$90+ Oil — What Are the Newsletters Touting?

by Travis Johnson, Stock Gumshoe | November 27, 2007 3:22 pm

The world of newsletter email advertising is a big one, with lots of money swirling around, but it’s not all that complicated. You can see the same triggers bring about the same effect time and time again.

And one of the biggest triggers for many investors is the price of oil[1] — high oil prices, especially as they move through psychological barriers like $90 a barrel or, for gas, $3 a gallon, tend to make investors highly attuned to that sector. If you’re paying through the nose, shouldn’t there be a way for you to get rich from that?

Well, that’s clearly the emotion that the newsletter advisers are playing on these days — and that will probably continue. I was intrigued to read in a Jason Zweig column a few weeks ago, “inside the mind of the older investor[2],” that folks in their 60s and 70s (the most desirable demographic for investing newsletter publishers) might be much more susceptible to “greed” triggers than to “fear” triggers — that is, they might be more likely to bite on an ad that promises riches than an ad that promises to protect them from a bear market. They’re not as fearful as losing their money as younger investors are, but they tend to lose some impulse control on the greed side of the equation.

I suspect the newsletter publishers are well aware of this tendency, at least anecdotally, so while I still see some ads telling you what to do if the market collapses, I see many more touting the ways you can make money from the markets that are working right now — and oil is certainly one of those.

When it comes to newsletter teasers for oil stocks I’m seeing a few old reliables resurfacing — one of my favorites is the “2 trillion barrels of hidden oil” teaser[3] from Matt Badiali[4] at Stansberry. This one comes out pretty much every time oil makes the newspaper headlines, and as far as I can tell it hasn’t changed very much. It’s still teasing us about the big Green River shale formation in Colorado and its potential for oil development. The main company teased here is Royal Dutch Shell, which has been working on shale extraction technology for ages, but there still appears to me to be no hurry — Shell withdrew at least one of its mining permit applications back in June because of the still remarkably high cost of its extraction techniques, even with oil at historically high levels. The company is still active in research projects in the area, and the feds are still hoping to get some commercial leases arranged by next year, but who knows if this will be a real project or just another in a long line of shale oil feints when oil prices spike higher — whole towns have been decimated by boom and bust in Colorado on the hope of similar shale projects in the past.

Several other oil-related newsletter ad campaigns are resurfacing, too, especially those for Canadian stocks, including royalty trusts, and for the various oil sands[5] investments. The only specific one of these that I’ve sleuthed out has been Connacher Oil and Gas[6], and that was a long time ago, but there are many more that are also making return engagements.

And in the oil/alternative energy[7] space, both of which tend to move together the hits keep coming — geothermal[8] is about the “hottest” thing going right now, and those ads keep flowing in to my inbox, whether it’s the “slow volcano power[9]” ad that only surfaced a month or so ago or the earlier Western GeoPower ad[10] from Greg McCoach[11], or the Raft River MIT teaser[12] from earlier this year. There are others I haven’t gotten to yet, too, like a “China[13] Lake” teaser that’s going around at the moment, but hopefully I’ll get around to them soon.

Surprisingly enough, I haven’t seen the ads for Range Resources (the Somali oil investment)[14] perk back up again with record high oil prices — perhaps the folks at Taipan[15] are trying to lay low on that one after predicting a massive return (800%, if I remember correctly) by October (which, you might note, is now past) and seeing the stock at the moment hovering right around its initial teaser price from the Spring.

And to tell the truth, I’m also quite surprised that I haven’t seen a huge push for the solar[16] stocks — there were a massive number of solar stock teasers throughout the Summer and into September, which is of course no big surprise for a red-hot market like solar is (or was, at least), but I haven’t seen all the ads come back in the last month or so, even as many of the companies have had a recent surge and high energy prices are bringing them back to the front pages.

One that is making the rounds again is the “biggest solar energy project ever”[17] ad from Green Chip[18] Stocks, but I’m not seeing many other recent blasts from the past in the solar world. I’m told that Robert Hsu[19] finally sold his briefly touted favorite, LDK Solar (smart move, I think, I’d always avoid a company where the insiders are fighting about accounting), but wouldn’t be surprised to see the return of any of these other big past hits with oil remaining over $90 a barrel:

water[20]-and-small-cap-in.html&sa=D&usg=ALhdy2-lwXs6JfU6m6u3jEQBkkRQFh1yrA">World Water and Solar
SunPower[21]
MEMC Electronic Materials[22]
Suntech Power[23]
Trina Solar[24]
Or even the worst performer in this bunch so far, Akeena Solar[25]

I haven’t even mentioned the other favorite commodity plays from the newsletters, which are likewise big beneficiaries of the dollar’s fall and are, in many cases, making the rounds again. Many of those are microcap stocks that either trade over the counter or on the Canadian Venture exchange, and they have been regular favorites, especially the gold[26] stocks, of several of the big touters all year.

Nor have I mentioned the other perennial favorites of the panicked investor, the healthcare[27] and high dividend stocks — and those are in some cases coming back in newsletter advertising, too. Not only the big American Oil Pension ads[28] that I’ve seen hitting my inbox again (this teases four specific Master Limited Partnerships[29], and was dormant for a little while as MLPs suffered over the summer, but it’s back in force again today), but others that promise high returns or bear market safety, too.

So that’s a quick review of what’s happening in the newsletter world with high oil prices — if I were a betting man, I’d wager that if oil prices remain high the next big teaser ad push from the newsletters will be a return to the oil service stocks (particularly the land drillers like Nabors[30], which is down, and the deep water drillers like Transocean[31], which is up) and to the solar stocks I noted above, but you never know …

full disclosure: I own shares of MEMC Electronic Materials, and some stocks in the other mentioned industries (including Seadrill, Kepcorp and Centamin Egypt), but do not have an interest in any other companies mentioned here.

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