroying a large industry and reducing tax revenues sharply. Does legislation get any better than that?

This time they're making war on another weed, one that has been a favorite in America since before the time of Pocahontas. The Nicotine Nazis are on the rampage and propose to turn tobacco over to the FDA to "regulate." The FDA intends to start by mandating the removal of all additives, including menthol, and my girlish laughter is going to dissipate as the smoke does.

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Since the sound byte medical types and MSM are convinced that smoking is worse than sex was to Victorians most citizens will doubtless think prohibiting tobacco (the real proposal; regulation by the FDA is merely the first step) is a fine solution that will lower health-care-related costs even though the jihad of the last thirty years has had no effect. The usual Liberal logic was applied: you may not smoke, but all diseases are tobacco-caused so either you are ill because of "second hand smoke" or you took a puff behind the woodshed when you were thirteen and forty years later you got cancer because of it. Smoking has become the easy, automatic answer for cause of death and is probably implicated in cases of suicide and car crashes.

This isn't about making Linda snarl at the world; we're interested in the economic effects ― which will be catastrophic. Ten years ago I spent $72/month on my two-pack-a-day habit. Taxes have been piled on to the point that the carton of cigarettes that cost nine dollars then is well over fifty now. Think of that as fifty-buck lattes or fifty-buck movie tickets.

"Sin" taxes are a favorite for revenue and those of us who enjoy a little tot of Irish or a glass or two of (heart healthy) red wine are subject to truly sinful and prejudicial new taxes ― at least one raised recently by 537% by Mr. "I'm not going to raise your taxes unless you make a quarter of a million a year." We got the usual equal treatment before the law: all smokers and drinkers are penalized.

Has anyone consulted the Carolinas to see what effect knocking R J Reynolds off the Big Board is going to have?

What about the shareholders there and of P. Lorillard and others? What about my solicitous neighbors who voted a ten dollar a carton tax last year to procure more "social services" before Mr. Obama added his ten dollar a carton tax to already outrageously punitive fees? The loss in tax revenue will be enormous and governments don't understand about reducing spending when income falls. Adjusted for inflation something like eighty per cent. of our cherished smokes are pure tax revenue, and guess what? Non-smokers are going to have to "sacrifice" to make up for that loss.

A black market will surely spring up, which may account for the BATF ruling that all purchases of fifty cartons or more must be reported to them! Even if all taxes are paid. Seriously. You have to fill out a form including your license plate number and full personal data.

Travel and tourism...a higher percentage of Europeans and those from the Middle East smoke and I know what my rule is: If I can't smoke, I don't go. How appreciative are New York, Las Vegas, and Miami going to be when the French and Germans say "non" and "nein?" Who cares how good the exchange rate is if a monsieur can't even buy a pack of Galoises or an American brand or smoke within twenty-five feet of a doorway? Will there be revenuers, so to speak, wandering around the country hunting tobacco patches and sniffing the air? Why not? There are some of those jobs Mr. Obama claims he is going to create. Will foreigners get special dispensations or will customs confiscate their cigarettes for failing to meet US standards?

Attempts to legislate morality and lifestyles always fail and always have nasty consequences. If there hadn't been prohibition Joe Kennedy would never have made a fortune running rum and we would have been spared Teddy in the Senate all these years. Why not ban sugar, which is far worse for you than fat, and ban the substitutes too? (Because the Stevia producers do not have the lobbies that sugar, Equal, and Splenda do.) Put enough social engineers to work and we could wind up with everyone in the country loathing everyone else and set new records for assault and battery.

Most of you probably don't smoke and don't see what the fuss is about; you even believe my health will improve if I am treated like a toddler. (Will I live longer if I stop smoking? No, but it will seem that way. Mostly, it is my choice, not the government's.) My bleeding ox may not move you, but how do you feel about the proposal you be taxed for every mile you drive? I don't drive a hundred miles a month, while lots of you drive several thousand. Will you like having your car fitted with a device that records your mileage (at your own expense) and allows the government to track your every move? They don't intend to lower the incredible taxes on gasoline, either. It will be argued that you deserve it because you are using more than your fair share of the gasoline and doing more than your fair share of wearing out the roads.

You know how it goes, people: When you don't protest when it happens to us, they'll come after your butter, cheese, salt, red meat, Cokes, cell 'phones, and roofs that are any color other than white. In times past coffee, tea, and chocolate have all been taxed and chances are that most of you regard one of the three as an invigorating "must have." They look like prime targets for revenue-hungry governments once the evil weed is outlawed.

Laissez faire, people, laissez faire. Let's all take responsibility for our own choices and pay for our own vices and stop regulating and taxing others for theirs.

Let us hope that wiser ― or more rapacious ― heads prevail in the latest campaign of the war against tobacco.

Now to business. You could call your broker this morning and sell tobacco short before it occurs to a lot of people that the proposed policy would destroy another large industry and a major source of income. Even though I expect a fall in tobacco stocks I'm more inclined to think we should hold off until we see what sort of support Dr./Senator C can garner. There could be some good short-hold bargains to be picked up but your timing will need to be impeccable ― and keep a firm eye on your "greed" gene. Maybe scoop up a handful when the gloom is deepest but promise yourself faithfully that you'll dump it when you have a modest profit.

I'd have to look at current prices and what tobacco stocks have done for at least the last year, but I'd be feeling pretty antsy when I had a twenty-five per cent. profit, and I'd begin charting volumn and price daily when I was ten per cent up. By the time a stock had recovered half it had lost it would take a squad of Marines to keep me from selling. Nuthin' wrong with a quick little ten to fifteen per cent., you know, and a lot right about it.

As volatile as the market has been you can lose, get lucky, or make your decisions ahead of time. I have never lost serious money by selling too soon; I've lost it by not having faith in my judgment and buying or by not paying attention and missing a major sell signal.

How about a quick identity check? I'm a trader, the spiritual descendent of robber barons, and believe in hoisting the Jolly Roger, a quick capture, putting a prize crew on board, and on to the next opportunity. How many of you think in terms of "investing for the long term?" My bet is that most of you are traders who believe in stashing spare cash in metal or you wouldn't be here.

I dunno'… Maybe what we all need is for government to deliver the foods they want us to eat directly to our homes and make sure the things that have even a remote chance of harming us are all banned…

While they're at, they could test all of us at an early age and see what occupations we're most suited for and make sure that's exactly what we're doing with our lives. You know, to maximize our happiness and security. They could decide how much each of us makes and ensure that no one has too much more than anyone else.

To make implementation easier, they could build all housing in the nation ― entire cities, even! Plenty of efficient clinics and security cameras everywhere, including the homes they generously built for us…for our health and safety!

If we get on it now, we could have a perfect society in about Five Years.

Across the vast reaches of the editorial room Whiskey contributor and LIR editor Jim Nelson laments, "I tried to watch a Sarah Palin interview…I just couldn't do it. I did try though. Just couldn't."

Your editor's ears perked up. A few of the other editors asked for a little clarification. Jim obliged:

"Apparently sending a check to every citizen in Alaska is not socialism. Yep, it's okay for the Alaskan government to divvy up the natural resources and make sure everyone gets a fair share. That's not socialist…but Obama is."

Your editor bit his tongue gently and left the room.

So…about that oil…

Got a question for Mr. King concerning Peak Oil.

I read over the last few years a couple of reports questioning the "biotic theory" of oil formation as opposed to the "abiotic theory". To this day I have never heard or read any convincing rebuttal other than simple denial of the fact. What troubles me is that apparently it actually is a fact that large recoverable oil reserves have been found in non-sedimentary basins by the Russians. If so, wouldn't that impose some severe limitations to the Peak Oil theory? Sure it might not affect the short term of oil, but looking at the medium to long term, it seems to me the equation is dramatically altered.

Would really appreciate your view to help me make up my mind.

I've passed this question along to Byron and will let you know what he has to say in a future issue.

Allow me to take this chance to point out that Byron King and fellow regular Whiskey contributor James Howard Kunstler will both be on the Whiskey Bar panel in Vancouver. I hope to heaven someone brings up abiotic oil. There'll be plenty of booze beforehand so this ought to be really good.

To make sure you're there with a good seat.

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Friend of the Whiskey Room Matt Savinar has addressed abiotic theory on his website LifeAfterTheOilCrash.net:

A handful of people believe oil is actually a renewable resource continually produced by an "abiotic" process deep in the Earth. As emotionally appealing as this theory may be, there is absolutely no evidence for it. While many of the people who believe in this theory consider themselves "mavericks," respected geologists consider them crackpots.

That's a little harsh, but it is accurate. Hydrocarbons are essentially condensed sunlight. The nearby continual nuclear explosion in space we know as The Sun bombards our little rock with the entire spectrum of electromagnetic energy. The life forms we lump into the plant kingdom capture that energy and store it as glucose. The life forms we lump into the animal kingdom get their energy by eating the plants or by eating the animals who eat the plants.

A long time ago the corpses of microscopic plant life got buried by random geological movement and cooked at high pressure and temperature deep in the earth. The results ― depending on the pressure and heat ― are the hydrocarbons we use today: natural gas, light sweet crude and the heavier, harder-to-use stuff that's beginning to look more appealing.

Point is this. Hydrocarbons are the result of biological life, not the result of natural geological processes in the earth's mantle. The energy hydrocarbons hold ultimately comes from the sun (which itself is just an enormous cloud of single atom hydrogen collapsing under its own gravity and giving off energy by means of nuclear fusion).

The earth isn't pouring forth the stuff we need. Abiotic promoters point to refill from nearby fields as evidence of abiotic production. We wish it were that simple, but as the plaque above the bar reminds us: "You can't get something for nothing."

The day grows long and Whiskey web production associate Adam "The Adamic Bomb" Hopkins will grow angry if I don't send him today's issue to prep for the send by the deadline. He's asked nicely, but I see the promise of violence behind his eyes.

We'll meet again around the same time tomorrow.

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