This article by Jay Hancock of the Baltimore Sun:
The Fed is printing money to clean up the housing bubble, which was fueled by the money it printed to clean up the Internet bubble. The only question is what kind of bubble the new money will inflate.Read The WHOLE thing.
Bet on oil and other energy.
Unfortunately for energy users, which is all of us, it may be years before the oil foam settles down. If this were the Internet bubble, we're probably closer to Nasdaq 2,500 in 1998 than Nasdaq 5,000 in 2000.
Every bubble needs a story. The Internet story was that the whole economy would shift to the Web. The housing story was that people don't trade Cape Cods and ranchers like penny stocks and that Wall Street knew how to lend to high-risk borrowers.
The energy story is that the planet is running out of oil, and we must pay $115 a barrel or more or return to the Stone Age. The "peak oil" theory, a fringe doomsday scenario a few years ago, is now an investment philosophy.
Like the other bubble stories, the energy tale contains substantial truth. It's just a matter of how much the truth is going to cost you.
Some energy analysts believe the natural price of oil, based on supply and demand, is $70 a barrel or less. This implies we're already into bubble territory.
There is no question that heavy speculation helped drive oil to $115. As with all good bubbles, leverage - investing with cheap, borrowed money furnished by the Fed - is a key inflator. Oil is the haven of choice for investors fleeing the dollar, which is the object of its own speculation.
Now taxi drivers talk about investing in Exxon Mobil. Exxon Mobil, The Wall Street Journal reported this week, is planning its future as though oil will return to $65. Maybe it knows something we don't.
With a slowing world economy, oil's price pop has outpaced increase in demand. The Energy Department projects that U.S. consumption will fall this year. Warren Buffett dumped his stake in PetroChina last year, although he later told Fox Business News that he "sold a little too soon."