As we begin the new quarter, now is an excellent time to take stock of your basic investment thesis. Ask yourself if your allocations still reflect what you think the world is going to look like over the next several months. And as part of that process, I'm here to tell you that making "financial" decisions based solely on "financial" inputs grossly oversimplifies the way the world really works. As I've said before, investing in debt, equity, or commodity markets without geopolitical intelligence is like trading juice futures without getting a weather forecast. You can do it, but good luck to you.
I get my geopolitical intelligence from Stratfor. My friend George Friedman and his team have just published their 3rd Quarter Forecast. I got George to give me a copy I can share with you in this Special Edition of Outside the Box. As a Stratfor Member, you can get the 3Q Forecast - as well as their other forecasts and daily analyses - at a preferential rate available to my readers by clicking here. I strongly encourage you to add this valuable weapon to your investing arsenal.
Here are just some quick examples of how I use Stratfor to guide my thinking, in these cases on energy prices:
- Just living in Dallas, I'm pretty familiar with rig counts and EIA inventory numbers, but I confess that the power-sharing negotiations between the Nigerian government and the Ijaw tribe aren't the most common lunchtime talk.... What will those talks mean for Nigerian supply figures?
- At first glance it's not obvious that the Olympics is supporting oil prices. But then you dig down and realize that China's showcase for global credibility requires lots and lots of smiling citizens. Lots and lots of smiling citizens requires plentiful and cheap fuel. Plentiful and cheap fuel requires government purchases/subsidies - at prices that may not be sustainable. So when the TV cameras go home, how much will the communist government keep paying out to maintain those smiles?
- And those Iranian missile tests that just spiked crude prices? Do those mean war is really coming, or are these the last-round raises, before the US and Iran reach a settlement on Iraq?
There are no simple answers here. No price targets or earnings estimates to the penny. But gentle reader, that's the real world. Today's markets require hard thinking on a whole range of fronts, with geopolitics being right at the top of the list. Join Stratfor today, and you'll get the same intelligence I use to map out where I think the markets are going. And enjoy this Forecast...
John Mauldin, Editor
Outside the Box
Quarterly Forecast: Third Quarter 2008
For the first half of 2008, Stratfor focused its attention on three features of the international system. All three remain key factors, but all have also evolved notably.
First, we anticipated an endgame between the United States and Iran over the future of Iraq. We have been surprised at just how fast U.S.-Iranian negotiations have progressed, and consequently violence has dropped to its lowest levels…