StockBullz.com: Your Daily Stocks Blog

I got this book as a Christmas present and I finished reading it this week. I have to say it opened up my mind to new ways of thinking about investing.

First off, the book is written by Dan Denning. He has a pretty succesful investment newsletter published by Agora.

The first few chapters focus mainly on how the US has gotten into the trouble it's in right now and what are the possible side effects. It is some ok background history. Some may consider it filler while other readers like this approach. I found it interesting.

A vital concept that all investors should understand is that we have already begun a major shift in the balance of power in the world today. America was the sole world power for the past ~100 years but this is quickly ending. The balance of power is moving east to Asia, most notably China and India.

Denning says he prefers investing using index funds and options. He says that putting money into a single stock involves too much risk but mutual funds eat your money so index funds are the perfect balance. He talks about several strategies in buying options on index funds too.

Another strong point he makes is that he is 100% sure oil will hit $100 soon because of one sole factor: the strait of Hormuz. I was always bullish on oil but I never thought of it in the way he mentions in the book. Basically, all Iran has to do is either block this straight or blow up a ship and all hell breaks loose.

If you don't believe me look at this map:

And fact is, that over 40% of global oil exports pass through this narrow channel (only 34 miles wide at its narrowest point). Denning really does a great job detailing what might happen and it's worth reading the book just for this chapter.

So although Denning likes index funds best, he admits that there are some companies that offer great value and great potential for upside movements. They are:

1. BG Group - for LNG
2. Bunge - for food production
3. Kennametal - for thier carbide tools
4. Kepco - for energy production in South Korea
5. BHP Billiton - best way to play Chinese raw material needs

Unfortunately, Denning, like 95% of American writers ends up searching the globe on different ways to invest in commodities and he doesn't put enough focus on Canada. They are all being ignorant but Denning makes up for it by mentioning other solid companies and making predictions I believe in. Every commodity investor should read it! Get it at Amazon for a great price and help support my little blog here.