“Work eight hours and sleep eight hours and make sure that they are not the same hours.”

– T. Boone Pickens

Inflation can do tricky things to markets. It creates distortions. In those distortions, an intrepid investor can find some big moneymaking ideas. I think we’ve got one opening up in oil and gas, and it is not without precedent in financial markets. In fact, it’s starting to look a little like the tail end of the 1970s in some respects.

In the spring of 1969, the Dow Jones industrial average stood at 969. By 1982, the Dow hit 1,071. That’s thirteen years of going nowhere. (We’ve had 10 years or so of going nowhere, though the ride between the poles has been anything but boring).

The problem is inflation makes that performance

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US markets shot higher for the fourth consecutive day on Thursday as JP Morgan’s robust numbers fed hopes that the worst of the economic troubles had passed.  Although trade remained choppy throughout the session, markets succeeded in getting a foothold towards the end as traders picked up technology and financial stocks.  Technology-heavy NASDAQ ended at its highest level since October.   

The Dow Jones industrial average gained 94 points, or 1.1% and the S&P 500 index increased 8 points, or 0.9%. The NASDAQ index jumped 24 points, or 1.3%.  Volume remained moderate with only 1.2 billion shares exchanging hands on the New York Stock Exchange and advancing shares outpacing declining issues by a seven-to-three margin.  Stocks have rallied this week as better-than-expected earnings from Goldman Sachs (NYSE:GS) and Intel’s (NASDAQ:INTC) robust third quarter outlook have lifted sentiments on the Street.

Helping the sentiment further were reports that said New York

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Should investors be warming to commodities or is the sector set to blow cold again?

It has been a spring of market rallies, but few sectors have rallied as dramatically as commodities.

The sector took a mighty pounding last year. Global recessions typically hammer cyclically-driven stocks such as base metals, and prices collapsed by more than 60% in some cases. It didn’t help that investors feared that infrastructure-related demand from China would also plummet.

The oil price also collapsed from its $147 peak to a little over $30, although gold, as you may have noticed, surged in the opposite direction. Like the Grand Old Duke of York’s men, commodities had marched up to the top of the hill, and marched right down again.

Golden age
And now they’re up again. Copper is up 50% this year. The oil price has doubled. Agriculture has also

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Assigned reading so that you don’t get bored this weekend:

What the Fed? Geithner demands oversight Geithner deals Wall Street a can’t-lose hand Banks gear up to game the government Banks price toxic assets ridiculously high Where’s the plan, Wall Street? Mark-to-market is everything and why the rules must die You can’t have a price-earnings ratio without earnings Could you profit from the toxic assets plan? Q&A with Paul O’Neill The People’s Republic of America Get ready for Washington’s budget brawl Budget battle rife with contradictions Angry about the AIG bonuses? Here’s what should really disturb you A way out of government debt Is the economy starting to recover or just less bad? Good news can’t offset bad The earnings picture remains pretty dark out there New home sales ...

Exchange-traded funds (ETFs) are excellent trading vehicles that allow investors to easily play whole sectors, indexes, or individual commodities. ETFs may be structured like mutual funds, but are bought and sold like stocks.

Inverse ETFs enable one to place a bearish bet, effectively going “short” without having to borrow shares, as you would with stocks. Another advantage of inverse ETFs is that the downside risk of going long on the “short” is finite, meaning you can only lose your initial investment. The potential loss from shorting a stock is theoretically unlimited.

Leveraged ETFs are designed to replicate twice the expected gain or loss of the underlying commodity, index, or basket of equities. Large moves in the markets like those of the past few days create opportunities for leveraged ETFs to realize massive gains. FXP, for example, returns approximately twice the inverse (i.e., double short) of the China FXI index, and gained 26.3%

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Financial NewsJason Corcoran in Moscow23 June 2008 Investment climate is steady as new leader continues reform agenda Russia’s equity markets are enjoying the country’s honeymoon period under its new leadership, but investors remain wary of how the power-sharing arrangement will evolve.The changing of the guard on May 7 saw Vladimir Putin hand over the presidential mantle to his protégé Dmitry Medvedev. Within hours, Medvedev had nominated his mentor Putin as Prime Minister.The smooth choreography proved to be a fillip for Russia’s main stock markets and sparked a buying spree by foreign funds.The MSCI Russia Index was the best performing emerging equity market last month, rising 15.7%, and outperforming the MSCI EM Emea index, which rose 7.3% in the same month. Inflows recorded in the third week of May of $542m (€350m) were the highest in Russia ...