Ian Cooper - Angel Publishing

Crisis Investing

Note: As part of our ongoing educational Wealth Daily series, including How to Invest in LEAPS, How to Invest in Options, and Lockup Expirations, I wanted to bring your attention to the topic of Crisis Investing. Enjoy.

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After the December 2007 assassination of Prime Minister Benazir Bhutto, the Karachi Stock Exchange plummeted along with Pakistan stocks... with a delay caused by a government suspension of trading.

On the market's reopen, Pakistan's financial markets were plunged into economic and political uncertainty, as fears of waning foreign investor sentiment raged.

But where there's crisis, there's wealth.

It's known as "blood in the streets investing" or "crisis investing."

While the investing approach may seem like a cold, heartless, cheap way to make a buck, it works. As the masses are selling, those who can stomach the wreckage step in and buy quality companies at significant discounts.

Take the unfortunate Bhutto assassination, for example. Investors waited for the news to be fully disseminated, and for the news to begin tapering off, at which point, they bought the damaged stocks, and waited for a recovery.

You see, crisis breeds opportunity, and it's been exemplified many times. Again, let's look at Pakistan stocks following the Bhutto assassination:

· Had you bought MCB Bank (MCBBI) for example after a fall from $14 to $12, you stood to profit on the recovery from $12 to more than $15.

· NetSol (NTWK) fell from $2.75 to about $1.75, only to recover from $1.75 to $2.50.

· Pakistan Oil & Gas Development (ODVCI) fell from $21 to $18.50 only to recover to $22 shortly thereafter.

History of Crisis Investing Opportunities

In 2007, for example, the Bovespa sold off and later recovered based on the market's absorption of U.S. rate hike fears. Those who sold at or near the bottom of the sell-off missed the opportunity to profit as the IGBC rose 402.03 points, or 6.5%, two days later, and to pre-fear levels a year later.

In 2001, for example, severe political and economic crises stripped 50% off the Turkish lira, as hundreds lost their jobs. But had you bought the "crisis investment" opportunity, buying shares of strong, but beaten-down companies, you'd have made a small fortune. Turkcell, for example, plunged from $24 to $1.50 only to recover to $16.52 following the crisis.

Even George Soros has used crisis investments to his advantage. He made a billion dollars in one day playing England's Black Wednesday currency crisis.

Truth told... When crises, such as Bhutto's assassination, occur, be prepared to buy. Crisis investing may sound cold, but it's proven to be profitable.

How To Invest in Post- Musharraf Pakistan

Faced with growing threats of impeachment by the ruling coalition government, Musharraf gave in and announced he was stepping down. "After viewing the situation and consulting legal advisers and political allies, with their advice I have decided to resign," Musharraf said. "Please accept this decision. I am not thinking on personal levels, but Pakistan first. Take care of Pakistan."

And it was no surprise when Pakistani stocks flew on news that President Pervez Musharraf was stepping down. We had a crisis over Musharraf and political turmoil. We had our opportunity to buy on Musharraf's announcement. Crisis bred an opportunity.

So it came as no surprise when the Karachi Stock Exchange jumped about 5% to 10,719 on the news. Investors were buying the opportunity on the expectation that the change would end political deadlock

While there's still time to buy the post-turmoil stocks we mentioned above, the rally's sustainability will depend on who replaces Musharraf and how the fiscal policies would be resolved.

Crisis investing - you can buy the whole seat, but you'll only need the edge.

Good Investing,

Ian L. Cooper
http://www.wealthdaily.com

P.S. Options Trading Pit Has Launched

With the fall of the UK economy, subprime, Alt-A, and banking institutions, the major breakdown of the Dow... and my latest predictions of US and global economies spiraling out of control, the markets in the coming months will offer some incredible investment opportunities.

While some of you may know me from past options trading services, my 4,500% cumulative gains of 2007, and gains such as these...

* Fremont General September 2007 12.50 puts - 291% in 16 days
* Lennar January 2008 25 puts - 279% in 40 days
* Pulte January 2008 15 puts - 224% in 40 days
* New Century January 2008 25 puts - 214% in 16 days
* Centex January 2008 25 puts - 207% in 40 days
* Countrywide January 2008 27.50 puts - 203% in 69 days
* Thornburg October 20 2007 puts - 188% in 6 days
* MGIC Investments December 35 puts - 175% in 80 days
* Capital One January 2008 65 puts - 160% in 59 days
* Accredited Home September 2007 7.50 puts - 141% in 4 days
* Hovnanian November 2007 17.50 puts - 136% in 13 days
* Radian Group August 2007 60 puts - 122% in 19 days
* Standard Pacific September 2007 15 puts - 111% in 2 days
* Autonation January 2008 20 puts - 105% in 49 days
* New Century January 2008 25 puts - 89% in 1 day

...we've decided to launch Options Trading Pit, looking to profit from the market's demise as well as its upside.

But know this... We're not your typical options trading letter. We use an aggressive trading approach... taking gains in as little as days to months using options and LEAPS to fully maximize gains.

Just ask yourself... Will you have a problem profiting as others suffer? And will you have a problem raking in profits from oversold gems?

If the answers are no... click here for more.

"The Worst is Yet to Come..."

If I hear one more banking CEO reference baseball metaphors for how deep our financial crisis really is, I'll scream. Truth is - we're no where near finished with the downturn. Honest.

Smart analysts like Meredith Whitney know this. I know it. And you know it. It's just the banking world and the naïve that actually believe we're nearing a market bottom.

Richard Fuld, for example, once told us the worse of the crisis is "behind us."

JP Morgan Chase's Jamie Dimond believed the market debacle is "maybe 75 percent to 80 percent over."

Remember when the Merrill Lynch CEO said the subprime crisis was "reasonably well contained"?

Or when FDIC Chairman Sheila Barr said we're in the 7^th inning?

Or when Morgan Stanley said we're in the 3^rd inning?

Or even when Morgan Stanley CEO John Mack says the 8^th inning... maybe even top of the 9^th?

Truth is we're lucky if we're in the top of the 6^th inning of a double-header.

But truth be know, "The worst is yet to come in the U.S.," according to Kenneth Rogoff, former chief economist at the IMF.

From Bloomberg.com:

"Credit market turmoil has driven the U.S. into a recession and may topple some of the nation's biggest banks, said Kenneth Rogoff, former chief economist at the International Monetary Fund."

"The financial sector needs to shrink; I don't think simply having a couple of medium-sized banks and a couple of small banks going under is going to do the job.''

"The U.S. housing slump has triggered about $500 billion in credit market losses for banks globally and led to the collapse and sale of Bear Stearns Cos., the fifth-largest U.S. securities firm. Bonds of regional banks such as National City Corp. and Keycorp are under pressure on expectations of more fallout. Rogoff, 55, said the government should nationalize Fannie Mae and Freddie Mac, the nation's biggest mortgage-finance firms."

"Freddie Mac and Fannie Mae ``should have been closed down 10 years ago,'' he said. ``They need to be nationalized, the equity holders should lose all their money. Probably we need to guarantee the bonds, simply because the U.S. has led everyone into believing they would guarantee the bonds.''

"Banks repossessed almost three times as many U.S. homes in July as a year earlier and the number of properties at risk of foreclosure jumped 55 percent, according to RealtyTrac Inc., an Irvine, California-based seller of foreclosure data. U.S. builders broke ground on the fewest houses in 17 years last month, according to a Bloomberg News survey."

"Rogoff told a conference in Singapore today that the credit crisis is likely to worsen and a large bank may fail, Reuters reported earlier. He was the IMF's chief economist from August 2001 to September 2003."

"Like any shrinking industries, we are going to see the exit of some major players,'' Rogoff told Bloomberg, declining to name the banks he expects to fail. ``We're really going to see a consolidation even among the major investment banks.''

"The only way to put discipline into the system is to allow some companies to go bust,'' Rogoff said. ``You can't just have an industry where they make giant profits or they get bailed out.''

Oh, and don't forget that Option ARM resets, which will be worse than subprime, is right around the corner.

"It shouldn't come as a shock when mountainous Option ARM and Alt-A loans begin resetting and the second leg of the credit crisis begins.

Alt-A loans were given to borrowers with credit scores of between 620 and 700, and included the option of interest-only loans, option ARMs, and no documentation loans that required little if any documentation for loan approval. Ninety percent of those that got an Option ARM in 2006 provided little or no documentation.

Ninety percent!

And it's estimated that only 60% of Option ARM borrowers make only minimum monthly payments. Others estimate that up to 80%.

Say a borrower makes minimum payments on a $600,000 loan. That loan could easily be a $750,000 loan within two years.

And we're supposed to be shocked when this problem ends in the second credit crisis?"

I'd love to hear what you think. You can leave a message below.

Options Trading Pit Has Launched

Options Trading Pit Has Launched

While some of you may know me from past options trading services, my 4,500% cumulative gains of 2007, and gains such as these...

Fremont General September 2007 12.50 puts - 291% in 16 days
Lennar January 2008 25 puts - 279% in 40 days
Pulte January 2008 15 puts - 224% in 40 days
New Century January 2008 25 puts - 214% in 16 days
Centex January 2008 25 puts - 207% in 40 days
Countrywide January 2008 27.50 puts - 203% in 69 days
Thornburg October 20 2007 puts - 188% in 6 days
MGIC Investments December 35 puts - 175% in 80 days
Capital One January 2008 65 puts - 160% in 59 days
Accredited Home September 2007 7.50 puts - 141% in 4 days
Hovnanian November 2007 17.50 puts - 136% in 13 days
Radian Group August 2007 60 puts - 122% in 19 days
Standard Pacific September 2007 15 puts - 111% in 2 days
Autonation January 2008 20 puts - 105% in 49 days
New Century January 2008 25 puts - 89% in 1 day

...we've decided to launch Options Trading Pit, looking to profit from the market's demise as well as its upside.

But know this... We're not your typical options trading letter. We use an aggressive trading approach... taking gains in as little as days to months using options and LEAPS to fully maximize gains.

Just ask yourself... Will you have a problem profiting as others suffer? And will you have a problem raking in profits from oversold gems?

If the answers are no... click here for more.

Vice Stock Investing

Editor's Note:

Options Trading Pit Has Launched

While some of you may know me from past options trading services, my 4,500% cumulative gains of 2007, and gains such as these...

Fremont General September 2007 12.50 puts - 291% in 16 days
Lennar January 2008 25 puts - 279% in 40 days
Pulte January 2008 15 puts - 224% in 40 days
New Century January 2008 25 puts - 214% in 16 days
Centex January 2008 25 puts - 207% in 40 days
Countrywide January 2008 27.50 puts - 203% in 69 days
Thornburg October 20 2007 puts - 188% in 6 days
MGIC Investments December 35 puts - 175% in 80 days
Capital One January 2008 65 puts - 160% in 59 days
Accredited Home September 2007 7.50 puts - 141% in 4 days
Hovnanian November 2007 17.50 puts - 136% in 13 days
Radian Group August 2007 60 puts - 122% in 19 days
Standard Pacific September 2007 15 puts - 111% in 2 days
Autonation January 2008 20 puts - 105% in 49 days
New Century January 2008 25 puts - 89% in 1 day

...we've decided to launch Options Trading Pit, looking to profit from the market's demise as well as its upside.

But know this... We're not your typical options trading letter. We use an aggressive trading approach... taking gains in as little as days to months using options and LEAPS to fully maximize gains.

Just ask yourself... Will you have a problem profiting as others suffer? And will you have a problem raking in profits from oversold gems?

If the answers are no... click here for more.

Today's Wealth Daily: How to Protect Your Portfolio

Impressive market rallies aside, they don't mean that the U.S. recession or bear market has been called off... not yet anyway.

You see, not only do wild rallies happen during bear markets they are actually a defining aspect of bear market. Take a look at the Dow since the downside slide began in 2007 and you'll see a few triple-digit upside moves in a day.

Then, take a look at the five-year bull market that preceded our bear market, and you won't find many of the same triple-digit gains in a day... In fact, they were just about non-existent.

While it's likely we'll see more triple-digit gain days, we're still in a bear market... and things may only get worse. According to the Pew Research Center:

Between February and August 2008, the number of Americans that put inflation at the top of the "worry" list grew by 47%,
Two-thirds of the sample population said incomes were falling behind living costs,
72% of the sample believes we're already in a recession.
38% said they were having problems pulling together enough money for food cost

Yep, by now, most investors know that our economy is in real trouble.

Thanks to housing, energy, financial, and unemployment fiascos, the White House lowered its economic growth forecast this year and for 2009. For 2008, 1.6%, as compared to February's 2.7% projection is expected. For 2009, growth of 2.2% versus 3% growth rates is expected.

Says the Associated Press, "The U.S. economy has continued to expand, but growth has slowed as a result of the sharp housing decline, disruptions in financial markets and high energy prices," the administration said. "Because of the recent slower economic growth, the labor market is likely to remain sluggish for a period of time before returning to better performance," the White House budget office said.

But the news comes as no surprise.

It's just building on prior bad news of doubling oil prices, skyrocketing gold, a severely battered dollar, the sub-prime and credit crash, six consecutive rate cuts, and a domino effect of falling banks. Oh, and let's not forget about inflation, which which is rising at its fastest pace in 17 years.

But what most investors are unaware of is that throughout history, especially in recessionary environments, a select group of ignored stocks start to rally.

And they rally because, as a recession looms, there's no better way to feel better than to eat, drink and be merry.

Even with soaring energy costs, higher food costs, and troubled mortgages, folks are not prepared to relinquish some of their pleasures... including alcohol and cigarettes. It's a trend well-echoed in stronger financials from so-called "sin stocks."

Anheuser-Busch, for example, turned a profit despite fears of rising costs for glass, barley, wheat and even fuel. And it's so confident that sales won't diminish that it has plans to up prices for popular brands.

Diageo PLC believes that its brands, including Johnnie Walker whiskey, Smirnoff Vodka and Captain Morgan Rum won't be given up, even in an economic breakdown. Diageo even expects its Scotch whiskey business to grow another eight to nine percent annually, thanks to stronger global demand.

Even tobacco companies are doing okay. Philip Morris just reported that earnings rose 23% in Q2 and raised their earnings forecast for the year, saying it wasn't affected by inflation.

That's just to name a few.

During the Dot-com crash starting in March of 2000, for example, while the NASDAQ took its historic 70% plunge and the Dow tanked 14%, certain vice stocks started to take off. The Standard & Poor's Casinos and Gaming index, for example, gained 115%, while the S&P 500-stock index plunged 47%. Shares of tobacco giant Altria (then known as Philip Morris) more than doubled, and the stock of Anheuser-Busch, the largest U.S. brewer, skyrocketed 87%.

The best part - we're not investing in risky or wildcatter companies. We're investing in thriving, well-established businesses.

Here's a gaming stock during the Dot-com era that pulled in almost 400% gains as people sought the dream of "fast" cash...

That's just an example of one stock fueled by tough economic times.

We'll get into more examples, and which stocks to play shortly. Stay tuned to SC Trading Pit for more.

Good Investing,

Ian L. Cooper
http://www.wealthdaily.com

Green River Oil Stock

Weeks ago, we recommended buying into Warrior Energy (TSX-V: WEN) in Pure Energy Trader. But we didn't want you to miss the opportunity either. While, to date, we're up more than 25%, we do expect further upside.

This is a junior company focusing on the exploration and development of oil and natural gas in the Green River basin.

And we don't expect these guys to drop in the short term, not after announcing major operational milestones with two successful wells in the Strike project area.

As you may know, the Strike project is in the Green River basin of Wyoming. And, according to the company, the area is a "multi-play, unconventional gas resource play with outstanding economic potential characteristics." To date, the company has identified 77 new well locations on the project area.

That announcement was about the company's first well, the Strike State #11 (in which Warrior has a 20% working interest). The well was spud on May 20, 2008 and drilled to a depth of 11,145 feet. The initial production rate includes 152 barrels of oil per day and 1578 Mcf/day. That equates to a total of approximately 2,490 Mcfe (thousand cubic feet of gas equivalent).

At the second well, the Strike State #12 (Warrior also holds a 20% working interest in this well) was also completed with initial producing sales at 515 Mcf/day.

Due to the success of these two wells, Warrior believes their current net production will double. Additionally, the company intends to drill four more wells in 2008, spending about $4.2 million. It expects to begin drilling within the next 20-30 days.

Now there's news that the company acquired more oil and natural gas leases in the Green River Basin of southwestern Wyoming. This will increase the company's total leasehold position in the Basin to more than 5,000 net acres.

If you're new to Warrior Energy...

What makes domestic oil production companies even more attractive as long-term investments are the oil and gas discoveries, and the fact that these explorations are more appealing, given geopolitical tension.

You know as well as we do that prices would come down sharply if we started producing on our own. And it'd be a strong global signal that we're not willing to be hostages of oil rich companies.

Even the President agrees.

"Our problem in America gets solved when we aggressively go for domestic exploration," Bush said.

And we need all the oil we can get.

While the International Energy Agency's oil supply forecast won't be released until November 2008, there's growing fear of a sharp downward revision in supplies. That means supply could be much tighter than previously thought, a nightmare scenario if proven true.

Any pessimistic IEA view will shock the market, spawning oil super spikes. We've already seen prices rocket to $130, doubling year over year. And it'll only get worse on a dismal IEA forecast.

For years, the IEA has said that crude supplies and other liquid fuels would keep up with rising demand, topping 116 million barrels a day by 2030. But now there's fear that the IEA, basing findings on aging oil fields, could revise sharply lower and warn of a struggle to keep up with 100 million barrel a day demand over the next 20 years.

But IEA pessimism is nothing new. Just last summer, the IEA warned that spare OPEC capacity could fall to "minimal levels by 2012."

Even the U.S. Energy Department is embarking on its own supply studies, which could be finished by summer. But they, too, may have nothing positive to say. They already suggest that daily 73 million barrel daily output will level off at 84 million barrels. To then reach 100 million barrels a day by 2030, we'll need a sizeable boost from other fuel sources.

And if you need more of a reason for a rise to $150, $170, even $200, look no further than the Middle East.

Israeli-Iranian tensions over nuclear projects aren't doing much to help. There's a growing fear that in the event of war with Iran, the Strait of Hormuz (passageway for 90% of oil exported from Gulf producers) would be jeopardized. If that happens, we'd see an immediate oil super-spike.

Iran's Revolutionary Guards has already said it would impose controls on shipping in the Persian Gulf and Strait of Hormuz, which accounts for about 40% of the world's oil, if it were attacked.

Green River Oil: Warrior Energy (WEN.V)

This is a new natural gas company we're keeping an eye on with a focus on large undervalued assets in the Green River Basin (Wyoming).

We can tell you that the energy companies are drilling and applying for drilling permits like there's no tomorrow.

And Warrior Energy is no different. It's buying land on the cheap with expectations for considerable upside. They just paid $8 million for producing property with active development.

Warrior's current project - called Strike - consists of 3000 net acres with 11 producing wells that are already kicking off cash flow.

And the stock only trades at a scant sub-3 with long-term $10 potential upside.

Better yet, the future doesn't look too shabby.

Over the next two years they hope to demonstrate year over year growth of proven reserves, production and cash flow through acquisitions and development to justify $500 million in asset values.

The investment firm Macquarie gave Warrior a $50 million line of credit, which is huge for an early-stage energy company... and a testament to the company's game plan to increase production within a short period of time.

Again, this is a $10 stock now masquerading at $4. It was $3 just weeks ago.

Good Investing,

Ian L. Cooper
http://www.wealthdaily.com

This Only Affects a Third of All Homeowners Who Bought Over the Last Five Years

"Almost one-third of U.S. homeowners who bought in the last five years now owe more on their mortgages than their properties are worth," according to Bloomberg.com. And the numbers are rising fast.

But that may just be best case scenario. Implode-o-Meter says "it is widely thought the Zillow valuation estimates are high because they do not take in account many of the actual foreclosure related sales that made up some 42% of all sales in the state of CA last month and even a larger percentage in other ‘bubble states'."

What's scary is if the numbers are correct, housing prices and the broader mortgage market fiascos are going to get a lot worse before they get better.

Here's more from Bloomberg.com.

"Almost one-third of U.S. homeowners who bought in the last five years now owe more on their mortgages than their properties are worth, according to Zillow.com, an Internet provider of home valuations.

Second-quarter home prices fell 9.9 percent from a year earlier, giving 29 percent of owners negative equity, said Zillow, the Seattle-based service that offers values for more than 80 million homes. For those who bought at the 2006 peak of the housing market, 45 percent are now underwater, Zillow said.

Negative equity and declining prices are making it difficult for homeowners to sell property for a profit. Almost one-quarter of U.S. homes sold in the past year were for a loss, Zillow said. That contributes to the foreclosure rate because some homeowners can't absorb the loss and end up surrendering their homes to the bank that holds the mortgage, said Stan Humphries, Zillow's vice president of data and analytics.

``For homeowners who need to sell, this is a gravely serious situation,'' Humphries said in an interview. ``It can also be harmful to communities where the number of unsold homes adds more to inventory and puts downward pressure on prices.''

The highest percentages of homeowners with negative equity were located in California. In four of the state's metropolitan areas — Stockton, Modesto, Merced and Vallejo-Fairfield — the number of homeowners whose mortgage debts exceeded the values of their properties topped 90 percent, Zillow said.

In five more California areas — the Inland Empire (Riverside-San Bernardino), Bakersfield, Yuba City, El Centro and Madera — the percentages were more than 80 percent.

Foreclosure Sales

In Stockton and Modesto, more than half the sales in the second quarter were of foreclosed homes, Zillow said. Almost 15 percent of sales nationwide were foreclosures, the company said.

Prices fell on a year-over-year basis in 140 out of 165 markets, Zillow said. Pittsburgh, Oklahoma City and Austin, Texas, were among the markets that saw rising home values, the company said.

The 9.9 percent decline in home values was the largest on a year-over-year basis in at least 12 years, Zillow said. The median home price of $206,919 was the lowest since the fourth quarter of 2004, the company said.

``Sellers are starting to adjust their expectations,'' Zillow Chief Financial Officer Spencer Rascoff said in a Bloomberg TV interview. ``More sellers accepting a loss is actually a sign of optimism. It means that the transactions might start happening. There are so many sales contingent upon the buyer selling their home.''

The Zillow Home Value Index is the median valuation for a given geographic area on a given day and includes the value of all single-family residences, condominiums and cooperatives, regardless of whether they sold within a given period, the company said. The index at the national and metropolitan area levels is calculated using a weighted average of the median home value for each county, Zillow said."

Caution: High Risk Trade Ahead

JA Solar Holdings (JA) August 15 calls are seeing heavy volume of 6,397 ahead of Tuesday earnings. But it's an earnings trade, which warrants a tight stop loss policy of at least -25%. Be sure not to risk the house. Earnings, regardless of who is bullish, can go either way.

While the stock has seen better days, firms like AmTech still believe it'll double over the next 12 months. Here's what AmTech had to say, according to ClusterStock.com:

"We believe ASPs [average selling prices] remained strong in 2Q08

Despite demand uncertainty as a result of ' 09 legislative concerns, we believe estimates for JASO remain low based on Si procurement levels and scheduled capacity ramp

Early ' 09 ASP negotiations seem to be progressing well for JASO at down 5-10%. This is in-line to slightly better than we have been modeling, giving us further confidence in our ' 09 revenue estimates

We believe that JASO's balance sheet entering a period of legislative uncertainty is a significant advantage versus peers following its recent $400M convert

We believe that all poly shipments are currently on schedule after some internal poly production delays at Shunda earlier in 2008 (covered by M. Setek supply)

We expect management to increase FY08 shipment and revenue guidance given poly procurement levels and scheduled capacity ramp."

Again, this is an earnings trade. Use tight stop losses. Earnings can go either way. Do not risk the house. If you're interested, we'd recommend buying the September 15 JASO call (QJPIC). We're speculating on good earnings with a high risk trade.

Keep an Eye on Marvell

After refilling a bullish gap at $15, and consolidating, buyers are lining up for call options. There's also rumor of a buyout, with Texas Instruments named as a possible suitor.

So far today, here's what's been happening in the call option pits:

August 2008 15: volume of 17,667
August 2008 17.50: volume of 3,726

September 2008 15: volume of 1,133
September 2008 17.50: volume of 9,720

November 2008 15: volume of 4,022
November 2008 17.50: volume of 8,726
November 2008 20: volume of 7,430

That's amazing volume for the stock. While we're not sure what's happening behind the scenes, it's apparent that some one may know something.

If you're game, we'd recommend a buy on the November 17.50 calls (UVMKW). But don't risk the house. Part of the call volume may strictly be rumor-related.

Good Investing,

Ian L. Cooper

Haynesville Shale Natural Gas

By now, I'm sure you've heard of the Haynesville Shale. We've covered it extensively in Energy and Capital and in the pages of Wealth Daily. It was even recently covered on CNBC, weeks after we first brought it to your attention.

And if you've heard of the Haynesville Shale natural gas formation, you've also heard about Chesapeake Energy (CHK), a stock that helped Pure Energy Trader readers realize quick gains of 16% and 19% in less than a month.

But 16% and 19% are nothing, as compared to long-term gains we could realize, especially if the Haynesville natural gas find proves to be the world's fourth largest. CHK's CEO Aubrey McClendon has said the Shale could hold more than 250 trillion cubic feet of natural gas and supply U.S. needs for about 10 years.

Better yet, an insider just bought 750,000 more shares of the beaten down company, or $43 million worth of stock, and he's been a steady long-term buyer.

In April 2007, he bought 100,000 shares
In November 2007, he bought 50,000 shares
In December 2007, he bought 50,000 shares
In February 2008, he bought 200,000 shares
In March 2008, he bought 400,000 shares and another 100,000 shares
And just recently, he bought 600,000 and now another 750,000.

Nor does it hurt that a potential Hurricane in the Gulf of Mexico could send oil and gas cost higher; or that a war between Iran and Israel could lead to $200 oil on a closed Strait of Hormuz; or that the eventual reset of Option ARMs could lead to a weaker dollar.

But it's the Haynesville Shale that gets us the most excited.

The Haynesville natural gas shale is found in a vein approximately 11,000 feet underground.

Although the Haynesville shale is being touted as one of the largest onshore natural gas fields, it's a little too tell exactly how much natural gas is down there.

But it's not stopping companies from rushing to grab acreage in the play, including CHK, XTO Energy, Range Resources, and Quicksilver Resources.

As the third largest producer in the United States, Chesapeake is no stranger to natural gas. Natural gas makes up 92% of the company's production. With success in the Barnett, Marcellus and Haynesville shales, Chesapeake has had an impressive year so far.

In March, the company announced plans to develop its 300,000 acres in the Haynesville shale and expects to pick up another 200,000 acres in the future. Chesapeake even stated, "...the Haynesville shale could potentially have a larger impact on the company than any other play in which it has participated."

And it doesn't hurt that lawmakers are taking an interest in the Haynesville Shale.

"Imagine if tomorrow you could announce a new energy plan that would in one stroke cut your constituent's gasoline bill in half, reduce our oil imports, improve our air quality, enhance national security, strengthen the dollar, reduce greenhouse gas emissions and create tens of thousands of new jobs in the U.S," Aubrey McClendon said before Congress. "I believe your upcoming reelection chances would be even higher than they already are."

And several lawmakers already seem convinced, describing natural gas as a "bridge to a renewable energy future - and a replacement for coal."

Rep. Rahm Emanuel D-Ill. And Rep. Dan Boren, D-OK, for example, have already introduced a bill that could result in having 10% of all vehicles powered by natural gas by 2018. And, in addition to providing tax credits, the bill could also require that Big Oil companies install at least one natural gas pump at each of their stations, says a Forbes.com article.

And as for hurricanes, the CHK CEO says the days of being "concerned that hurricanes will damage the infrastructure for natural gas is ‘pretty much over.'"

Again, what's not to like? Buy. Hold. And sit tight with CHK. Patience will pay off.

Good Investing,

Ian L. Cooper
http://www.wealthdaily.com

Why Banks Need to Get Real

Ever since Meredith Whitney downgraded Citigroup, I've been a fan... and for good reason. Like me, Whitney believes the credit crisis is far from over, despite the clamoring talking head buffoons that think credit woes and housing debacles are bottoming.

Whitney even warned last year, and continues to warn, that the "incestuous" relationship between the banks and the credit-rating agencies during the real estate bubble will have a long-lasting impact on banks' ability to recover."

Here's more from Forbes magazine:

"You're going to have this stealth pressure on bank balance sheets until you start to see the ratio of downgrades to upgrades change."

"Whitney's bearishness has deep roots. In fact, she was the first analyst to sound the alarm loudly about subprime mortgages, predicting back in October 2005 that there would be "unprecedented credit losses" for subprime lenders. The problem, as she saw it, was that loose lending standards and the proliferation of teaser-rate mortgage products had artificially inflated the U.S. home-ownership rate."

"A lot of the new homeowners were in over their heads, she believed, and would have trouble making their monthly payments when home prices started to fall and their teaser rates got bumped up."

Her current concern is that banks aren't cutting costs or losses in loan portfolios quick enough. "On the cost side, she says, banks have yet to come to terms with the disappearance of the securitization market, which she believes will stay in hibernation for the next three years."

"Why does this matter? From 2001 through 2005, for every dollar of bank capital used to make mortgage loans, 10 were supplied via investors in mortgage securities. All that secondary-market capital is now sidelined, but the staffing levels of bank lending departments don't yet reflect it. "

"She also argues that banks need to "get real" about how they're valuing their problem mortgage-related debt, much as Merrill Lynch has now done. Merrill recently sold a large package of toxic mortgage debt for just 22 cents on the dollar."

"Whitney's idea of "real" is pretty drastic. Whereas most banks are estimating 20% to 25% peak-to-trough declines in housing prices, the Case-Shiller housing futures traded on the Chicago Mercantile Exchange portend a much steeper 33% decline, she points out."

"In fact, Whitney thinks the actual declines will be worse - closer to 40% - because of the loss of the securitization market and the paucity of mortgage credit available. And that means more defaults: "The consumer's ability to refinance his way out of trouble has diminished greatly."

"Whitney's critics, and there are many among bankers and analysts, contend her bearishness at this point shows she simply doesn't now how to measure the remaining downside risk. "

"Her response: If she has no idea how to properly value bank stocks now, it's because the metrics don't work. Price-to-earnings ratios are useless when earnings are nonexistent. And valuing banks on price-to-book ratios is just as futile. Those book values - which reflect underlying assets and liabilities - are moving targets."

Well, that, and a lot of bankers and analysts, as compared to Whitney, don't have the guts to tell it like it is.

American Express Stock

It could be a long time before American Express regains its credit throne. CEO Ken Chenault alluded to it himself, predicting further weakness in coming quarters because of economic malaise.

But it comes as no surprise to us.

We've been saying the same thing for months. Ignore American Express (AXP) stock because of its exposure to consumer debt. But no one listened.

AXP will be fine, they said. You're blowing the consumer issue out of proportion. "Ian Cooper has no brain," said one reader.

But we were right.

American Express just posted a Q2 profit that fell 38%, well below Street forecasts, as consumer spending slowed and the number of loans that were written off increased beyond expectations.

For Q2, the company posted net income of $653 million, or 56 cents a share, as compared to the $1.06 billion, or 88 cents per share posted last year. Analysts expected 83 cents this time around. Net loan write offs came in at 5.3%, as compared to 2.9% year over year.

The company also said the weakened economy would not longer allow it to attain a 4% to 6% growth rate this year. "The scope of the economic fallout was evident even among out longer term superprime cardmembers," said Chairman and CEO Kenneth Chenault.

Even that's not a surprise, as many debt holders can barely keep their heads above water.

Americans were carrying $960 billion of credit-card debt in May, up from $879 billion at the end of 2006. The average household with credit cards has a balance of $8,600, according to the Philadelphia Inquirer.

It only helps to confirm what we've said all along.

Here's what we reported in Wealth Daily on July 5.

American Express (AXP) continues to be a favored short. And that's because they hold consumer debt, and fall prey to mounting delinquencies. So when I learned that UBS upgraded the stock from Sell to Neutral, I had to laugh at the absurdity.

The argument remains the same, though.

If you want to own a credit card stock, buy Visa (V) or MasterCard (MA). They do not hold consumer debt. They simply process the cards.

American Express on the other hand deals directly with credit. It has to worry that as of November 2007, credit card debt "soared at an 11.3 percent annual rate in November following an 8.5 percent rate of increase in October" and is still on the rise."

They're the ones where share values are being beaten stilly because of charge-offs, payment delays, and higher delinquencies.

Same goes for American Express, whose CEO said, "Business conditions continue to weaken in the U.S. and so far this month [June 2008] we have seen credit indicators deteriorate beyond our expectations."

It was January when AXP's CFO Daniel Henry predicted that the company's U.S. write off rate would peak between 5.1% and 5.3% in 2008. It's now July and delinquencies and default rates are growing worse.

American Express and Cash-Strapped America

With homeowners struggling to stay above water, American Express has to worry about further delinquency problems, as credit card debt balloons.

Instead of just using credit cards for big ticket items (TVs, furniture), some are now charging gas, food, and even paying other bills with them. And some are only making minimum payments... if they can afford even that.

It's far more difficult these days for many consumers to dig their way out of debt, since other relied upon options, such as home equity lines of credit, are no longer readily available.

National revolving debt just hit a record $957 billion in April, from $800 billion four years ago. Total credit card debt was up by 0.4% in April, according to the Fed. And Moody's is reporting that the charge-off rate, which measures credit accounts considered uncollectible, hit 6.27% in April.

Q1 consumer borrowing skyrocketed to $34 billion, the biggest amount since 2001 when the U.S. was diving into a recession. And not all of that may be paid back. Credit card investors are becoming increasingly concerned that a weaker U.S. economy will hurt borrowers' ability to pay back debt.

But as long as there are naïve investors, and foolish upgrading banks, it's hard to get that reality to the investing masses. Still, downside risks remain at American Express... even Discover and Capital One. They'll slide long-term as subprime fiascos are replaced with Option ARM reset fiascos.

Good Investing,

Ian L. Cooper
http://www.wealthdaily.com

White House Lowers Growth Estimates

Thanks to rising unemployment, housing, financial, and energy fiascos, the White House lowered its economic growth forecast this year and for 2009. For 2008, 1.6%, as compared to February's 2.7% projection is expected. For 2009, growth of 2.2% versus 3% growth rates is expected.

According to the AP:

""The U.S. economy has continued to expand, but growth has slowed as a result of the sharp housing decline, disruptions in financial markets and high energy prices," the administration said.

With economic growth slowing, the unemployment rate is projected to move up to 5.3 percent this year and to 5.6 percent in 2009. The administration's old forecast called for the jobless rate to climb to 4.9 percent this year and next. The unemployment rate averaged 4.6 percent in 2007.

"Because of the recent slower economic growth, the labor market is likely to remain sluggish for a period of time before returning to better performance," the White House budget office said.

The administration believes the jobless rate will drop back to 5.3 percent in 2010 and continue to dip in subsequent years, falling to 4.8 percent in 2012 and 2013.

On the inflation front, consumer prices are now expected to rise by 3.8 percent this year, up from the administration's old forecast for a 2.7 percent rise. Prices should calm down a bit next year, rising by 2.3 percent. Still, that's also higher than the old forecast of a 2.1 percent rise.

"Inflation has increased in recent years, in large part because of surging food and energy prices," the administration said. Oil prices, which had spiked to a record high of more $146 a barrel, are now hovering around $124 a barrel.

The new forecasts were contained in the budget office's updated look at the nation's balance sheets. A record $482 billion budget deficit is now being projected for next year, something the next president will inherit."

Keep Chesapeake Energy on Radar

We hold the Chesapeake Energy (CHK) underlying stock in Pure Energy Trader, but wanted to bring it to your attention, too. And that's because of solid volume in August 50, 52.50 and 55 calls.

News is that China National Petroleum Corporation (CNPC) is "thinking" about bidding for minority stakes in CHK shale gas assets. CHK is reportedly looking to raise as much as $5 billion from selling minority stakes in Arkansas and Pennsylvania shale gas properties, according to the South China Morning Post.

This follows early-July news that BP agreed to buy 90,000 acres of CHK's Oklahoma natural gas properties for $1.75 billion.

Keep it on radar.

"We're saying no to almost everybody"

There's a heart-stopping article in today's New York Times about the changing commercial lending environment and the impact on the broader economy.

"Banks struggling to recover from multibillion-dollar losses on real estate are curtailing loans to American businesses, depriving even healthy companies of money for expansion and hiring."

"Companies that rely on credit are now delaying and canceling expansion plans as they struggle to secure finance."

"Drew Greenblatt, president of Marlin Steel Wire Products, figured it would be easy to get a $300,000 bank loan to finance a new robot for his factory in Baltimore. His company, which makes parts for makers of home appliances, is growing and profitable, he said. His expansion would add three new jobs to an economy hungry for work."

"But when Mr. Greenblatt called the local branch of Wachovia - the same bank that had been aggressively marketing loans to him for years - he was distressed by the response."

"The exact words were, ‘We're saying no to almost everybody,' " Mr. Greenblatt recalled. "This is why God made banks, for this kind of transaction. This is going to slow down the American economy."

Ouch.

Here's the full New York Times article, if you're interested.

"Banks struggling to recover from multibillion-dollar losses on real estate are curtailing loans to American businesses, depriving even healthy companies of money for expansion and hiring.

Drew Greenblatt of Marlin Steel Wire Products is having trouble getting a $300,000 loan to buy a robot for his Baltimore factory. "This is what a bank is supposed to do," he said.

Two vital forms of credit used by companies - commercial and industrial loans from banks, and short-term "commercial paper" not backed by collateral - collectively dropped almost 3 percent over the last year, to $3.27 trillion from $3.36 trillion, according to Federal Reserve data. That is the largest annual decline since the credit tightening that began with the last recession, in 2001.

The scarcity of credit has intensified the strains on the economy by withholding capital from many companies, just as joblessness grows and consumers pull back from spending in the face of high gas prices, plummeting home values and mounting debt.

"The second half of the year is shot," said Michael T. Darda, chief economist at the trading firm MKM Partners in Greenwich, Conn., who was until recently optimistic that the economy would continue expanding. "Access to capital and credit is essential to growth. If that access is restrained or blocked, the economic system takes a hit."

Companies that rely on credit are now delaying and canceling expansion plans as they struggle to secure finance.

Drew Greenblatt, president of Marlin Steel Wire Products, figured it would be easy to get a $300,000 bank loan to finance a new robot for his factory in Baltimore. His company, which makes parts for makers of home appliances, is growing and profitable, he said. His expansion would add three new jobs to an economy hungry for work.

But when Mr. Greenblatt called the local branch of Wachovia - the same bank that had been aggressively marketing loans to him for years - he was distressed by the response.

"The exact words were, ‘We're saying no to almost everybody,' " Mr. Greenblatt recalled. "This is why God made banks, for this kind of transaction. This is going to slow down the American economy."

Earlier this year, credit extended by banks to companies and consumers was still growing at double-digit rates compared with three months earlier, according to an analysis of Federal Reserve data by Goldman Sachs. By mid-June, bank credit was declining at an annualized pace of more than 6 percent.

That is a drop of nearly $150 billion, an amount much larger than the value of the tax rebates the government has sent to households this year in an effort to spur economic activity.

Financial industry executives say tighter credit from major banks represents a swing back to a realistic assessment of risk, after years of handing out money with abandon. Those practices produced a mortgage crisis whose losses could reach $1 trillion, by many estimates.

"Before, they wouldn't verify income and they were loose on the valuations of collateral," said John W. Kiefer, chief executive of First Capital, a private commercial lender. "Now they're tightening down on the ability to repay. They go off the reservation, and now they come back to basics. It's preservation for many of them at this point. It's survival."

But if the newfound caution of American banks is prudent in the long run, the immediate impact is amplifying the troubles with the economy. The Federal Reserve has been lowering interest rates aggressively to make money flow more loosely and to spur economic activity.

The financial system is not going along: As banks hold on to their dollars, mortgage rates are climbing. So are borrowing costs for corporations.

Some suggest that the banks, spooked by enormous losses, have replaced a disastrously indiscriminate willingness to hand out money with an equally arbitrary aversion to lend - even on industries that continue to grow.

"There's been a lot of disruption in the credit market, and a lot of traditional lenders have really tightened up," said Gregory Goldstein, president of Macquarie Equipment Finance, which leases computer gear and other technology to companies. "Before, some of the standards they lent on were weak, but we think they have overshot and gone too far on the other end."

Such was Mr. Greenblatt's reaction, as he learned that an infusion of credit for his Baltimore factory would not come easily. His company has been enjoying double-digit sales growth. This month, it received the two largest orders in its history, he said.

"It was jubilation," he said. "I was doing the Funky Chicken."

The initial call to Wachovia left him dismayed.

"I'm stunned," Mr. Greenblatt said. "God is smiling on this factory. We're at such an exciting inflection point, and this is what a bank is supposed to do. There's sand in the gears."

No loan meant one fewer order for the factory in Chicago that makes the robot Mr. Greenblatt wants to buy, and fewer hours for workers there. It meant less business for the truck driver who would have hauled the robot to Baltimore, and no help-wanted ads for Marlin Steel Wire Products.

Mr. Greenblatt eventually got oral approval for the loan, though after more than a week. He was still waiting for the money at the end of last week.

Wachovia, which lost $8.9 billion in the second quarter, declined to discuss the loan. But the bank confirmed that it has been reducing its lending in troubled areas of the economy.

"We've got industries that we consider to be stressed industries, and we're looking at those a lot harder," said Carlos Evans, a wholesale banking executive for Wachovia, listing as examples housing construction, building products and distributors for those goods. "Our loan growth slowing is more indicative of the economy than anything else."

Still, Wachovia's commercial and industrial loans grew by 13 percent in June compared with the prior year, Mr. Evans said.

"We're saying yes daily," he said.

But recent signs suggest that tight lending is spilling from housing into other areas of the business world. Companies with solid credit and profitable businesses can generally still get loans, but rates are higher and wait times are longer.

According to a survey of senior loan officers conducted by the Federal Reserve in April, 55 percent of American banks tightened lending requirements for commercial and industrial loans to large and midsize companies - up from about 30 percent in the previous survey, in January. About 70 percent of the respondents said they have made such loans more expensive.

"Banks will be much more cautious and keep raising the bar, and that will lead to an outright decline in total commercial and industrial loans," predicted Stuart G. Hoffman, chief economist at the PNC Financial Services Group in Pittsburgh. "Banks clearly have to rebuild their capital base. They're going to look a bit more nervously before they make those loans."

Until last summer, banks lent freely, banking experts say, because they sold most of the loans they issued, making them less concerned about whether the customer could handle the payments: If the loan went bad, that was someone else's problem.

But in the wake of the mortgage crisis, that system has all but shut down. Banks are now stuck with the loans they extend, making them more motivated to scrutinize their customers, particularly younger and smaller businesses.

"It's the small business guy who creates most of the jobs," said Mr. Kiefer, the First Capital chief executive. "If they can't borrow to employ people, then we've got a mess on our hands."

For the last six months, Saul Epstein has been trying in vain to get a $2 million line of credit for his company, Global Harness Systems. The company, based in Bala Cynwyd, Pa., has a factory in Mexico, where it makes parts for engines. The factory gets paid for its wares weeks after they have shipped, necessitating credit to finance the upfront costs of production - raw materials, labor and transportation.

Mr. Epstein figured that getting a loan would be easy. Since he became chief executive last year, Global Harness has gone from break-even to profitable. Sales should reach $20 million this year, up from $17 million last year, he said. But in this new era of caution, banks are focused on the fact that Global Harness lost money in 2005.

"They keep saying, the way the times are, we need a longer track record," Mr. Epstein said.

Mr. Epstein, forced to limit his production to what he can finance with his existing cash flow supplemented by his own money, has been tightening credit himself: He has been turning down orders from companies with any whiff of financial troubles, lest his company fail to get paid.

"The same way the bank is hesitant to lend to me, you're concerned about taking on a customer that might go into bankruptcy," he said.

George Rosero, president and chief executive of Atlanta Pediatric Therapy, has been trying for more than a month to increase his roughly $500,000 credit line to about $1 million.

His company, profitable for the last two years, offers therapy to children with speech and physical impediments, he said. Mr. Rosero aims to expand by adding four sales people. He wants to buy new software to better manage communications with patients and hire a consultant to improve the work environment.

All of that is on hold.

"Three or four years ago, I could just make a phone call and get an increase," Mr. Rosero said. "Now, they're asking me for a lot more information."

Biotech Boom

Institutional money has been pouring into the biotech sector, as biotech stocks enter the third quarter surprisingly strong.

Take the Rydex Biotech Fund, for example. In 2000, the fund had about $1.4 billion invested. Then, over the following eight years, biotech stocks floundered, stripping the Fund of about 95% of assets.

But over the last few weeks, assets have just about doubled in the Fund, as Wall Street comes back. They know the next biotech boom is upon us.

But the move comes as no surprise to us.

Drugs are recession proof. They have no exposure to subprime and housing concerns. No matter what happens in the economy, people still buy medication. Period, said Brian Hicks in November 2007.

Hicks, you may remember, has been calling for the return of biotechs since November 30, 2007, catching the biotech bull-run before it began.

How could you not see the boom coming?

Hicks knew that as the baby boomer generation rushes into old age, like a colony of army rats, healthcare spending is expected to skyrocket. And all this spending represents a boom for drug and medical device developers and manufacturers.

So the recent boom isn't a big surprise.

Take Intuitive Surgical (ISRG - NASDAQ), for example. This company makes the robotic da Vinci surgical systems for use in urologic, cardiothoracic, gynecologic, and general surgeries.

Sales at ISRG have gone from $26 million in 2000 to over $524 million today.

The stock is up about 4,500% since the start of 2003!

And with baby boomers getting surgeries in record numbers, medical device companies like Intuitive Surgical are going to continue to do quite well.

But it won't just be companies that make surgical lasers and robots that'll profit from this trend. Drug companies stand to make a fortune as baby boomers get older and need more healthcare.

Take a look at some of the returns posted by biotech stocks:

Amgen...............+59,000%
Gilead Sciences....+3,500%
Biogen IDEC........+2,329%
Celgene..............+9,030%
IDEXX Labs.........+3,300%

And There's still time to Buy Biotech

After scouring the biotech industry looking for the next Amgen or the next Genentech... Hicks discovered 2008 favorite Anavex (AVXL.OB).

As we said on June 14:

More than 5.2 million Americans have Alzheimer's disease. Another 7.7 million Americans will suffer with it by 2030, and another 16 million will suffer by 2050. And there's a yearly price tag of $148 billion to treat these patients.

No one is quite sure what causes the disease that gradually robs sufferers of memory and the ability to care for one self. There's no known cure, and current drugs are only temporary pain relievers.

So wouldn't it be nice if the drug companies got it right?

Hopes are already mounting that an experimental drug from Elan and Wyeth can do the trick. If they can clear out deposits called amyloid plaque, or simply halt the production, they could help millions of patients, and potentially see annual sales of $13 billion.

But such theories of anti-amyloid could be based largely on "theory and hope," says University of Southern California psychiatrist Lon Schneider (as quoted by Forbes). "None of the drugs have shown evidence of efficacy yet. Geneticist John Hardy, one of the first to finger amyloid as a suspect, puts the odds at 50-50 that one of the antiamyloid drugs will work."

Plus, says the Forbes report, people that can function normally also have large amounts of amyloid-beta plaque, which casts doubt on whether the plaque is a cause, a consequence, or simply an indication of an aging brain.

While there's some hope that Elan and Wyeth can help millions of sufferers, and in the end reap millions for shareholders, some drug developers are turning to the theory of oxidative stress, which damages and destroys cells and is believed to be a primary cause of Alzheimer's disease.

According to PharmaLive.com, ‘Involvement of Oxidative Stress in Alzheimer's Disease' study leader Dr. Nunomura "pointed to extensive evidence of mechanistic and chronological links between oxidative stress and a number of key characteristics of the disease."

The research also suggested that amyloid beta could be produced by the body as it tries to fight the disease, later turning into an accumulating toxic substance. In other words, there's a belief that if amyloid was removed during early stages of the disease, it could do more harm.

Alzheimer's Drug Stock: Anavex Life Sciences (AVXL.OB)

The company's drug candidate, ANAVEX 1-41, uses sigma receptors to stand guard against oxidative stress and repair cells. And when AV-1-41 goes into Phase I trials, we fully expect the market to re-rate the company upwards to $10 to $12 a share.

The drug is already showing promise in early stages. And in some trials, the drug reportedly provided neurons with protection from oxidative stress, prevented amyloid beta from becoming toxic, and reduced memory deficit in animal tests.

We continue to rate Anavex stock as one of our favorite small cap investments for 2008-2009. And the fact that the stock hasn't sold off - especially during the recent market turmoil - speaks volumes.

Better, we wouldn't be shocked if Anavex was a buyout candidate.

One, the company is betting that compounds for Alzheimer's disease based on its Sigmaceptor platforms will provide it with competitive advantages. Its Anavex 1-41 treatment has demonstrated that the compound "significantly" protects neurons by preventing oxidative stress, which can damage and destroy cells and is strongly believed to be a main cause of many neurodegenerative diseases.

In short, if drugs like Anavex's can slow or prevent diseases like Alzheimer's there's no telling how many buyout offers would flood Anavex offices.

Plus, they've got another 11 sigma receptor compounds in pre-clinical development, three of which could soon file for investigational new drug applications this year alone. This includes treatments for epilepsy, colorectal cancer and other solid tumors.

Anavex 7-1037 (for colorectal cancers) preclinical trial treatments, for example, shows a 69% reduction (with minimal adverse effects) in tumor growth.

Two, big pharmaceutical companies may not continue overlooking companies with oxidative stress exposure. And three, the Alzheimer's drug market could triple to $9 billion by 2017. Why wouldn't big pharma want a piece of that?

Good Investing,

Ian L. Cooper
http://www.wealthdaily.com

———————

In case you missed our other investment opportunity highlights, here's what we covered in Wealth Daily, Gold World, Energy and Capital, and your free blogs for the week of July 21, 2008.

Let's Take Some Gains: 180% Lehman Put Gains... Bank it.
In the weeks preceding our options product launch, we've been issuing trades in this free blog. And to secure our hard-earned gains, we're closing five of our positions today.

The Non-OPEC Oil Peak: He said it's "imperative that governments acted urgently to reduce their dependency on oil..."
While the International Energy Agency's oil supply forecast won't be released until November 2008, there's growing fear of a sharp downward revision in supplies. That means supply could be much tighter than previously thought, a nightmare scenario if proven true.

Pickens: Oil is Headed to $300 in 10 Years: Boone Heads to the Hill
In case you haven't heard, T. Boone Pickens is a worried man when comes it comes to the energy situation these days. America, according the legendary oilman, is in a heap of trouble-and it's only going to get worse.

Copper Mining Stocks: A Big Surprise in the Copper Market - Part 2
In Part 2 of our Argentinean copper mining stocks report, we'll take a look at the rest of Coro's copper mining prospects, which are numerous and conclude with specific details regarding my recommendation.

The Bakken Oil Field: Is it Too Late For You to Play the Bakken?
Over the last few weeks, I've been trying to wrap my head around the recent excitement over our domestic production. Whether the topic of drilling in ANWR or the outer continental shelf came up, people were getting excited. There are a few problems, however.

Domestic Oil and Gas Companies: The One Energy Stock You Must Own

Renewable Energy in Germany: New Energy in Old East Germany
BERLIN, GERMANY: West Berlin wasn't just the free half of this city during the Cold War; it was an island. All around the reunified capital today, there are reminders of East Germany's economic past, and signs that Europe's largest economy can do more to bring the East into the future.

Gold Price Forecast: Why Gold Could Spike to $1,200 by January
It'll be 2009 when we see $1,200 to $1,300 gold. Here's why.

Green Energy Investing: How To Follow the Green Money Trail
This article originally appeared in the Green Chip Review on July 17th, 2008 as an in-depth report on today's green energy investments. With the current state of the energy market, and the looming boom in green energy, we felt readers of Wealth Daily could also profit from the information presented in this article. Enjoy.

Profit from American Depress
American Express posted a Q2 profit that fell 38%, well below Street forecasts, as consumer spending slowed and the number of loans that were written off increased beyond expectations.

Caution: High Risk Housing Trade Ahead
President Bush just dropped his opposition to a housing package that could bolster the economy. The House is expected to vote on it later this afternoon, and it could become law as early as this week. Reportedly, House Republicans do not have enough votes to prevent it from becoming law.

Gold Price Forecast

Editor's Note:

With gasoline prices now at $4 per gallon, two new energy proposals are attracting a lot of attention on the airwaves - the Pickens Plan and Newt Gingrich's "Drill Here. Drill Now. Pay Less." plan. But did you know that we've had an energy plan on the books for months now? It was developed by Chris Nelder and Brian Hicks.

They released their plan to the public last May... and it consistently ranks #1 on Amazon in popularity. In short, the Nelder-Hicks plan could save the US economy from disaster... and make many investors a fortune. To see their plan, go here.

Gold Price Forecast: Why Gold Could Rally to $1,200 by 2009

Gold closed in on $1,000 this week on fresh financial concerns, fears of Fannie Mae and Freddie Mac insolvency, and the collapse of California's IndyMac Bank.

Retail and institutional investors alike even see gold racing above $1,000.

UBS just raised its near-term gold price forecast to $1,000 from $900. And investors in the Gold ETF (GLD) are buying September 1,000 call options like they were going out of style. Just the other day, more than 160,000 of these options traded hands.

But it'll be 2009 when we see $1,200 to $1,300 gold. Here's why.

ARM-ageddon by April 2009?

It shouldn't come as a shock when mountainous Option ARM and Alt-A loans begin resetting and the second leg of the credit crisis begins.

Ninety percent!

And it's estimated that only 60% of Option ARM borrowers make only minimum monthly payments. Others estimate that up to 80%.

Say a borrower makes minimum payments on a $600,000 loan. That loan could easily be a $750,000 loan within two years.

And we're supposed to be shocked when this problem ends in the second credit crisis?

These are the types of loans that give borrowers the "option" to set payment amounts. Unfortunately, many of these types of loans were set up near the real estate market peak in 2005 and 2006, which means they'll reset in 2010 and 2011.

And, according to the FDIC, many of these loans will see payment resets and require amortization by 2009. That means we're nowhere near the end of financial writedowns or loan defaults. If we're lucky, this'll end by 2011... maybe 2012.

Of the $581 billion in option ARM loans, and the $1.4 trillion in interest-only loans, about $325 billion will default at some point. That alone could lead to more than a million foreclosures.

We're nowhere near the end of financial hardship.

And we're not alone in our thinking...

According to Business Week, "With the subprime mortgage crisis already crippling the U.S. economy, some experts are warning that the next wave of foreclosures will begin accelerating in April, 2009. What that means is that hundreds of thousands of borrowers who took out so-called option adjustable-rate mortgages (ARMs) will begin to see their monthly payments skyrocket as they reset. About a million borrowers have option ARMs, but only a fraction have already fallen due."

"Monthly option recasts are expected to accelerate starting in April, 2009, from $5 billion to a peak of about $10 billion in January, 2010. Some of these loans have already started to recast. About 13% of option ARMs that were issued in 2006 were delinquent by 60 days by the time they were 18 months old, Credit Suisse said."

And it'll be California that gets hit the hardest. As of today, outstanding option ARM loans in the U.S. alone total $500 billion. About 60% of that was sold to CA homeowners, according to reports.

Not only does this negatively impact consumers, it'll continue to wreak havoc on banks.

And, according to Greg McCoach, "Fear is rapidly increasing that the next shoe is about to drop on the credit derivatives time bomb. Recent research I have been doing had led me to the conclusion that a major banking crisis is soon to unfold not just in America but Europe as well."

"The size of this debacle is going to be colossal. It will involve huge write-downs by the banks which in turn will cause instant liquidity problems and possibly bankruptcy for some of these institutions."

"It looks like the end of August or early September could be reckoning day for at least 20 financial institutions across the United States and Europe. The fallout will be devastating to financial stocks and depositors of troubled and or failing banks and institutions."

"As these banking failures pile up starting in the next few months, look for gold and silver prices to have their biggest moves yet since the bull market in precious metals began back in 2002. These banking failures and the corresponding inflation that will take place will finally take the U.S. Dollar Index below the critical "70" level."

"Gold in my opinion will begin to have a series of $100 up days taking the yellow metal to $1,500 per ounce and possibly even higher before the end of the year. Silver will be trading at no less than $30 an ounce and probably much higher as well before year end."

You heard it here, folks. Back up the truck on gold.

Take care,

Ian L. Cooper
http://www.goldworld.com

———————

In case you missed our other investment opportunity highlights, here's what we covered in Wealth Daily, Gold World, Energy and Capital, and your free blogs for the week of July 14, 2008.

The Gingrich & Boone Pickens Energy Plans: Which Energy Plan Will Work?
In the past 2 weeks, we've been inundated with two specific energy proposals to kick America's foreign oil addiction. One has come from Newt Gingrich's American Solutions advocacy group. You may have seen the commercial for the petition. The energy campaign's motto is "Drill Here. Drill Now. Pay Less."

Stooges Testify, Inflation Soars: Nothing But a Clown Show
Lost in the charade of yesterday's testimony by Bernanke, Paulson & Cox was an absolutely abysmal wholesale inflation number from the Labor Department. While the Three Stooges entertained, prices continued their journey to the moon.

Gold Mining in Mexico: An Undervalued Gold Producer Working Across the Border - Part 1
Over the next two days I am going to report on one of my favorite Canadian gold stocks mining in Mexico.

The Next Major Banking Crisis: And What To Look For in Precious Metals
Market conditions for the junior mining sector continue to deteriorate as we approach mid-summer. Several forces are currently at work, causing problems not only for our sector but for stock markets in general. Here is what I believe is happening:

Green Energy Investments: Where the Green Money's Going Now
And yet, there's no point in selling-houses or stocks. Why sell a long-term investment for less than you paid for it, especially if it's likely that the price will rise again in the next few years?

Renewable Energy in Europe: France Goes Green for Jobs
MARSEILLE, FRANCE: As beautiful as the South of France is, landscapes alone don't make the future look promising. The economies of Portugal, Spain, and southern France are feeling the pinch of the global recession more than many developed countries.

Shadowboxing the Apocalypse: Energy and the Politics of Partisan Paralysis
If it weren't such a desperately serious situation, watching our fearless leaders trying to grapple with the energy and financial crises would be hilarious.

Offshore Oil Drilling: The One Offshore Oil Drilling Company to Play this Week
It is always good to have a plan. It's not, however, good to have a bad plan. That was my initial reaction last month when the President gave Congress several steps to reduce gas prices and foreign oil dependence.

Copper Mining Companies: Why Southern Copper is a Buy
In September 2007 Citigroup analysts Alan Heap and Alex Tonks called for the spikes in coal and iron ore prices "because of demand from China and congestion at ports in Australia and South Africa." And they were spot on. So when the same analysts upgraded outlooks for coal and copper, why argue?

Insiders Buy at 2-Year Lows
These insider buys come as the company looks to boost customer food business performance, and buy back $900 million of stock with monies from the sales of its departure with its agricultural commodities trading unit.

Domestic Oil and Gas Companies

Editor's Note:

Today's Energy and Capital: The One Energy Stock You Must Own

You know as well as we do that prices would come down sharply if we started producing on our own. And it'd be a strong global signal that we're not willing to be hostages of oil rich companies.

Even the President agrees.

"Our problem in America gets solved when we aggressively go for domestic exploration," Bush said.

And we need all the oil we can get.

Any pessimistic IEA view will shock the market, spawning oil super spikes. We've already seen prices rocket to $130, doubling year over year. And it'll only get worse on a dismal IEA forecast.

But IEA pessimism is nothing new. Just last summer, the IEA warned that spare OPEC capacity could fall to "minimal levels by 2012."

And if you need more of a reason for a rise to $150, $170, even $200, look no further than the Middle East.

Iran's Revolutionary Guards has already said it would impose controls on shipping in the Persian Gulf and Strait of Hormuz, which accounts for about 40% of the world's oil, if it were attacked.

Natural Gas Squeeze

Natural gas prices are rising just as fast as oil. Natural gas could be subjected to the same supply and demand issues that drove crude oil well above $130 a barrel.

That's as liquefied natural gas (LNG) shipments to the U.S. slow, and as companies like Cheniere and other companies drop plans to build more terminals.

Global natural gas demand has grown about 2.6% a year over the last 10 years. But in Asia, the Mid East and in Africa, demand has been more like 7% over the same time frame. And demand growth will only rocket further refinery and power growth in the developing world.

With that in mind, drilling domestically just makes sense, which makes this next buying opportunity even more attractive.

Warrior Energy (WEN.V)

This is a new natural gas company we're keeping an eye on with a focus on large undervalued assets in the Green River Basin (Wyoming).

We can tell you that the energy companies are drilling and applying for drilling permits like there's no tomorrow.

And Warrior Energy is no different. It's buying land on the cheap with expectations for considerable upside. They just paid $8 million for producing property with active development.

Warrior's current project - called Strike - consists of 3000 net acres with 11 producing wells that are already kicking off cash flow.

And the stock only trades at a scant sub-3 with long-term $10 potential upside.

Better yet, the future doesn't look too shabby.

Over the next two years they hope to demonstrate year over year growth of proven reserves, production and cash flow through acquisitions and development to justify $500 million in asset values.

Again, this is a $10 stock masquerading at $3.

Companies already in the Rockies area don't seem to have a growth problem.

Berry Petroleum bought Rockies assets on January 27, 2006, and watched its stock soar from $33 to $55 inside two years.
Black Hills Corporation bought Rockies assets on March 9, 2006, only to watch its stock roar from $33 to $44.
MDU Resources bought assets on May 1, 2006. Its stock ran from a $23 low to more than $32.
Marathon Oil bought in July 2006, and watched its stock skyrocket from $35 to $65.
EXCO Resources ran from $16 to $24 after buying Rockies assets on September 30, 2006.
Encore Acquisition bought assets on January 17 and 25, 2007. Its stock ran from $25 to $65.
Forest Oil ran from $45 to $66 after buying in January 2008. And Continental Resources jumped from $25 to more than $61 after buying Rockies assets on January 14, 2008.

The potential for Warrior Energy (WEN.V) to run significantly off lows is there. They just bought assets for only $8 million. With domestic oil and gas exploration experiencing a renaissance in the U.S., we expect small emerging plays like Warrior to give early investors exceptional returns.

Take care,

Ian L. Cooper
http://www.energyandcapital.com

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In case you missed our other investment opportunity highlights, here's what we covered in Wealth Daily, Gold World, Energy and Capital, and your free blogs for the week of July 14, 2008.

Gold Mining in Mexico: An Undervalued Gold Producer Working Across the Border - Part 1
Over the next two days I am going to report on one of my favorite Canadian gold stocks mining in Mexico.

The Non-OPEC Oil Peak

Any pessimistic IEA view will shock the market, spawning oil super spikes. We've already seen prices rocket to $130, doubling year over year. And it'll only get worse on a dismal IEA forecast.

That's called Peak Oil. And it's a dangerous situation.

But IEA pessimism is nothing new. Just last summer, the IEA warned that spare OPEC capacity could fall to "minimal levels by 2012."

Your best bet in this market. Buy and hold energy stocks. They're going much higher.

Listen, I've said this before. I'll say it again. We're not economically pessimistic at Wealth Daily. But we won't put on the rose-colored glasses, and tell you everything's okay. We're simply trying to profit from an eventual "blood in the streets" investing scenario.

Further energy bullishness comes from TimesOnline.com:

"Oil production in non-Opec countries is set to peak within the next two years, leaving the world increasingly dependent on supplies from the cartel of exporting nations, according to one of the world's leading energy experts.

Fatih Birol, chief economist of the International Energy Agency (IEA), said that falling production from key regions such as the North Sea and the Gulf of Mexico would leave international oil companies such as Shell and BP increasingly sidelined at the expense of national oil companies, such as Saudi Aramco.

The North Sea is one of the fastest-declining energy-rich regions in the world, with output falling by an average of 7.5 per cent a year since 2002.

"The days of the international oil companies are coming to a glorious end because their reserves are declining and they will have difficulty accessing new reserves," Dr Birol told The Times. "In future we expect most of the new oil to come from a very small number of national oil companies."

Dr Birol, who is leading an investigation into the condition of the world's largest oilfields, said that the world was entering a "new oil order".

"Demand growth is no longer coming from the US and Europe but from China, India and the Middle East," he said. "Because their disposable incomes are growing so fast and because of subsidies, high oil prices will not have a major impact on demand growth." This meant that prices would remain extremely high for the foreseeable future and that the fundamental dynamics of the global oil market increasingly were outside of the control of Western countries.

Dr Birol sidestepped questions over how close he thought Opec oil production could be to a peak. "Oil will peak one day, but we don't know when," he said. "There is a lot of oil in Opec countries and also unconventional oil ... I don't think oil will peak because of the geology ... but conventional, non-Opec oil is going to peak very soon."

He said it was imperative that governments acted urgently to reduce their dependency on oil and to address the issue of climate change. He said that the IEA would publish the results of its study of the world's oilfields in November."

Let's Take Some Gains

In the weeks preceding our options product launch, we've been issuing trades in this free blog. And to secure our hard-earned gains, we're closing five of our positions today.

Thirty nine days after urging caution over the Barry Diller / Expedia rumors, we picked up the Expedia October 22.50 put (UEDVX) at $1.80. It now trades just above $5.10 for a gain of 183%. Bank it.

On tough trends, we also spoke of Coca-Cola Enterprises, picking up the November 20 put (CCEWD) at $1.05. Thirty nine days later, it's at $3.80 - good for a 262% gain.

Thirty five days ago, we urged caution after the Masco Chairman bought 300,000 shares of the company between $17.80 and $17.99. We believed that unless the stock could hold multi-year support, the stock would drop further, as it did. It now trades at $15.86 and is headed lower.

Following that report, we bought Masco October 20 puts (MASVD) around $3.00. It now trades at $4.70 - good for a 57% gain.

On June 3, we recommended buying the October 25 put (LYHVE) with the following argument. "It's only a matter of time before Lehman (LEH) joins the latest list of casualties," we said.

"Having just broken multi-year support levels, the underlying stock could be headed to $20 near-term. The best way to trade the possible drop is to buy the October 25 put option (LYHVE). This is an aggressive trade."

After rising as high as $13 and change, the put now trades at $8.40 - good for a 180% gain.

We also recommended a buy on the UBS AG September 2008 22.50 put on June 10, 2008. At the time, it traded at $1.30. It now trades at $1.70 - good for a 31% gain.

Congratulations on the gains. Hold all other recommendations from your free Options Pit blog.