The Rude Awakening
Wall Street, New York
Friday, July 14, 2006

-------------------------

• Get your bid cards ready and your checkbooks out –
  how to buy your own oil company,
  
  
• The future of natural gas prices set to rise,
  
  
• Oil charges towards $80, the markets take a gut
  punch, science and popcorn and much more...

-------------------------

Counting cabs from a Pearl Street perch, Joel Bowman
reports...

How many barrels of oil does it take to fuel all the cars,
buses, trains, planes, supertankers, Hummers, motorcycles
and armies in the world?

In an effort to solve such a perplexing puzzle, a highly
skilled team of statisticians and I conducted a scientific
experiment, the magnitude of which has never before been
seen. 

From our carefully selected vantage point, high above New
York's Pearl Street, we set about counting the traffic that
passed by the bustling intersection below. All variables
would be under the strictest control possible and to
further validate the experiment, the microwave would signal
a predetermined time frame within which we could gather our
sensitive data.

In the time that it takes to (slightly) burn a bag of
microwave popcorn, Eric's three vigilant children managed
to tally 52 cabs, 27 private vehicles and 18 trucks and
buses - a total of ninety-seven vehicles roaring by under
our windowsill in just over two minutes.

Today the owners of these hundred odd vehicles joined the
bemoaning of millions of others as oil prices left the
seventy-six dollar mark in its wake. It is only a matter of
time before sharp hikes like this pack a punch at the gas
station where you top up your tank.

But not everybody is griping while the global volatility in
oil rich areas continues to drive prices through the roof.
Some long-term investors are actually relishing the
proliferation of opportunities such volatility is yielding.
Outstanding Investments' Justice Litle explains below...

--- The Ultimate Investment ---

The Agora Financial Reserve Is Open...

The Agora Financial Reserve is open...join now and get all
of our top research - for life. Make sure you secure your
membership soon...this offer is only good until midnight on
July 30, 2006. Click on the link below for a letter from
the Reserve Founder:

Agora Financial Reserve - Open Until July 30

http://www.isecureonline.com/Reports/AFR/EAFRG716
 
-------------------------
 
Explosive Opportunities
By Justice Litle

Now that North Korea is firing test missiles into the Sea
of Japan, and Israel is firing real missiles into Lebanon,
very few investors are eager to purchase stocks. Even gold
and oil stocks are finding few buyers. But these short-term
(we hope) anxieties are creating opportunities for long-
term investors, including the long-term investors that run
some of the world's largest natural resource companies.

Three recent takeover deals in the resource sector stand
out for size and scope. At a combined $21 billion-plus,
Anadarko Petroleum's dual bids for Kerr-McGee and Western
Gas Resources rank as the eighth biggest energy deal of all
time, according to Thomson Financial and The Wall Street
Journal. Yet, that is the smallest of the three deals
recently bandied about.

In base metals, Phelps Dodge has put together an evenen
more audacious bid, worth $40 billion, for Canadian mining
companies Inco and Falconbridge. And finally, Indian steel
magnate Lakshmi Mittal looks to have prevailed in his
protracted takeover battle for No. 2 steelmaker Arcelor,
after fighting off ugly management tactics, derailing a
sketchy Russian merger and upping his bid to more than $33
billion.

Wall Street is typically distrustful of large mergers and
acquisitions. The ones forking out the cash wind up with
the short end of the stick more often than not, and the
most touted deals can wind up destroying shareholder value.
The footing is not always sound: It is sometimes the case
that the CEO has an ego to feed and wants a shot at
climbing the Fortune 500 league tables or thinks a bigger
expense account would go well with a bigger company. But on
the flip side of things, when a big acquisition actually
has solid strategy and skillful execution behind it, the
long-term benefits can be well worth the cost.

What is the rationale behind these three recent plays? In
each case, the logic is unique, but the underlying theme of
strategic focus is similar. These companies are looking
beyond short-term results and thinking about long-term
positioning.

In Anadarko's case, the Kerr-McGee and Western Gas bids are
a contrarian bet on natural gas in the Rocky Mountain
region. Natural gas in general, and the Rockies in
particular, have been mostly written off this year, with
plenty of natural gas in storage after a mild winter and no
sign of a supply shortfall. But longer-dated energy futures
tell a different story: While front-month natural gas is
trading in the neighborhood of $6 per MMBTU, contracts two
and three years out are trading 40% higher.

The compelling element of the natural gas story is the
ongoing decline of North American gas wells; even with
significantly increased exploration and drilling efforts,
overall production has flat-lined. Producers are running to
stand still as demand creeps higher, pushed by consumer
use, commercial use and even demand from energy-intensive
recovery operations like the Canadian oil sands. A
disruptive summer weather event – a.k.a. a hurricane – or
the return of cold winter, could get natural gas rocking
and rolling again in a hurry.

Anadarko is acting now because it sees the inevitable
trends that will keep nat gas supply tight and make
expanded production profitable. Nor does it hurt to snap up
a roster of high-quality geologists and engineers, as
Anadarko is doing, when they are in perpetually short
supply.

The Phelps Dodge bid is harder to suss out, as it
represents third-party entry into a multiparty bidding war
already under way. (Both Inco and Falconbridge are being
aggressively bid on by other suitors, even as one bids for
the other.) Shareholders are questioning the logic of the
deal, but it is clear Phelps Dodge wants to diversify,
hoping to become not just the biggest publicly traded
copper mining firm, but the biggest nickel miner too.

In his bid for No. 2 steelmaker Arcelor, Lakshmi Mittal of
Mittal Steel is interested in diversity of markets, rather
than product, seeking access to Arcelor's higher-margin
opportunities. Mittal also hopes to tap the negotiating
clout and bargaining power that comes with huge size, as
the combined Arcelor Mittal would be a global steel
behemoth four times the size of its nearest rival.

Managers here are deliberately taking a long-term
perspective; they are looking many years out and
positioning themselves for the landscape ahead. We suspect
that individual investors ought to do likewise.

As long as Wall Street continues to undervalue the earnings
power of well-managed energy companies, and continues to
underestimate the value of a long-term perspective, the
merger and acquisition fever will still have legs.

A company like Anadarko has no need of the short-term
thinking that animates Wall Street's manic trading action.
Anadarko's management understands as well as any investor
that supplies of oil and gas are becoming increasingly
valuable, especially the supplies the lie underneath
American soil.

And clearly, Anadarko is not the only oil major on the
prowl to "buy reserves." The biggest of big deals could
still be in the works.

[Joel's Note: You may not have a few billion stashed under
the floorboards to muster a serious bid of your own, but
you can still profit from exciting M&A activity just like
these. All it takes is some research and diligence.
Hulbert's Financial Digest recently ranked Outstanding
Investments as its number one investment newsletter of the
last five years. You can start your resource research with
this report right here:

Energy = Wealth
http://www.agora-inc.com/reports/OST/EOSTFB09

--- Protect Yourself ---

A Shocking Financial Prediction From the #1 Ranked Advisory
Letter
Your Chance to See Profits up to 257% - Or Your Money Back!
 
If we printed this shocking prediction here, you wouldn't
believe it - even though it's coming from the #1 performing
advisory letter of the last five years. Mountains of
evidence back them up. And if they're wrong, they'll give
you your money back. Don't wait another second. Get the
details on the massive move they see ahead… and discover 5
specific investments that could help you cash in!
 
www.isecureonline.com/Reports/OST/EOSTG710

-------------------------

And the Markets...