Okay, so the stock market is heading into the toilet, your a survivalist contrarian, and think “stocks take a nose dive, shit hits the fan, how do I turn a dime?” Building off why I said Gold: Don’t Buy the Hype, it would be un-ranger-like of me to not follow up without suggesting a few SHTF stocks to buy before the sky falls. There are plenty of suggestions, but in order to make the suggestions manageable we’ve got to break the likely SHTF scenarios down to a few manageable categories. Let’s consider these scenarios: 1) bird flu jumps human-to-human, 2) terrorists score another dramatic 9/11 style hit, and 3) peak-oil.
For disclosure purposes, Ranger Man must reveal that he is a member of a small investment club. This probably sounds fancier than it really is. What it really means is members get together once a month, everyone contributes $50.00, and votes on stocks to buy or sell. It’s hardly scientific, hardly professional, and hardly big money; BUT – amazingly enough – we turned a massive 44% return in 2007 – no lie! How? Energy stocks mostly (and a healthy dose of luck), but the exact details of which go beyond this post, and don’t really pertain to SHTF topics. I needed to make this disclosure, though, because the Feds love to nail people that buy penny stocks and post about how great they are in hopes of driving up the stock price so they can sell at a profit. I’ve labeled any stock I have a “vested interest in” green, though I hardly doubt my suggestions will affect their share price. Also, I’m not a financial advisor, and who knows when/if shit will hit the fan. These suggestions could be great, they could be lousy, it depends on the turn of events.
Onward!
Bird Flu Jumps Human-to-Human
Eeeef, the prospects of this (or some other nasty, infectious disease) happening scares me more than many other types of scenarios. The thought of having to hold up in my house while the entire community falls ill is freaky – to say the least! But alas, we wouldn’t be capitalists if we didn’t profit from the woe! Think Tamiflu (www.tamiflu.com) - think Roche Holding Ltd. (they own it) - ticker symbol RHHBY.
Terrorists Strike Again
Move the engines of war! Lockheed Martin (LMT), Raytheon (RTN), and General Dynamics (GD) are the gold standards here. Lockheed Martin – just look at the pic on their homepage if you have any questions: www.lockheedmartin.com. Raytheon – missiles and missile-defense systems galore (and a whole lot more): www.raytheon.com. General Dynamics – subs, ships, combat systems and more: www.generaldynamics.com.
Peak Oil
There are two lines of thinking here: 1) stock up on oil companies, because oil will be worth more, or 2) stock up on alternative energy companies, because their services will be in huge demand. If you pursue #1, consider companies that SERVE oil companies as opposed to the oil companies themselves. I prefer the latter, because who knows which oil company will get the the next big find? Diamond Offshore Drilling (DO) rents out huge offshore drilling platforms to the highest payer – www.diamondoffshore.com. Most new finds will be offshore, this company is the big player here. If you pursue the #2 option, Vestas (VWS) is the world’s leading supplier of wind power solutions – www.vestas.com. Personally, if I was investing for Peak Oil I’d go with the #2 option (or maybe both options). Number 2 would give you positive returns as well as a warm and fuzzy feeling that you’re making a positive contribution toward a cleaner world.
Go forth – get rich (or not).
- Ranger Man
BTW: blockade is breached in Gaza, Palestinians cross border into Egypt to buy goods. Is there a lesson here? What do they buy? Milk, cigarettes, fuel, rice, wheat, sugar, handguns, and more cigarettes. Check the article here.
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{ 5 comments }
I found your site on technorati and read a few of your other posts. Keep up the good work. I just added your RSS feed to my Google News Reader. Looking forward to reading more from you.
Allen Taylor
Maybe cruizing around the internet and buying stocks is going to be a good way to waste all the time I will have sitting in my house during a bird flu outbreak or sitting in my house not driving my car because of peak oil.
Tamiflu and Relenza are likely to be inaffective against the Bird flu, since Chinese poutry farmers added these drugs into chicken feed back in 2004. The WHO demanded China to immediately stop but I doubt the practice was completely abandoned. I suppose in a panic sales of these products will probably be strong (ie placebo for the masses). I wouldn’t spend any money stockpiling them (unless you plan to sell it).
Peak Oil
When push comes to shove, All of the oil companies will be nationalized and the gov’t will ration and price fix fuel. If the oil is ratioed and prices are fixed, it will be extremely unlikely the off shore drillers will see gains as the costs for off shore development are quite high. They need high oil prices to make development worthwhile. I think investing in Oil companies for PO may be challenging.
“Move the engines of war! Lockheed Martin (LMT), Raytheon (RTN), and General Dynamics (GD) are the gold standards here. ”
There is a good chance that when the Democrats take over in 2009, that we will be pulling out of the Middle East. I think that as we get closer to an election and investors will start dumping defense on the likelyhood of a Middle East withdraw.
One investment option would be to invest in companies that sell vice products: alchol, tabacco, etc. When the economy goes down the tubes, cosumers drink and smoke more (anti-depressants). Employeed folks have more time to drink and smoke than the employeed. I believe there are Vice/Sin ETF or Mutual funds.
Another option is to invest in bear market funds that go up in value as the economy and the markets take a dive.
The question remains is that will we see some massive gov’t bailouts, and how it effects the markets. A big bailout would increase the money supply and probably drive up inflation causing stock prices to start rising again. When inflation is high, prices for goods and services rise which means stock earnings go up. Its possible for a company to sell much less, but still have earnings growth. I believe that part of the reason why companies had good third quarter results was because of higher inflation.
I think for the near term stocks will fall and unemployment will rise because consumers spending is falling, as the credit crunch is cutting off credit to both consumers and businesses. Over a near term (12 to 24 months) its difficult to say which direction the market heads for. It really depends on how much money Congress throws at the declining economy.
There are oil companies (can’t remember which ones off the top of my head) that mostly do the pumping on land that other people own. They get a fee plus a percentage of what the oil sells for.
They become MUCH more profitable when the price of oil goes up because they are getting their percentage of a much higher number. As long as the wells they pump aren’t running out, they will have greatly increased profits during a peak oil scenario.
Keep in mind, though, that if the economy tanks for any reason that demand for oil will plummet, driving the prices much lower.
There’s always a risk, isn’t there?
This actually answered my downside, thank you!