Investing

Mohammad Khatami, the ex-president of Iran is doing a two-week speaking tour here in the United States. Apparently he needs the speaking fees to help fund his country’s foreign policy since oil has declined almost 14% from its $78 high in late July.

What is he talking about at our universities, social groups and even the U.N.? How the West misunderstands the Mid-East and we all need to sit down and talk about our differences. The only thing we need to talk about is how his country is ignoring the protests of the rest of the world and continues to work at developing a nuclear explosive.

Because of this nose-thumbing, the people of the world were nervous about what would happen if Iran defied the U.N. mandate. This fear kept the issue of Iran on the front headline and in the minds of speculators for months. Each time a media person burped the word Iran the price of oil futures went up.

Now the deadline is past, nothing is happening, Mohammad Khatami is over here talking, talking and more talking. What are the people of America doing, especially those who are cheering the recent $.50 drop in gas prices while all this talk continues? They’re like the kids in the back of the classroom falling asleep. The rumors of war are old news, the NFL is kicking off soon, and oil continues to slip downward, for now.

My money is on oil futures continuing to trend lower through mid-November. There will be some peaks, especially if someone starts getting serious doing something about Iran and the bomb. However, over the next 6 weeks I believe oil futures could possibly dip into the upper $50 range, barring any major disruption in the Gulf of Mexico.

Once the elections are over and America is turning its attention to Christmas and the rosy economic picture the price of oil futures will begin to rise again. Mid-October will be a good time to buy oil futures for mid-2008. These futures will rise in value and should be sold in a ladder pattern - 20% every $5 you make in profit.

The bear is still chasing the stocks of companies who buy debt and attempt to collect. In fact, the bear is going to be around until the negative effects of high energy prices and rising interest rates dissipate.

These two issues are the reason the reported collection levels for the second quarter were lower than analysts expected. Slowing collections are believed to be part of the reason NCO Group is going private. The merger offer is $27.50 a share, recently the stock was selling on NASDAQ for $26.

Encore, another debt buyer is exploring ways to unlock value, could also go private. If stock prices remain low, the pressure will be on for other companies to go private again, or by take-over targets. Asset Acceptance is a third company that may leave the public arena.

All companies face the rising price of debt portfolios from other public companies and debt buying organizations backed by private investor and large fund groups. As the cost of buying debt increases and the ability to collect from cash strapped debtors decreases, earnings will continue to fall.

Encores earnings are down 7% year over year. NCO Group reported 31 cents a share net income, down from 42 cents last year. The only real exception was Portfolio Recovery which grew its earnings 23 percent year over year.

If you are holding onto shares of a debt buyer, you have two choices – hang on and hope for someone who wants to take the company private, or give the stock to a charitable organization and write it off your taxes as a worthwhile donation.

Procrastination is bought and paid for with a very large price tag.

Everybody likes to live in the here and now and not worry about tomorrow. The problem with this is that eventually tomorrow becomes the here and now and you are going to reap the benefits of your investment decisions.

Whether you are accumulating a nest egg for early retirement, or want to protect that nest egg and your independence with insurance, time is the most important asset you have at your disposal. A cruel irony: every year you delay your insurance decision increases the cost.

Being under-insured means you risk facing bills with lots of zeros. It means you are putting your retirement savings, your 401(k), your bank passbook account, your current wages, future investment potential, your children’s college fund and even your home at risk of being confiscated to pay for your debts.

By waiting a few more years you are going to pay a lot more for it. Wait too long and you won’t qualify. The largest cost of delaying your insurance protection is not the premium, it is not having the coverage when you need it.

Don’t look at the insurance coverage premium as just one more monthly bill. Consider it an investment in your future financial well being. By waiting, high blood pressure, accidents or a chronic illness can severely decrease the return, and protection, in your later years when you really need it.

Abbott Laboratories (ABT) is a drug and device medical company currently trading at 16 times its expected 2007 earnings of $2.82 per share. That is significantly below the 5-year average of 20.

The reason it is trading so low is multi-faceted but can in large part be blamed on the disappointing failures last year of prostate-cancer treatment drug Xinlay, and the heart-failure medication Simdax. Wall Street is also weary of medical stocks as the health care companies have lost 5% of their value in the past 5 years.

The reason many value investors are looking at Abbott Laboratories as a good buy right now is because of it’s recent acquisition of Guidant’s vascular-devise business. Purchased in April for $4.1 billion, the vascular division is producing $1.4 billion of this years estimated $22 billion in revenue and is expected double by 2009. It is also likely to boost Abbot’s earnings growth rate into the double digits from a current single digit performance.

Humira, the rheumatoid arthritis drug, is producing 12% of the profits and is going to grow bigger in the next several years. It’s competitive advantage is impressive; less dosing than Amgen’s Enbrel, and being injectable is more convenient than Johnson & Johnson’s Remicade.

With the prior disappointments already factored into the stock price, this $44 stock is poised to move upward. In the coming year it’s stock price could move upward to trade in the $54 range.