In this "Special Report", I would like to ask a few important "philosophical questions" to my readers. Firstly - our Federal Reserve Chairman Alan Greenspan discusses the implications and consequences of aging population on things such as Social Security again in a speech he made last Friday. Readers may recall that I briefly mentioned this problem in I was about 24 June comment. I urge you to establish this worldwide phenomenon of the aging population on the rear holdminds. If you are like most people, then you earn you living by producing a certain thing – such as a consumer good, or a service that the masses want. Let’s face it – how many people really “struck it rich” by being pure traders or investment managers? The stock market and other financial markets are definitely very important to us investors/traders but this “super secular trend” of the aging of the worldwide population will impact every aspect of our lives, whether it is losing our relative competitiveness on the world stage, increasing pension and healthcare costs, or even a potential fundamental change in our political system.

The second question I would like my readers to think about is the possible end of the era of cheap energy prices - an era that we really enjoyed for the past two decades, without regard to the long-term effects. The United States, with less than five percent of the world's population, consume currentlyapproximately 25% of the world’s energy each year. Supply is maturing while demand continues to surge – as exemplified by the surging in demand from China and India. In the meantime, spare energy-producing capacity and inventory levels have been at all-time lows – potential for a perfect storm?

Finally, I want to ask my readers the following question: What kind of investor are you? What investing style do you adopt and what investing style are you most comfortable with? Can you a contrary and buy when the amount of the sale or you are just a trailer, the only comfortable if you're fit? These are simple questions - but these are questions you really need to ask you to really invest money in the long run. If my readers for taking the time to think about these three questions or problems - and ultimately have a clear idea of even one of the questions - then you are much better than in an economic situationMost Americans from five to ten years.

To get started, what are the possible effects of "aging" phenomenon? Readers recall that my 24th in my June commentary, I stated: "Assuming that the current level of benefits remain into the future, provided that the amount of taxes is not raised, then public benefits to retirees would increase significantly going forward too. At the far end to Japan and Spain a more than 100% increase in their expenses for retirees.Sure, that's not sustainable. Either things such as defense or education spending must be cut, or the above mentioned countries must increase their taxes. Neither scenario is ideal. Borrowing more of their funds is not a long term solution. Includes cutting funding in defense and education have a future in the country, and the collection of taxes is a huge social and financial burden on the population of the developed world - where the tax is already at historically highLevel. Think about that if you're a bright, young, French industrialist and you were forced to pay 60% of your income in taxes to support older people, what would you do? Why would you vote with their feet and move to another country to make it more tax-friendly and business-friendly - and it will be another great talent that can make a big contribution to the economy in French. To recognize the governments of the developed world - but there are no easy solutions.

"ThisPicture is gloomier when one takes note of a study that was done by the Bank Credit Analyst. In this study, the BCA predicts that by the year 2050, the percentage of the developed countries of the world's population is less than 14% - or about equal to the population of the Islamic peoples of over 30% in 1950 falling in the world. Similarly, Yemen will be more populous than Germany in 2050, while Iraq will be 30% more residents than in Italy (Iraq is less than 40% of the size of Italytoday). Russian population is expected to fall further - at a rate such that the population of Iran will be even greater than that in Russia in 2050. India is the most populous country in the world and Pakistan will only lag the U.S. by approximately 50 million people. If developed countries do not choose now to work harder and become more efficient, then they will eventually lose their comparative advantage, as the younger population of the world is by naturehardworking, energetic, innovative and creative. In today's globalized world, this is a killer for the average worker in the developed countries - the more so if the language barrier is broken down (the successful commercialization of universal language translators is expected in ten to fifteen years to be the case). Overall I am more optimistic than the elimination of the language barrier will greatly enhance business opportunities and efficiency, but a person such as theaverage American worker is losing its comparative advantage in the global workforce. The availability of a large supply of labor should also drive wages in the global market - and likely to increase the unequal distribution of wealth in the developed countries of today. "

As I have already mentioned, there are no simple solutions. If the average American is an increase of 10 years in his life, he or she can reasonably or logically be retiring the currentnormal retirement age of 65 years (which was established during the Roosevelt administration in the 1930s) without placing an undue burden on the system? The answer is probably "no." Application of the same work year-to-year retirement money on his new life, then the average American, you should probably around five to six years more work - so that the revision of the normal retirement age of 70 years or so. Moreover, all this analysis are based on the outdated population distribution) in the form of a pyramid - where the younger and more able workers represent a majority of the population (and where the elderly represents only a small minority of the population. The pyramid distribution has historically facilitated government support was borne of the elderly - such as the monetary and social burdens through a relatively large younger population. The recent experience in Europe and Japan suggests a more even distribution in the population of theseCountries continues - as the birth rate in these countries now lamentably below the replacement rate of the population. The situation in the United States is currently not as drastically) (given our relatively lax immigration policy, but we are going in the same direction. In order to keep the current standard of living in retirement, my guess is that people not only have to work longer, but work more hours in the present (and save more) aswell.

The situation is alarming when one considers that the population of China and India makes up about 1 / 3 of the population of the world. The number of unemployed in China is larger than the entire workforce of the United States. The competition for relatively unskilled jobs will continue, and it promises to accelerate going forward. The average American who does not stay ahead of the curve or does not keep pace, the trend will find his workoutsourced - not to mention the average wage is driven down by global competition. I think, for one, that this continuing trend of globalization will make the world a better place, as hundreds of thousands of people will finally be empowered as they climb out of absolute poverty (again, more than half the world population is currently less live as two U.S. dollars per day) - and what the prices are driven by consumer products continue to evolve. The average American will probablydo not agree, but the trend of globalization and "offshoring" will not stop. The last time the United States adopted economic and military isolationism we had a global economic crisis and later the Second World War. I honestly do not think that this was an accident.

The trend of the general aging population and globalization have a profound effect on all Americans. Ultimately, I believe, will benefit all Americans - even though it might not be clear to people who lose theirWorkplaces today. For the initiated and nimble, you will find not only survive but thrive in these "interesting new times." Imagine a market for your product, which is more than ten times the size of the population in the United States. China and India has historically disappointed - as the citizens of these countries have historically consume far too poor to U.S. goods and services. Globalization and offshoring will have all of them. A world that is economically compensated for an averagemuch more secure and less conflictive world.

Now I would like (a similar address concerns of all Americans - as the era of cheap energy, especially the low energy prices by the Americans in the last twenty years of experience) comes to an end. Although I believe that oil prices will decline to say in the short term (for the next few months), I am long term bullish on oil and natural gas prices (I'll) just about oil in this commentary. Consider the following:

The world oil supplyis flatter. Readers may not know this, but the United States today still produce enough oil for about 40% of total domestic demand to satisfy. The United States also had 22.7 billion barrels of proven oil reserves of 1 January 2004, eleventh highest in the world. According to the Energy Information Administration (EIA), the United States produces around 7.9 million barrels per day in 2003. This is lower than the projected 10.6 million barrels on averagein 1985. The peak of domestic oil supplies eventually arrived in the 1970s. Today is the total domestic production in 50-year low - and still falling.
While Saudi Arabia (the world's largest exporter and 25% of the reported reserves in the world contains) has contended that it and there will be no supply problems for the next few decades, they have not been transparent with their reserves data. According to Simmons & Company International, between five and seven key fields in Saudi Arabia produce 90% to95% of total oil production - all but two fields very old - with the last major find reported in 1968. The latest published reserves data was to be in 1975 - still at Saudi Aramco, Exxon, Mobil, Chevron Texaco and managed. Identified in this report, the world's best experts that all the key fields at that time contained 108 billion barrels of oil in recoverable reserves. If this is true, then the head of supply in Saudi Arabia, will come soon. Moreover, if the reportis correct, then there really is no "Plan B" (unlike in the 1970s when the center of power shifted from the Texas Railroad Commission to OPEC due to the equalization of supply in the United States) - Crude oil prices soar.
The "last frontier" for the production of oil (namely the North Sea, Siberia and Alaska) is now aging. Most companies have to struggle now to maintain their current production.
World demand for oil continues to rise. Oil demand in theIn the early 1990s stayed relatively flat (about 66 until 68 million barrels per day), but in the next ten years, until today, a rise in world oil demand of 14 million barrels per day. Today, total world oil demand is greater than 82 million barrels per day. The energy "experts" predicted in the early 1990s, a flattening of demand for oil, which attributed the growth and demand growth in developing countries were totally wrong.
No new refineries have been built in the United States in the last twoFor decades, even as refineries have been closed every year during the same period. Refining capacity from 1981 until the mid 1990s also dropped drastically) (this author estimates a drop of approximately 6 million barrels per day in refining capacity during that period. Since 1994, however, contributed to an expansion of refining capacity in existing refineries to increase refining capacity of 15.0 million barrels per day to 16.7 million barrels a day (today). DespiteThis expansion is exhausted, however, domestic refining capacity is still to extremes, such as capacity utilization at U.S. refineries is now averaging nearly 90% - so there is no cushion room if something unforeseen happens.

Currently, there are three factors at work which should contribute to a further increase in the world price of oil - the maturation of the supply, growing demand and the lack of a cushion in refining capacity and low inventories. The "culprit" is usually referred to as China, but itIt is interesting that the United States has had virtually no domestic energy policy (in the sense of preserving and promoting the development of alternative fuels) for the last little more than twenty years. China demand, however, has risen in recent years. It is now the second largest oil consumer, who just surpassed Japan for the title. The demand for oil in China more than doubled in the last 10 years (from today's 6 million barrels per day), and this amazing increase inis projected to continue, especially given the fact that oil demand in China is still a modest 2 barrels per person per year (up to 25 barrels per person here in the United States) in comparison. Furthermore, it is interesting to note that the number of cars in China amounted to only 700,000 in 1993 and 1.8 million as late as in 2001. Today the number of cars in China has amounted to more than 7 million euros - a figure which could have been much higher if not for the Chinese governmentIntervention in limiting the number of cars that can be sold and driven each year. Well, the scary part: Current oil demand in India could only 0.7 barrels per person per year - given the fact that oil demand in India to explode over the next ten years - except a massive worldwide recession or depression.

I think my readers should be made aware of the current energy supply / demand situation. For these reasons, what is the best approach for the averageAmericans? How about the best approach, if you occupied the head of a motor company like GM or a pilot with a legacy airlines like Delta? How about the best approach for a fund manager or a commodity fund manager? Since there are no easy solutions, no easy answers, it should not. In the short term () three to five years, Americans will pay if we want to drive gas-guzzling SUVs, and legacy airlines like Delta will continue to reduce costslikely to continue slashing labor costs by as their first priority. A further improvement in extraction technology should help, but need to be the serious development of alternative fuels start now. I also believe that the next serious decline is induced by a combination of an "oil shock" and a rise in interest rates. Readers may recall the relative strength chart that I developed in my 15th August this shows the AMEX Oil Index versus the S & P 500 and the huge potential inverseHead and shoulders pattern in this table. For now, the relative strength line should bounce around the neckline, the line drawn on the table) (- maybe even for a few years - but as soon as the relative strength line convincingly breaks above the neckline, crude oil prices could rise to $ 80 or even $ 100 per barrel. I hope that you ensure that my readers would not be surprised if gas prices at the pump rises to $ 4.00 a gallon five to six years from now.

Finally, I would like to ask my readersthe following question: Have you had the time to learn more about the mental state and how they affected your investment or trading decisions? What kind of person you are when it comes to the market? Are you a so-called buy-and-holder, a swing trader or day trader? An independent thinker, a contrarian, a momentum investor or merely a follower? I ask you these questions because I am following considerations:

This author believes that we are currently asecular bear market in domestic common stocks. While I believe that this current rally still have more room to go, I believe that a cyclical bear market will emerge in due time – this upcoming cyclical bear market may even take us back or below the lows that we hit during October 2002. If this is true, then a buy-and-hold portfolio would definitely not work – unless you were in natural resources or precious metals mining stocks.
When this cyclical bull market tops out, all your friends, Relatives and the popular media ask you to buy more or hold their common stock. The bears and all bearish thoughts will be ostracized and frowned upon. This has happened in every bull market of all in all the history of mankind. If you are in cash now, you could cash in when the top finally comes, or you will not resist and leave because you're afraid of "buy" with the train the station without you "remain, so to speak?
Most people are by nature notGood day traders or even swing traders. To even be good in the past, you need a huge amount of commitment and discipline.

Investment and trade have always been dominated by emotions and always will be. My thinking in starting www.marketthoughts.com have always known that if I can my readers to buy now, it will sell a much easier decision for them and keep money when the DJIA reaches 11,000 or 12,000 or so - as to be in cash and stay out for the rest of the oppositeThis bear market. 99% of Americans are just not disciplined enough, or paid in cash during a bear market stay - not to mention staying in cash during the entirety of a bear market and buying and holding common stocks during the entirety of a subsequent bull market. The average human psyche is just not in a position to do so. For this reason, I sincerely believe that the success would be in the market (for most people) in the next five to ten yearsinclude the swings to the right start, or almost the right time. For readers who just can not resist, I am, I will continue to recommend some common stocks at reasonable times, but in no way should my readers take my recommendations as gospel and in no way should my readers all their eggs in one basket. If you are a person who can stay in cash for the next ten years and wait until the Dow Jones Industrials has a P / E below 10 and a dividend yield of over 5%, then more power to you - you areeither already rich who have no need to make money in the market anyway or you are very disciplined and independent thinking people. Most Americans can not do it - but I'm here to help.

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