A Full Blown Energy Crisis? It seems like oil prices have only one way to go. Up! This spring has been brutal on oil prices. We worried about $100 a barrel oil and $3.00 gasoline but we passed those barriers like they weren't even there. All this time, we've had a totally unexpected rally in the stock market. I can only say that I didn't expect it and I doubt that these levels can hold. My position is that the market hasn't figured out the difficulties that our economy will face because of these price levels. Although I am leaving day-after-tomorrow to drive to Colorado, I doubt there are very many families who plan to travel this spring or summer with fuel prices at these levels. Hotels, restaurants, and tourist related business haven't even begun to feel these effects yet. Truck drivers can strike all they want to but the only way they can cope is to raise their own prices. Some airlines will have to raise their prices to compensate and have already begun to do so via imposing a fee for all checked baggage. Retail stores and restaurants have been closing stores due to reduced traffic. This is bound to have an effect on the stock market. Don't expect the current prices to hold. Stay invested in dividend stocks but sell others, perhaps even energy stocks, into rallies. Raise cash for opportunities which will arise later.
Has The Housing Market Turned Around? Recent data show that it hasn't with nationwide prices dropping more than 3% during the past 12 months. These data also show how strongly regional factors affect the marketplace. In Tibodaux, Louisiana home prices increased 11%, the highest in the nation. You will probably be shocked to find out that number two was Grand Junction, Colorado with an increase in excess of 9%. No major city in Colorado reported a decrease. Is it time to venture into residential real estate investments? Some think it is; however, don't expect price increases to accelerate rapidly. It could be years before we see strong appreciation again. Still, those who want to diversify will probably find the returns from residential real estate investments will exceed those available from the stock and bond markets, particularly with the potential for renewed inflation.
Why Is Colorado Housing Doing Better Than The Rest of The Country? Part of the answer is the energy business. Colorado has always been sort of a hub for oil and natural gas exploration and production. I get numerous e-mails about the potential of "The Bakken Fields which are located in the Williston Basin of Montana and the Dakotas. The area is reported to contain 500 billion barrels of light sweet crude which has only become available due to improved drilling technology. Of course, much of this is probably hype but drilling activity has picked up considerably. Certainly, there are other areas in the Rocky Mountains and Denver will probably regain some of its reputation as an energy hub. These are high paying jobs and will probably insulate us from some of the ill effects of the slow down in other sectors.
Headed To Colorado For a Month. As I said before, I am driving towards Denver day after tomorrow. I will be available for client meetings so any of you who need to schedule a meeting can call our office and leave your contact information. Of course, you can also send an e-mail; however, I am not as tied to the computer while on the road as I am at other times. You can also leave some contact information in the event that I run out of money and can't afford the gas to get all the way home. Your help would be appreciated.
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