Just Back from Las Vegas

[dan_s]

I just returned from a short trip to Las Vegas where Susan and I had a great visit with our son, Chase and his wife, Eyrun. Eyrun was born and raised in Iceland where her entire family lives today except for a brother who runs a bed and breakfast in GreenLand. Her family is safe from the volcano but the ash cloud is making a mess of things.

The wife and I were in Vegas about six months ago and it was dead. Things have really picked up and the cab drivers are in a much better mood. This is a very bullish sign for the economy in general and for growing energy consumption.

The oil price will flop around in the $80 - $85 range for awhile longer but eventually it will drive past $85/bbl which should then become a solid support level. All of the Sweet-16 companies will do quite well in a world of $85 oil.

Frankly, I'm a bit surprised to see natural gas holding up so well - if you can call $4.35/mcf "so well". Any increase in the industrial demand for natural gas will be very good news for the gassers and the drillers.

If you own Canadian Energy Trusts take the time to educate yourself on their oil / gas mix. Also, check carefully to see that they have a high percentage of their 2010 gas production hedged. I have a lot of my father's money in these trusts but I sell deep in the money covered calls against his entire interest to protect his downside. I only recommend using them for the high yield portion of your portfolio and I do recommend selling covered calls to increase your yield.

Dan