Top Proven Oil Reserves by Country

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According to the BP Statistical Review of World Energy 2012, Venezuela has the most proven oil reserves in the world. The country is estimated to have reserves of about 297 billion barrels followed by Saudi Arabia at 265 billion barrels.

Saudi Arabian crude is considered to be of high quality. Venezuelan  crude oil is is extra-heavy crude and is of lower quality. This crude can be produced at one-third the cost of producing crude from Canadian oil sands.However  due to politics production has declined considerably in the past few years.Venezuelans also enjoy the cheapest price per gallon for premium gasoline in the world paying just $0.09 per gallon compared to $10.12 by Norwegians who pay the highest rate.

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Proven Oil Reserves by Country

Proven-Oil-Reserves-by-Country

 

Source: BP Statistical Review of World Energy 2012

Via Chavez’s Troubled Legacy for Venezuela’s Oil Industry, by Blake Clayton of Council on Foreign Relations

 

U.S Homeowners’ Housing Equity Since 1960s

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For most Americans the biggest purchase they will ever make in their life is a house. Next in this list of “necessities” of life in the U.S. is a car. Sadly both the purchases involve high transaction costs and consumers are the mercy of crooked salesmen and saleswomen who are more likely to put them in more debt than they have to. Last month fellow financial blogger and chief executive of FusionIQ Barry Ritholtz wrote about the ordeal of car buying process from a dealer.

The process of buying a house is also similar with too many players involved starting with the realtor. Unlike in other countries, home ownership is almost considered as a right and not a privilege. Until the credit crisis stuck, anyone – legal or illegal in the country and had a heartbeat – could get a mortgage to buy a house even with No Jobs, No Income and No Assets (NINJA) loans. Hence the U.S. has one of the highest home ownership in the world. Though technically most people that have mortgages don’t actually their homes, they are still considered as “owners”. In reality the banks that made the mortgage loan owns the property.

Most realtors and others will push the belief that buying a house is the best investment one will ever make. This because, they will state that with homes one can build equity and owing a home is cheaper than renting. They will also mention that one can even build wealth and use the house as an ATM by getting cash with home equity loans when housing prices soar. Nothing could be further from the truth. Today millions of “homeowners” own underwater homes – meaning they owe more on the property than the house is worth.

Here is a chart showing the disaster that building equity by homeowners since 1960:

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US-HomeOwners-Equity

Source: Investment Strategy, Special 2013 Outlook, AXA Investment Managers

From the AXA research report:

The housing market has finally bottomed out: prices, construction and sales are all on the rise. However, the legacy of the boom looms large over US homeowners. Until house prices went into reverse in 2006 the average US homeowner had a 60% equity stake in their home, now it is closer to 40%

(Exhibit 10). However, even this dramatic 20pp slide doesn’t reveal the full gory detail.

 

Related:

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US-MiddleClass-Wealth

Source:  U.S. Homeowners Are Repeating Their Mistakes. Bloomberg BusinessWeek, Feb 14, 2013

Which Stocks Are Closely Tied To The Housing Market ?

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The housing industry is closely tied to many other industries including finance, home-improvement, machine tools, etc. When the construction industry booms all these industries experience a boom. After the credit crisis most of these industries suffered heavily as consumers cut back on renovations and the housing market tanked badly. As the housing market has stabilized and is slowly recovering, all these industries are showing signs of life.

According to an article in the Journal, as the residential market recovers many companies are enjoying strong sales. From “From Power Tools to Carpets, Housing Recovery Signs Mount“:

The U.S. housing recovery is starting to show up in corporate results.

Companies that sell power tools, air conditioners, carpet fibers, furniture and cement mixers are reporting stronger sales for the fourth quarter, providing further evidence that a turnaround in the housing market is taking hold.The results add to data on home construction and pricing that indicate a bottom may have been reached after the sector’s long slide. While the incoming data continue to be mixed, evidence that Americans are spending more to build and refurbish homes is raising executives’ confidence that the housing market will continue to improve and help fuel the broader economy.

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Housing-market-Stocks

 

However caution is warranted as many of the housing-related stocks have already shot up in anticipation of the recovery. Hence these stocks may actually fall as the recovery becomes stronger. From another article in the Journal:

Since August 2011, the Philadelphia Housing Sector index of U.S. home-building stocks has jumped about 140%, while the Standard & Poor’s 500-stock index is up about 30%. U.S. house prices overall have risen by less than 10%.

Housing stocks have clearly run up too high too fast. So from an investment perspective, it is better to avoid stocks directly related to housing such as home builders, home improvement companies, etc. Banks may provide one option to profit from the recovery as their earnings are broadly diversified.

Top Traded Foreign Stocks of 2012 by Value

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The following foreign stocks were the most traded in 2012 based on dollar volume. The companies are traded in descending order.

a) Western Europe:

1.Company: BP Plc (BP)
Current Dividend Yield: 4.82%
Sector: Oil & Gas – Integrated
Country: UK

2.Company: Vodafone Group (VOD)
Current Dividend Yield: 5.60%
Sector: Telecom
Country: UK

3.Company: Rio Tinto plc (RIO)
Current Dividend Yield: 2.85%
Sector: Metal Mining
Country: UK

4.Company: Total (TOT)
Current Dividend Yield: 5.42%
Sector: Oil & Gas – Integrated
Country:France

5.Company: Nokia (NOK)
Current Dividend Yield: 6.31%
Sector: Communications Equipment
Country: Finland

b) Eastern Europe

1.Company: Gazprom (OGZPY)
Current Dividend Yield: 5.89%
Sector: Natural Gas Utilities
Country: Russia

2.Company: Lukoil (LUKOY)
Current Dividend Yield: 5.37%
Sector: Oil & Gas – Integrated
Country: Russia

3.Company: Sberbank (SBRCY)
Current Dividend Yield: 1.72%
Sector: Banking
Country: Russia

4.Company: Rosneft (OJSCY)
Sector: Oil & Gas – Integrated
Country: Russia

5.Company: Norilsk Nickel (NILSY)
Current Dividend Yield: 6.14%
Sector: Metal Mining
Country: Russia

c) Asia Pacific

1.Company: Baidu (BIDU)
Current Dividend Yield: N/A
Sector: Computer Services
Country:China

2.Company: BHP Billiton (BHP)
Current Dividend Yield:
Sector: Metal Mining
Country:Australia

3.Company: Taiwan Semiconductor Manufacturing (TSM)
Current Dividend Yield: 2.75%
Sector: Semiconductors
Country: Taiwan

4.Company: Infosys Technologies (INFY)
Current Dividend Yield: 1.61%
Sector: Software & Programming
Country:India

5.Company: Melco Crown Entertainment (MPEL)
Current Dividend Yield: N/A
Sector: Casinos & Gaming
Country: Hong Kong

d) Latin America

1.Company: Vale (VALE)
Current Dividend Yield: 5.59%
Sector: Metal Mining
Country: Brazil

2.Company: Petrobras (PBR)
Current Dividend Yield: 6.64%
Sector: Oil & Gas – Integrated
Country: Brazil

3.Company: Itau Unibanco (ITUB)
Current Dividend Yield: 4.47%
Sector: Banking
Country: Brazil

4.Company: Petrobras (Preferred) (PBR.A)
Current Dividend Yield: 1.30%
Sector: Oil & Gas – Integrated
Country: Brazil

5.Company: America Movil (AMX)
Current Dividend Yield: 1.69%
Sector: Telecom
Country: Mexico

e) Middle East and Africa

1.Company: Teva Pharmaceutical Industries Ltd (TEVA)
Current Dividend Yield: 2.72%
Sector: Biotechnology & Drugs
Country: Israel

2.Company: AngloGold Ashanti Holdings (AU)
Sector: Mining
Country: South Africa

3.Company: Gold Fields (GFI)
Current Dividend Yield: 4.10%
Sector: Mining
Country: South Africa

4.Company: Harmony Gold (HMY)
Current Dividend Yield: 1.73%
Sector: Mining
Country: South Africa

5.Company: Sasol (SSL)
Current Dividend Yield: 4.70%
Sector: Chemical Manufacturing
Country: South Africa

Note: Dividend yields noted are as of Feb 1, 2013

Disclosure: Long ITUB, PBR

Source: The Depository Market, 2012 YearBook, BNY Mellon

What are Sin Stocks?

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Companies that produce and sell alcohol, operates casinos and sell tobacco products are called as “Sin” stocks. In this sector, tobacco stocks usually have high dividend yields and steady growth. Tobacco companies make high profit margins and their products generally sell well despite high taxes as people become addicted to them.

Casino stocks are volatile and their performance is highly related to the state of the economy. Beer and other alcohol product sales tend to be more stable even in recessions and go higher when the economy is in expansion mode. One reason for this could be that prices of beer for example are relatively cheap and consumers are able to afford it even in recessions.

XX sin stocks trading on the markets are listed below with their current dividend yields:

1.Company: Lorillard Inc (LO)
Current Dividend Yield: 5.21%
Sector: Tobacco

2.Company: Altria Group Inc (MO)
Current Dividend Yield: 5.26%
Sector: Tobacco

3.Company: Reynolds American Inc (RAI)
Current Dividend Yield: 5.38%
Sector: Tobacco

4.Company: Molson Coors Brewing Co (TAP)
Current Dividend Yield: 2.84%
Sector: Beverages (Alcoholic)

5.Company: Constellation Brands Inc (STZ)
Current Dividend Yield: No dividends paid
Sector: Beverages (Alcoholic)

6.Company: Las Vegas Sands Corp (LVS)
Current Dividend Yield: 1.90%
Sector: Casinos & Gaming

7.Company: MGM Resorts International (MGM)
Current Dividend Yield: No dividends paid
Sector: Casinos & Gaming

8.Company: Wynn Resorts Ltd (WYNN)
Current Dividend Yield: 1.61%
Sector: Casinos & Gaming

9.Company: Beam Inc (BEAM)
Current Dividend Yield: 1.45%
Sector: Beverages (Alcoholic)

10.Company: Brown Forman Corp (BF-B)
Current Dividend Yield: 1.57%
Sector: Beverages (Alcoholic)

Note: Dividend yields noted are as of Jan 25, 2013

Beam increased its dividends by 10% when it reported the latest earnings last week. Brown Forman is the owner of the world famous Jack Daniel’s Tennessee Whiskey brand.

Disclosure: No Positions