A LOOK 2013

                                                           
This is, to paraphrase Dickens, the worst of the clueless versus the best of the clued-in time, a time when much money will change hands now that we have four more of the Bamster crowd.

Worse nightmare: taxes rise? Nope! Worst nightmare: taxes go up and deficit stays same or expands. Printing presses world-wide running hard. Japan's debt to GDP 250%, US 170%; highest in history for country: UK 290% in 1815 and again in 1945, British lost its currency status as international trade currency after WW II. US housing market showing some vague life-like signs, much of it coming from higher rents when demand there increased owing to the trashed home-buying market. Demand or lack thereof creates markets, up or down. Housing inventory still high, banks afraid to lend, oil at $85/barrel--cheap. US has one ace in hole--domestic gas and shale oil, but politicians could screw that up. Materials, metals, agriculture all places for money. Water too.

Romney biggest winner in election; he won't have to explain messy next 4 years. Biggest losers the great unwashed masses of the clueless. Rising prices not only way to create inflation, debasing the fiat currency works just as good. It's going on big-time. Bamster loves the word equal, but a Russian immigrant recently told me, equal there means everyone is poor, working hard and have jobs, but top 10% have all the money. Familiar ring. Here it's top 1%. No middle class there, vanishing one here. Divided nations create opportunities. In fact, one could argue when was it ever undivided.

Take look at how dollar debased over last 100 years, the anniversary of Federal Reserve Bank and the IRS, both created in 1913.

We have not had 20% market decline since the bottom in 2008. 20% declines usually occur about every 3.5 years. We've had couple 10 percenters and one 17% in 2011, so after lame duck season ends, political dealing begins. But the market may well tip it's mood before that. Lot of talk/concern right now about fiscal cliff. Market may soon, if not already, factor in that possibility. Most likely scenario non-event short-term.

Here two oil picks to add to, BP and COP. BP just settled spill issue and has 5.3% yield at current price, 40.16, mid-way between 36 and 48 on 52w high-low. Earning 4.95 this year and possibly 5.20 next, trading at 8x earnings. Added kicker also just settled dispute with Russia. Similar story for COP, trading just over 54 with 52w high-low 50-78 range at 9x times earnings yielding 5% earning close to 6 a share.  Average yield on S&P 500 stocks 2% and trading at p/e 14. These are good rainy-day buys in here with recent pullback in energy prices.

With taxes set to go up muni bonds should become more in demand, but higher interest rates when they arrive, and they will, could prove troublesome. Like the line in a long-ago popular song: It's just a matter of time. Could be facing a cap on part of tax-exemption of muni bonds based on one's tax bracket. A Bamster proposal.

Some of the bartering is in and dividends for those earning less than 400k for single folks and 450k for married couples survived at 15% tax rate. Above that the pic gets a bit like the portrait of old Dorian Gray, pretty ugly. Interest income took a hard hit, so investors will react accordingly. The same for capital gains in the higher brackets.

To put it succinctly, the recent deal to avoid a cliff that was better advertised than the upcoming Super Bowl where Beyonce will do the halftime gig will be is just a period between crises. This lull presents major opportunity in the energy sector. Meanwhile, back at the ranch the Obamacare surcharge tax at 3.9% gets added to interest income and that coupled with this administration's latest definition of "rich" spells trouble in so-called paradise. Rich is as rich does.

New US credit downgrading in the wind. And if you like the quirky, unfathomable, see
Oregon where legislators want to tax all those greenies who rushed out and bought a Prius. It's a mileage tax. And don't laugh Washington has one on the books and Nevada is considering. Reason: falling tax revenues at the gas pump. The Washington tax requires electric vehicle owners to pony up an annual flat tax and a mileage added tax is under consideration. So where is Ed Begley, Jr. When you need him?

Investments: buys

Oil ............. yes
Gold/silver...........yes
Energy...........yes
Good quality dividend payers......both here and Europe...yes. General Mills, Diebold, J&J

US Treasuries.......no
Bonds.....no. Munis....yes with care and benefit of clergy.

We want some exposure to large cap European stocks, most likely via either vanguard /fidelity fund. Also commodities via fund. Copper has already started back up. Agriculture, too. One financial we like is HBAN, Huntington Bank, traded in low 20s in 2007 and has chance to return there. Slowly buying more. Trading around book value with small dividend. Made its mistakes, but is now well-run regional with some upside.

Other outside the box good dividend plays are SCCO, Southern Copper, an Arizona based metals that mines more than just copper--lead, molybdenum and zinc with 6.5% yield trading at around 11p/e. Another is CLF with big yield, low payout ratio, trading way off 52 week highs. This is a good return-of-inflation play.