AverageJeremy

So who's running this crazy rollercoaster anyways?!

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It certainly isn't the Fed or Mr. Bernanke. If they were in control there wouldn't be such radical gyrations in the stock market before and after a rate cut. There is so much volatility right now that anything the Fed does makes little difference to those with all the money. And right now the sovereign wealth funds control some of the largest amounts of that money. Countries like China, Norway, Singapore, the United Arab Emirates, and Saudia Arabia make up the largest percentage of the sovereign wealth funds. These funds have already brought cash to the beleagured financial markets in the U.S. You might remember a couple of months ago when Citigroup was on the receiving end of $7.5 billion. That money came from sovereign wealth funds and is just a small drop in the bucket of what the funds have in the way of money. For example, the Abu Dhabi Investment Authority is estimated to have almost $900 billion under management. To put this in perspective they could buy Exxon with cash and still have enough left over to buy Bank of America and Citigroup. And the fund that Saudia Arabia is working on starting will dwarf the Abu Dhabi fund with its estimated $2.5-$3 trillion in assets. And all of these sovereign wealth funds are becoming more and more concerned with the dollar's downward tailspin. That is mainly due to the fact that most of what they sell, namely oil, is bought and sold in dollars. There have been a lot of rumblings of late about changing the price of oil from dollars to euros or some other world currency that is holding up better. Many of the countries that I have mentioned above also have a vested interest in making sure that the dollar doesn't completely crash since the United States is the largest consumer of oil in the world still. So, many of these countries are playing the part of good global citizens by helping out with the financial crisis here in the U.S. by plopping a few billion here and there into these financial institutions to buy themselves time to figure out how to get their money out of a plummeting dollar and into something else without crashing the whole system. Eventually these sovereign wealth funds will begin moving their money into better investments than the U.S. currently has to offer instead of the billions in U.S. treasuries and short-term U.S. government securities that these sovereign wealth funds currently hold. And with the price of virtually everything going up and the dollar losing its value that's not a good thing for these countries right now. So, in short, with all of the money managed by the sovereign wealth funds of the world a new paradigm is starting to unfold. The biggest question now is, "Where are the sovereign wealth funds looking to invest the trillions of dollars that they're sitting on?"

Sorry for rambling on about all of that. I just felt that I needed something to help explain why my fund currently has certain holdings. As we progress for the next 5 or 6 months I will try to discuss one stock that I have purchased and why on a fairly regular basis.(I hope) I will also talk about stocks that I have recently sold and why. And of course I will probably ramble on about things that are going on in the world and the markets with each post. I certainly love to hear comments from people about whether I should just stop blabbing nonsense or if anything was helpful or insightful.

So, without further rambling, my stock of the month is General Moly Inc (GMO). This stock has been in my portfolio since January 16. This company is a U.S.-based moly mineral development exploration and mining company. Molybdenum, or moly, is a metal that is used in numerous applications from aircraft parts and missiles to plasma TVs and fuel cells. Moly was once used to make samurai swords stronger and sharper without making them brittle. Moly also has the fifth highest melting point of any element. Molybdenum has been on fire with over 600% gain in price since its lows in 2000. There is also growing demand for moly for just about anyting being built nowadays. The uses of moly are almost limitless. It has been used for all kinds of industrial building including pipe coatings, oil super tankers, and nuclear reactors. As demand grows so does the price of moly and GMO is in a prime position to rake in massive profits over the next decade as long as the price of moly continues to rise. I got in to GMO under my $10 buy price and I am currently sitting on nearly a 25% gain in less than 2 months. I see commodities and alternative energy being the "hot" stocks for the rest of 2008. Another place to watch is in foreign markets such as the B-R-I-C countries, Brazil, Russia, India, and China. These countries will continue to grow at a rapid pace even with a slowdown in the United States. I hope that this has been informative and helpful to anyone that reads this post. Good luck in the competition and happy investing.

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