Market Crash

There were lots of buying opportunities yesterday. Solar stocks like LDK, FSLR, & SOL got pushed way down even thought the fundamentals are good. By the end of the year I expect to see SOL back to nearly $20 and LDK hit $50 again. According to a post in Digitimes today, spot polysilicon prices are over $400/kg and 6-inch solar wafers are around $12. As LDK progresses towards 16,000 tons per year of polysilicon production their earnings will continue to grow. I see the stock price hitting $100 by late 2009.

Lehman lesson

Lehman has filed for bankruptcy. Even after Bear Stearns and IndyMac I was still investing in companies without doing due diligence. I went short Lehman in the mid 40's after analyzing the preferred series P offering. However I turned long in the 20's thinking it had bottomed and considering Meredith Whitney was supportive of Lehman.

When big investors like Joe Lewis loose over a billion on Bear Stearns it should be a lesson to be very careful. I thought lightning doesn't strike twice.

Oil prices

With the recent pull back in oil, some are talking about prices in the $30's. My forecast is for prices in the $70-$100 range for the next few years, with some spikes over $100. OPEC has been talking about supporting oil prices in the $85-$100 range, and the economics of new technologies like oil shale and existing oil sands extraction don't make much sense when oil goes below $50-$70.
Gas should trade in the $7-$10/MMBTU range, and should be near a bottom now ($7.17). The oil/gas ratio is now over 15; an unsustainable level since a barrel of oil is about 6 million BTUs. By December I expect gas to return to the $10 range.

Stock Portfolio

Not a great day on the markets. Suncor is down to $50.61. It is my biggest holding, with an average cost of just over $55. I plan to increase my position by another 10% or so with a buy around $50. On an upward move I'll sell covered calls for half my position at $65 and liquidate the rest around $70.

Encana is down but I'm still in the black. I'm about half in on Encana so my plan is to write naked puts in the $65 range and add to my long position if it drops below $62. The covered calls I wrote last week have given a cushion against the drop.