What if the Dow races past 20,000?

Forget Doom! What if the Dow hits 20,000 first?At Mumbai like in many other cities around the globe investors lose sleepless nights over the future of the Dow and the US Economy. While Mr. Faber and Rogers may believe that the Big Bad Bear is around the corner, investors might wonder, if instead, given the strength of the US Economy the Dow races past 20,000 even as we hide cash under the mattress.

I'm here to tell you why the doom-and-gloomers aren't going to be quite as sure of themselves when we hit Dow 20,000.

The Dow broke 14,000 and has hit record highs 52 times since October, and the S&P 500 hit an all-time high. But the doom-and-gloomers don't care about that as they continue to beat their drum. They seem to think it's all a mirage.

My favorite are couple of Mutts on CNBC-TV18 and NDTV Profit. Blokes like Marc Faber and Jim Rogers are the guys for financial TV shows when bookers need a stopped-clock bear.

Additionally, the Supremo at TV18 has majorly been a Bear since April 2nd, 2007 -- he's been dead wrong for four years in a row and has not lost one ounce of his reserve. Touché, amigo. Never unsure but not always accurate -- the hallmark of a great pundit.

So let's take a trip to his neighborhood in Mumbai and go over a few things, because I want you to understand why his kind has been so wrong for so long. And there's no doubt in my mind that the doom-and-gloomers will continue to give us the same story all the way to Dow 20,000, which is great for us. Read on to find out why.

The Sky Isn't Falling

I'm sure you've heard that the collapse of the economy is imminent. (It's been called imminent more times in the past few years than John Edwards has called his hairstylist, for crying out loud.

The doom-and-gloomers are basing this theory on the American consumer:

Pay raises for 80% of Americans have barely beat inflation.

The housing market is in its sharpest slump in 15 years, and there are no signs of recovery. Gasoline is more than $3 a gallon, and oil is north of $70 per barrel.

The majority of Americans surveyed said the economy was better five years ago than it is today.

But all this bad news just doesn't translate into a spending drop, and I'll tell you why.

Historically Low UnemploymentNot only is 4.5% unemployment historically low, it actually understates the real economy. Most of the jobs created during the past five to six years fall into the category of the new American knowledge worker. US Employment figures do not consider Limited Liability Corporations as part of the pay-rolls. Infact, there have been more LLCs set up in the past five years than at any time in history, and they account for millions of high-paying jobs. The fact that these knowledge workers are not counted as employed is one of the secrets of the U.S. economy.

'Super Spenders' Going StrongAnother secret -- which shouldn't be a secret at all since we've talked about it a lot here -- is that the wealthiest 20% of Americans account for 40% of consumer spending.I'll say it again: 20% spend 40%. We call these Americans the "super spenders." Two dollars of spending for every dollar other Americans spend. And super-spender income and spending have been growing at a 5% rate.The doom-and-gloomers just don't seem to understand these secrets of the U.S. economy -- they've overlooked these shock absorbers that are built into it. And the impact of the super spender is the biggest one we have.

Here are some other economic shock absorbers to consider:

The positive economic impact of legal and illegal immigrants. The consumer spending of the 12 million-plus non-documented workers.The median age of Americans is 34, compared to over 40 in Europe and over 45 in Japan. A 50% reduction in oil per GDP. Historically low interest rates. Put it all together and you can see why the collapse the doom-and-gloomers keep waiting for doesn't happen.

Like Taking Candy From a Baby

So please, doomers, I'm begging you to continue to call for the collapse of the American consumer. Please keep saying that the economy is going down the tubes and that the stock market is going to tank.The wall of worry you've built up has created more wealth for us than we could have possibly done on our own. Without your blind disregard for the structural shifts in the global economy -- not just in the United States -- we wouldn't be sitting on this huge amount of cash that's been on the sidelines, waiting for your predicted crash.As that cash starts to come back into the market because investors can't stand to be on the sidelines any longer, that will be part of the recipe for Dow 20,000.Without the doomers' dogmatic belief that the U.S. government deficit is going to kill the economy, that we're headed for double-digit interest rates and that the dollar is going to collapse, we would not have had the huge amount of profits we've made since 2003.So I want to say thank you for seeing the "boogeyman" and for telling others he's coming. Remember, according to you guys, $40 oil was going to kill it the economy. And then it was $50 oil and then $60. Well, at $70 for sure. Then it was inflation taking off and subprime mortgages, even though they make up an incredibly small part of our entire mortgage system. You think you see the boogeyman over and over again.Without you guys, we wouldn't have this fabulous expansion and this fabulous stock market.So investors, when you see Faber and Rogers or some of the other doom-and-gloomers, give them a tip of the hat and thank them for all the wonderful profits you've made.And if you'd like to make some money while the Dow rolls past 14,000, 15,000 and 16,000, check out our write-ups. We're making money hand over fist. And it's a lot of fun making money while everybody says we're going down.

Thank you, doom-and-gloomers.

You're the best

New Fresh Calls ( 30-45 days )

At the current scenario its better to pick momentum strong scripts rather than bottom up approach...market is looking strong n fresh for another 400-500 points upmove in the near future

here are some of the stocks which are looking strong n gathering stong accumulation...one can pick these for the coming 15-45 days

United Phosperous...300 right now.....target 340.....375....STOPLOSS 270
Bonus candidate.....plus Fiis n mutual funds r holding 52%
solid for short term as well as long term

Tata Chemicals....right now 242.....target 265-290....Strict Stoploss of 235..EPS of 20

Crompton Greaves...right now 270....target 290....325...stoplos 240
mutual funds n Fii holding 40%.

Indian Seamless...ISMT...right now 103....target 130....stoploss 98

Oriental Bank Of Commerce....right now 242....target 265....280...stop loss 225

PSL-On the verge of exponential growth

PSL-On the verge of capturing exponential growth

With an order book of Rs 2400 crore executable by March 2008, and a HSAW pipe capacity of 1.1 mn tonnes-the largest in the country, PSL foresees massive growth, which can be considered just short of revolutionary.

As against FY07 Revenues of Rs 1600 crore and after tax profits of Rs 60 crore, FY08 Revenues should rise to Rs 2400 crore and after tax profits exceed Rs 100 crore.

On an expanded Equity of Rs 34 crore, FY 08 EPS should work out to Rs 29, valuing the current market price of Rs 305 at just 10 times earnings forecast for the on-going financial.

While the UAE based pipe plant has gone commercial in April 2007, during the year new pipe plants are to be set up in China and the USA.

Over the next five years demand for Oil and Gas pipelines will work out to 21000 kms from Gail, RIL, Essar and Gujarat State Petronet. This expansion of gas pipelines alone will cost Rs 42000 crore as per current estimates.

That apart there will be demand for water pipelines and renewal/modernisati on of existing oil, gas and water pipelines within the country.In addition, about 220,000 kms of Oil and Gas pipelines are to be set up in the Middle East, China and the USA, which works out to a demand of roughly 30,000 kms per annum over the next 7 years.

There is a huge global demand-supply mismatch which should work to the advantage of pipe manufacturers in India. Concerns like PSL would benefit with ideally located coastal plants as also plants located within the consuming nations.

Overview

PSL is the largest manufacturer of high-grade large-diameter spiral (helical) submerged arc welded pipes, or HSAW pipes, in India, with a capacity to produce up to 1,100,000 tonnes per year. Our HSAW pipes are used primarily in the transmission of oil, gas and water. PSL manufactures HSAW pipes in 11 HSAW pipe mills and pipe coating mills located in five cities geographically spread throughout India.

PSL is also one of the four pipe manufacturers in India with an integrated pipe coating capability for among other things, pipe corrosion protection. PSL designs and builds its own pipe manufacturing and coating equipment in-house and also undertakes turnkey HSAW plant and machinery manufacturing.

Through its wholly-owned subsidiary PSL Corrosion Control Services Limited ("PSL Corrosion"), corrosion protection for reinforcing steel bars used in laying reinforced concrete in the construction industry by the fusion bonded epoxy coating process. The other types of coating services provided by us are polyethylene coating, coal tar enamel coating, fusion bonded epoxy coating, concrete weight coating, cement mortar lining, liquid epoxy coating and elastometric and field joint coating.

Demand for Pipes- Domestic ScenarioOil and Gas Sector

Pipeline transport is the cheapest mode of transportation of petroleum products. It is approximately 50% and 125% cheaper than railways and roadways respectively. Inspite of this, only about 25% of the total petroleum products are transported through pipelines in India as against about 65% in the developed countries.

This has been on account of low level of investments in the past in laying of pipelines in India. However, this is expected to change in the coming years with large capex lined up by hydrocarbon companies and pipelines emerging as the preferred mode of transportation due to its inherent advantages such as lower operational cost, safety and protection against pilferage.

The total pipeline infrastructure in India for oil and gas is around 18,000 km. Oil and gas majors have already announced plans to lay around 21,000 kms of pipelines over the next few years and more projects are expected to be announced going forward:Pipeline projects of some oil and gas majors: Gails existing network of pipelines will increase from the present 5340 kms to 18448 kms; RIL's network mainly KG2 and KG6 pipelines would be 6000 kms, and Essar Oil and GSPL will add close to 4000 kms of fresh oil and gas pipeline capacities.

One of the significant developments in recent times is the initiative to establish a National Gas Grid. Of the under mentioned projects, only a few are completed or are under implementation, which indicates that there are a number of pipeline projects lined up in the near future.GAIL, GSPL, Gas Transportation & Infrastructure Company Limited and other players have planned various crosscountry and regional pipelines. GAIL itself is planning 12,000 km of new trunk lines over the next five to seven years, even if some of the projects are delayed by 2-3 years and some are shelved, demand is expected to be in excess of average 3,000 km p.a. over the next 7 years.

Another important development in the country has been a number of gas-finds by players such as Reliance and ONGC. Gas consumption in India is set to take off with rising crude prices, which is putting pressure on need to find alternative sources of fuel, and improved availability with discovery of new gas fields and setting up of huge LNG terminals.

Moreover, gas, being a cleaner fuel, makes it a favourable source of energy. This presents another big opportunity to the sector, as pipes are the only means of transporting gas. There are expectations of manifold increase in gas supplies over the next 5 years with GAIL, RIL, ONGC and Indian Oil having clearly articulated elaborate investment plans in laying pipelines.

Water Pipelines

Apart from oil and gas pipelines, all Indian state governments (and in particular the Gujarat, Rajasthan and Kerala state governments) are increasing their focus on laying water pipelines to various locations within their states where water is in short supply, particularly since international organisations such as the World Bank and the Asian Development Bank are now funding such projects across India.

Water pipelines are large diameter pipes which can best be delivered using HSAW technology.Expand capacity by setting up new pipe manufacturing unitsThe Company intends to take advantage of the announced increases in the market by adding capacity in locations, which shall be closer to the areas of demand. The energy rich Middle East continues to be in the limelight for pipe manufacturers with major projects declared in this area.

In addition, the market for transportation of water within Middle East will also boost the requirement of pipelines.According to study by Simdex, there is demand for about 76,074 kms of pipeline in Middle East and Asia. In order to cater to this demand, PSL has set up a plant in Hamriyah, UAE with an annual capacity of 75,000 MTA which has been commissioned in April, 2007.

In USA, the growth in gas consumption has further necessitated laying of new pipelines and enhancement of existing pipeline network. Moreover, replacement of the existing water distribution network would further add to the demand of pipes in this region. To cater to this growing demand, PSL has proposed to establish a pipe manufacturing facility in the USA.