This from Lou:

Billionaire investor George Soros and I don’t normally see eye to eye. He supports drug decriminalization, assisted suicide, America bashing… and a host of other off-the-reserve liberal causes.

I don’t. I’m an old-school Reagan conservative. (Full disclosure – I’m so old school, I named my first born after the late President.)

But here’s the thing. When it comes to investing, great political divides matter little. Because it’s not about getting our guy elected or unashamedly pushing a partisan agenda.

Instead, business – and by extension, investing in businesses – is only about increasing profits, as Milton Friedman put it. And based on the latest SEC filing for Soros’ hedge fund, we both agree on the best way for investing in crude oil’s imminent rebound…

Interested in Making Money In Stocks? Bookmark This Website…

If you’re interested in making money in stocks, regardless of your political leanings, you should bookmark the following website – and visit it daily. It’s a link to the most recent SEC filings.

• The first thing you should scan for are Form 4 filings. For a refresher on why, consult my friend Alex Green’s recent column on tracking insider trading.
• The next best thing to insiders backing up the truck is institutions doing so. And that’s because numerous studies confirm heavy institutional buying almost always leads to excess returns in future months.
• In other words, follow the “smart money” and you’ll often profit, too. And thankfully, we can easily monitor institutional purchases (and sales) via Form 13-F filings.

You see, the SEC requires all money managers with over $100 million in assets to disclose their U.S.-traded stocks, options and convertible bonds each quarter. And yesterday, Soros’ hedge fund firm, Soros Fund Management LLC, made its holdings public.

Turns out he increased his stake in one company by roughly 16 million shares, or 74%. And since April, he’s more than tripled his stake in this company to 36.8 million shares, up from 11.4 million.

Petrobras – The Best Play for Investing in Crude Oil

The object of Soros buying is none other than Brazil’s state-controlled oil company, Petrobras (NYSE: PBR). It’s a wise investment in my opinion. In fact, I recommended it to Oxford Club members last month at our Chapter Meeting in Managua, Nicaragua.

Here are five reasons why -

1. New discoveries. Worldwide oil demand might be off. But it’s temporary. And even if demand miraculously plateaus (don’t count on it with gas below $2 per gallon), the world would still “need to replace one Saudi Arabia per three years,” according to Petrobras’ CEO. No other company is making bigger discoveries than Petrobras. In fact, the company’s recent finds could triple its reserves. And as we all know, the country with the oil is always in control.
2. Long-term focus. With crude below $40 per barrel, most oil companies are cutting back on exploration and development. Not Petrobras. They plan to spend $174 billion by 2013, which ensures they’ll have plenty of products to sell when oil prices climb higher.
3. Low cost. Management estimates it can be profitable on new projects, even if crude oil stays around $45 per barrel. Few – if any – other major oil producers can claim such a low hurdle rate. Basic economic principles govern here – the low cost provider of a commodity enjoys the most profits when prices rise. And share prices often go along for the ride, too.
4. Deep-water expertise. All the easy-to-find crude oil is gone. But Petrobras is an expert in deep-water exploration. That’s a competitive advantage no other oil company can touch. And it should continue to help Petrobras add reserves at much lower costs than its peers.
5. Valuation. Emerging markets took it on the chin – twice as hard as the United States – despite stronger underlying fundamentals. It’s pointless to argue whether or not it was deserved. What matters is many high-quality stocks got caught up in the downdraft and now trade at mouthwatering levels. Petrobras is no exception, trading for less than 10 times earnings.

Add it all up, and this is one time I’m willing to admit I actually agree with George Soros. But forget about me. His sizeable investment and track record – last year his Quantum Endowment Fund returned 8%, compared to an 18% loss for the average hedge fund – are reasons enough to consider adding Petrobras to your portfolio.

Source: Investing in Crude Oil: The Best Way to Play Oil’s Imminent Rebound

U.S. Treasury bonds, the only asset in the world appreciating along with the dollar and the yen since mid-July, have skyrocketed in value since November 18. The yield on the benchmark 10-year Treasury now fetches just 2.54% – the lowest yield since 1954.

Even more incredible is the yield now offered by short-term government bills. It’s possible that yields might even turn negative before the day is through. The last time T-bill yields turned negative was in the 1930s; a negative interest rate implies investors are paying the government to park cash and not the other way around.

Evidence of heightened investor fears reached a nadir this morning with 30-day and 90-day U.S. Treasury bills yielding only 0.10%, or ten basis points – the lowest such yield since the 1930s. And six-month T-bills now yield a meager 0.20% – also in the record books.

The great paradox about the credit crisis at this stage is how investors continue to lunge after super low yielding T-bills and T-bonds when an entire gamut of fixed income markets – many with implicit government guarantees – are yielding north of 7%. Investors are indeed pricing in a serious deflation.

The U.S. 30-Year Treasury bond now yields just 3.04%, also trading at a 53-year low. Why would someone give the government money for 30 years at these rates? Short of a full-blown Depression, which I don’t think will occur, long-term bonds are the most overvalued asset in the world leading up to over $1 trillion dollars worth of Treasury bond issuance in 2009 and probably more in 2010. The only reason why an investor would buy this paper now is because of imminent financial Armageddon.

Meanwhile, investors are paid to take risk. And the values now in high quality investment grade corporate bonds, agency bonds, TIPs and convertible bonds are just too compelling to ignore. These markets all crashed starting in mid-September but have started to recover nicely over the last three weeks while stocks gyrate like a yo-yo. A 7% yield today seems mighty sweet.

Financial Armageddon is still a possibility. Global central banks and governments have spent trillions since August 2007 attacking clogged credit arteries, but only with limited success. At some point, however, I truly believe central banks will restart credit markets again as coordinated policy finally begins to work. Credit markets will unclog.

Tired of trying to pick a bottom in the stock market? I am. I have no idea where stocks are heading from one day to the next amid intense volatility. But I do believe high quality fixed-income securities should be purchased at these attractive levels for long-term investors. The values are too attractive to ignore.

Also, assuming stronger credits have stabilized at this point, investors can buy this sector without the dizzy volatility associated with common stocks, which ultimately lead to ulcers anyway as new lows are violated following every rally since last October.

Source: 30-Day and 90-Day T-Bill Yields Plunge to just 0.10%

The Dow, however, dipped under its October 27 low of 8,176 while the S&P 500 Index was far below its 848.92 low last month.

The CBOE Volatility Index – which measures options traders’ sentiment on the S&P 500 Index – plunged 10% to 59.83. That’s still a highly elevated level with the VIX in record territory since Lehman’s collapse in mid-September. In 2008, the VIX has surged 113% and has gained an average 73% annually since November 2005.

An extreme VIX reading continues to suggest stocks are seriously oversold. Other market sentiment indicators remain highly stressed, including investment advisor sentiment (highly bearish), high cash levels at mutual funds and hedge funds and record equity fund and hedge fund redemptions. With everyone heading out the door at the same time over the last 60 days, contrarian investors believe stocks can post a major rally off the recent lows.

Since September 1, the Dow has crashed a cumulative 26% while the S&P 500 Index has plunged 32%. Worse, the MSCI Emerging Markets Index has collapsed, down a dizzy 42%. Over the same period gold prices have declined 10% while the euro has tanked 11.6%.

Just where the stock market is heading next is anyone’s guess. From one day to the next it’s like watching a wild rollercoaster; big price swings are indicative of a major transition ahead to either a bottoming process and then higher stock values, or worse, the next leg down for this bear market. It just seems that every time we have a big rally the sellers always tend to emerge.

I suggest investors remain highly defensive. It’s just not worth chasing this market. Remember, we are entering a “soft” economic depression as suggested by Swiss money-manager, Felix Zulauf. I embrace this view.

The economic news is still deteriorating and despite an oversold stock market, corporate earnings don’t look encouraging as global demand falls off the charts this fall. Any big rally should be viewed as an opportunity to sell unwanted stocks and raise shorts or reverse-indexing positions.

If you’re adamant about bottom fishing at these prices, consider going into the market carefully through income producing securities like bombed out convertible bonds, investment grade corporate bonds and TIPs. These are all highly attractive segments of credit right now and still miles below their highs following a major crash in September and October.

Source: Volatility Levels off the Charts