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A funny take on the stimulus checks / “Big Apple” / searching for alternative energy

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May 06, 2008 – Comments (13) | RELATED TICKERS: GE , ENERQ.DL , FPL.DL2

While doing research on the government stimulus checks and the potential impact that they will have upon the economy, I stumbled across this hilarious take on them from comedic author Dave Barry:

“Q. What is an Economic Stimulus Payment?

A. It is money that the federal government will
send to taxpayers.

Q. Where will the government get this money?

A. From taxpayers.

Q. So the government is giving me back my own
money?

A. Only a smidgen.

Q. What is the purpose of this payment?

A. The plan is that you will use the money to
purchase a high-definition TV set, thus
stimulating the economy.

Q. But isn't that stimulating the economy of
China?

A. Shut up.”

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Speaking of terrible economic policy decisions that will have a detrimental impact upon the U.S. dollar, how about that gas tax holiday.  Apparently it wasn’t ridiculed enough in the media when McCain proposed it because Hillary has hopped on the bandwagon now as well.  She has responded to criticism of the gas tax holiday by a panel of 200 economists, including four former Nobel price winners, by essentially calling them elitist (see article: Clinton dismisses 'elite' economists on gas tax plan).  HAHAHAHAHAHA.  I realize that economists are often wrong...as the saying goes they have correctly predicted fourteen of the last three recessions or something like that...but I think that I am going to go with them over her on this one.  Let me see if I can simplify things for her:

Let’s say that you have a thing that is the backbone of your entire economy…for the purpose of this exercise we’ll call it apples.  You use apple juice to drive your cars, fly your planes, power your boats, create plastic containers to put things in, to create fertilizer to grow food…basically everything.  The problem with apples is that 90% of the world’s supply of them is controlled by people other than American companies, aka “Big Apple.”  On top of that, many of these people either completely hate you, have already picked a lot of their low hanging fruit, have underinvested in their apple harvesting infrastructure, or have such political turmoil that gathering apples in their country is not safe. 

What is the logical solution to this problem?  How about we tax “Big Apple” and use that money to lower the taxes on apples for consumers?  What’s that you say?  Doing so will only cause them to use more of this finite resource and make matters worse.  Huh.  I guess that was a dumb idea after all.  It would be like using corn to fuel our larger than necessary SUVs and trucks while global hunger is causing people to riot.  What?  We’re already doing that. Oh.

Good grief.  We’re all doomed (I say this somewhat jokingly, but unfortunately not enough).  If you’re going to tax the heck out of Big Oil, which I disagree with, but that’s a whole different debate, at least use the money to fund research on alternative energy, not to encourage U.S. citizens to consumer even more gas.

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OK, I need a new sector to focus my research on.  First I was in love with spin-offs, then ag companies, then oil, I’m looking for suggestions for a new sector to dig around in.  Alternative energy is interesting, but solar has obviously already had a huge run.  One company that I have been peeking at a little lately is Energy Conversion Devices (ENER).  I’m not usually a big fan of companies that don’t make money, but these guys look like they might soon and they have a huge stable of patents. 

Some wind plays that have popped up on my radar including FPL and Otter Tail (OTTR), the latter of which I have owned in the past.  GE is obviously a huge player in this arena, and the huge drop in its stock price makes it look much more attractive, but it’s just too big (that’s an understatement) for my taste.  Does anyone out there have any suggestions that I can do some research on?  Let’s throw a bunch of stuff at the wall and see what sticks.  

Thanks and have a good one.

Deej

13 Comments – Post Your Own

#1) On May 06, 2008 at 7:54 AM, abitare (39.45) wrote:

IFX, HL, ORA, AA, SPN, BHI

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#2) On May 06, 2008 at 8:43 AM, Andyman (94.56) wrote:

Deej,

May I suggest biotech or Saas companies? I think the market tends to undervalue these categories. The market percieves no new hotness, only tired and bustedness. I think they're wrong, but as with any sector, there's plenty of snake oil to avoid.

Within biotech, you can look at medical devices or pharmaceuticals. Devices generally have an easier time navigating the regulatory landscape, but good ones are few and far between. Pharma takes longer to get to market, but as investors we often have the opportunity to own a piece of some really astounding, life-saving intellectual property for cheap.

Pharma generally takes one of three approaches. They can develop their own pipeline by screening compounds on a massive scale, and hope to find one that does something useful, or they can rationally design it for a specific effect. Or they can just in-license a pipeline from other company's compounds.

In-licensing can be a great way to assemble a pipeline quickly, but for my money, nothing beats the pure science of rational design.

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#3) On May 06, 2008 at 9:39 AM, Hezakiah (93.94) wrote:

Maybe we should also suspend the tobacco tax so that poor smokers do not feel like they are getting burned...

I mantain that gas taxes should be severely increased... the politicians can argue over how to best (and most fairly) re-inject the money into the economy.  You are exactly right that Clinton and McCain want to provide extra incentive for the very practice that is currently the source of the problem.

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#4) On May 06, 2008 at 10:08 AM, leohaas (32.77) wrote:

We need to wean ourserselves off "apples". Double the gas tax, and use the money to invest in alternative energy research.

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#5) On May 06, 2008 at 10:29 AM, devoish (98.38) wrote:

So, you like a small, profitable and expanding business. Would you also like a product that saves its customers money? And an alternative energy play.

Good luck,

Devoish

Long LXU, also you could try WFI on the TSX.

PS in the case of LXU if you look, could you help explain their different stock types and compensation for me?

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#6) On May 06, 2008 at 10:57 AM, TMFDeej (99.41) wrote:

Thanks for the suggestions everyone.  I'll definitely make sure to check them out.

I know that I'm probably asking for too much, but it doesn't hurt right Devoish :).

Deej

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#7) On May 06, 2008 at 11:45 AM, TMFDeej (99.41) wrote:

Hey hey4ndr3w.  I agree that there are a lot pf potential big winners in biotech, but the problem with the sector is that I have very little first hand knowledge on it.  I have done extendive research on the oil and ag plays and I understand them reasonably well.  With biotech I feel like it would be more of a crapshoot.  I have no idea which drugs will get approved and which ones won't.  I would have to rely heavily on input from others.  I'm not completely ruling the sector out, but I think that I would feel more comfortable elsewhere. 

Medical devices is a little more attractive for me, but there is so much uncertainty about healthcare with the Presidential race going on that it is difficult to tell what will happen.  If I recall correctly, a number of the medical device companies have gotten pretty beaten up lately.  Perhaps this would be a good entry point.  It's not like they're going to go away.

Deej

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#8) On May 08, 2008 at 8:37 AM, Terok1313 (31.10) wrote:

I've been meaning to look deeper into battery producers, myself.  I've taken the contrarian view here on CAPS and gone long on ABAT.

Here's an article I read a few days ago that might have some good places to start (again, it's something I've been meaning to do, but haven't yet):

http://www.forbes.com/2008/05/05/lithium-batteries-electricity-pf-ii-in_mm_0505energyintelligence_inl.html?partner=alerts 

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#9) On May 08, 2008 at 10:35 AM, TMFDeej (99.41) wrote:

ARGGGGGGGGGGGGG!!!!

ENER

Should have pulled the trigger.

Deej

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#10) On May 08, 2008 at 10:21 PM, Terok1313 (31.10) wrote:

Aww, hell.  I've been in training all week or I would've actually followed through on those intentions.  Hopefully there's still some other nice values in the segment.

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#11) On May 20, 2008 at 4:08 PM, TDRH (99.68) wrote:

Look at OESX after June/July.   The initial warrant holders will have cleared out their money and the stock should stabilize and provide long term growth.

 

 

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#12) On May 21, 2008 at 5:41 PM, joshmcbride (23.30) wrote:

Great points, The whole country needs to be committed to alternative energy, that includes Politics. Let's find solutions and not feed the problem. Of course Hilary and McCain Just want in office so they will say anything. After they get in they won't do any good, and it's not just them, none of them will do any good. Lets look at the word POLITICS. Poli is a Greek work meaning "Many" and Tics means "Blood Suckers" So they're

"Many Blood Suckers"

I rest my case. We're all doomed if we depend on the "Geniuses" of Washington to take care of it. All they want is their huge paychecks for life.

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#13) On May 23, 2008 at 1:10 PM, TMFEldrehad (99.99) wrote:

I have never understood, for one second, the call to tax "Big Oil".

Do these people even bother to think at all?  What do they suppose "Big Oil" is going to do in response?  Hrm...  maybe, just maybe, attempt to pass these increased costs onto consumers?  Nah, can't be.

After all, oil companies are faceless, nebulous entities who make tons of money on the backs of us poor working people.  Never mind that the costs that can't be passed onto consumers will be bourne by the shareholders.  Anyone out there own a mutual fund?  If so, when people talk about taxing "Big Oil" they're talking about taxing *you* either as a consumer, as a shareholder, or both.

Good grief.

-Russell (a.k.a. TMFEldrehad)

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