A Real Black Swan...

...If it is true which I cannot vouch for but this is fascinating and something I have to say I have never thought of. A reader who goes by the name Paul H. M. at Seeking Alpha left the following comment on a post by George Speicher.

We're not really dependent on foreign energy. We have plenty of natural gas. And large amounts of oil reserves. Our strategy, for the long term, is to use the rest of the world's oil before using our own. So using foreign energy before using up our own is a choice, a strategy, not something we need to do. Remember: the Pentagon makes a lot of these decisions. Guys like Bush or Obama simply sell them to the public.

Off the top the strategic petroleum reserve had 727 million barrels at the end of June which at about 20 million per day works out to a little over a months' worth of oil. Actually I believe we import 60% of our oil which if correct means the SPR could last for about two months which is still not a lot. The US obviously has the potential to produce a larger percentage of the daily need, if not all of it, save for the politics. I dunno, I thought it was an interesting turn the tables kind of comment.

The actual post was sort of about how Niall Ferguson would invest given his very pessimistic outlook. He favors countries with favorable debt to GDP ratios with specific mentions of Canada and Norway. Canada is very easy to access with ETFs; iShares MSCI Canada (EWC) and the IQ Canada Small Cap ETF (CNDA). There are also some niche ETFs out there with relatively large exposures to Canada but I would not call them pure plays.

There are also countless ADRs that are easily accessible in most of the big sectors although I would stay away from the Canadian Ma Bell telecoms. We own a bank and an oil company (to correct a comment from a post a couple of weeks ago we have targeted about 5% to Canada for quite a while now). There are also a bunch of funky income vehicles tied to things like hydroelectricity, ice and cocoa among others. Some are solid and have good yields but they tend to be very cyclical as many of them went down more than the broad market during the meltdown. If you dabble in this part of the Canadian market, I do not BTW, I would go with a very limited exposure.

Norway is more difficult to access. The GlobalX Nordic 30 ETF (GXF) probably has the largest exposure but it is only 15% of the fund. We've owned Statoil (STO) for years now and have also had two year sovereign debt from Norway since 2007 (rolled it in 2009). There are not a lot of ADRs which means of you don't want STO but you do want Norway then you'll have to go to the pinksheets to find a stock. As a quick note because sometimes there is confusion on this point, buying a foreign stock off of the pinksheets is not the same thing as buying a US company that trades on the bulletin board.

Short post today.