NEW YORK (MarketWatch) -- When I last wrote about Outstanding Investments, I noted that it was calmly contemplating a commodities correction. Editor Byron King allowed as how oil, then around $105, might correct to $85 or so -- but then "spike back" above $100 and resume its upward march because of a profound imbalance between supply and demand.
Obviously, Outstanding Investments' oil optimism paid off, as it has for the past several years. Currently, OI is the sixth-best performing investment letter over the past 12 months according to the Hulbert Financial Digest, up 27.3% vs. negative 4.87% for the dividend-reinvested Dow Jones Wilshire 5000.
Over the past five years, the letter has achieved a remarkable 40.39% annualized gain, vs. 11.77% annualized for the total return Dow Jones Wilshire 5000.
Outstanding Investments, which with good reason used to be called Real Asset Investor, has been through a number of editors with varying results. But since the HFD started following it at the end of 1999, it has been up 21.5% annualized vs. only 1.1% annualized for the Dow Jones Wilshire 5000.
That, of course, coincided with the new real assets bull market (and the peak of the stock market). But, hey, OI was there.
OI seems to be so calmly confident about its macro philosophy that its latest issue barely discusses energy prices at all. Byron King's stock of the month is a supplier of cement plant technology, Khd Humboldt Wedag Intl. Ltd. (KHD
Sponsored by:KHD) KHD.
King writes apologetically: "I know. It sounds boring. Unless, of course, you need cement. And everybody needs cement. Directly or indirectly, you use cement all day, every day ... The developing world is, as the expression goes, 'developing.' And it cannot develop without cement."
But Kevin Kerr, who seems to blow in and out of Outstanding Investments according to the inscrutable whim of its publisher, Agora Financial, adds a characteristically flamboyant assessment of the impact of rising energy costs on agriculture. According to Kerr, we all have to become "locavores" -- consumers of food that is locally produced. (A section of OI's portfolio is devoted to "infrastructure and logistics," claiming profits in stocks like Canadian Pac Ry Ltd. (CP
Sponsored by:CP) )
(Kerr is also the editor of MarketWatch Global Resources Trader.)
On their Web site, however, OI editors have been much more focused on energy moves. Last Friday, Kerr wrote:
"Another day, another record crude oil price. It's like that movie "Groundhog Day," in which the same thing keeps happening over and over again to Bill Murray.
"Doesn't it seem like every day we wake up lately the news is blasting about record energy prices and a weaker dollar? So where will it end, and how high can prices go?
"... I think the answers are that crude can and will go much higher and that this summer could be an extremely painful reality check for U.S. consumers, myself included."
Kerr says his "near-term target" for oil is $140.
Kerr also expects $1,500 gold in the next nine to 12 months. He writes:
"I think all signs are there for another big rally ... I have been calling for a pullback to $822 but we never got there; close, but not $822. My feeling is now there are more inflation troubles on the horizon, the dollar is looking weaker and weaker and the other shoe is likely ready to drop."
He adds, interestingly: "I actually like silver on a supply/demand basis even better than gold."