Book Reviews: 3 John Rubino Books

So, I was asked to review “Clean Money: Picking Winners in Green Tech Boom”. Whenever I get asked to review a book that tells me what stocks to pick, my BS antenna goes way up. So, I asked for all the authors books so I could review his last predictions. Your gonna want to read this.

First up was:
“How to Profit From The Coming Real Estate Bust”, written in 2003.

Had you read this one in 2003 when it was released, you would have been introduced to little letters like, CDS, GSE’s, CDO, RMBS, CDS and the like. You would have been told that Fannie and Freddie were perpetuating an unsustainable cycle of lending in the sub-prime market. You would have been told that home equity was at generational lows and that any drop in prices would lead to massive foreclosures as new mortgage products reset and buyers would be able to afford the new payments nor would they be able to sell the homes since the mortgages were upside down.

One of the best parts was were Rubino assembled a slew of headlines from 2002-2003 telling us the housing market was in a “new paradigm” and that there were new rules in housing (always a sign we are in a bubble).

You would have been told of the problem with the CDO market and how it was giving banks a false sense of security and that a fall in the housing market would have consequences in the hundreds of billions of dollars.

This is one of those book that reading after the fact you sit there and say “well yeah..we know that”. But in 2002-2003, most folk didn’t. I’ll admit, I did not think the gains we were seeing in housing prices then could continue but did not see the current “crash” we are seeing.

So, what to do about it then? Here is a group of stocks Rubino suggested shorting in 2003 for those who believe him that housing was going to crater.

Citigroup (C)
Ambac (ABK)
Capital One (COF)
Lennar (LEN)
Fannie Mae (FNM)

So, how did those 5 do since 2003? Down 84%, 97%, 48%, 82% and 98%. Not a bad return???

Here is the book:

Next up was:
“The Collapse of the dollar and How to Profit from It”

I suggest the paperback version because it was updated in Nov. 2007. Rubino here does a nice job going into the history of currencies and gold without drowning the reader in a mind numbing history lesson. He keep the history relevant to his point.

Rubino argue that Fed actions are slowly rendering the dollar nearly worthless and as it happens, inflation will rear it head in a savage way and gold wil be the commodity people pile into.

He gives several way to invest in gold from ETF’s for the commodity itself (GLD), (IAU) to both miners and way to buy gold directly. Again ,based on results form when the book was originally released in 2004 show Rubino was dead on as gold staged a huge rally up 84% since then.

Rubino also introduces the readers to the “Fear index. No, it is not the VIX we all hear about today. It is an index that gives us a value of US Gov’t holdings of golds per dollar bill. For instance, a value of 2% means that 2% of the value of a dollar bill is backed in gold. 2% is a notable number as that is roughly what the value is today. The last “buy signal” for gold was had in May 2002, the signal is still positive for gold today and recent Treasury and Fed action have continued to devalue the dollar.

A neat way to buy gold direct (no recommendation here, have not investigated it fully yet) is “Gold Money“. It is in essence a savings / checking account that buys gold as you deposit funds into it. The value of the account rises and falls with the value of gold .

Again Rubio in Nov. 2007 gives the readers a portfolio of stock to short for 2009. The List?

Lehman Brothers (LEH)
Bear Sterns (BSC)
Fannie Mae (FMN)
Freddie Mac (FRE)
Citigroup (C)
Wachovia (WB)
Merrill Lynch (MER)
Goldman Sachs (GS)
Bank of America (BAC)

There were a few other but suffice it to say none of the stocks he recommended shorting are up in 2008. Now, admittedly most stocks are down in 2008 but in the list above, most are down in excess of 70% and several no longer exist.
Here is the book:

Finally “Clean Money: Picking Winners in the Clean Tech Boom”

The book begins with a primer on oil and gas (limited, dirty and expensive) and then moves onto renewable fuels and energy sources.

Rubino details for the first half of the book all renewable fuels, the technology that goes into them and the progress that has been made and is being made in making them economical and more efficient. It is not an “all renewables are great” thesis as he does steer the readers aways from certain areas.

This part of the book is extremely informative and detailed yet is written in a way that all readers can understand and grasp the points he is making. There is a tendency in these types of books to let the science run away with the discussion but Rubino thankfully avoids this.

The second half of the book goes into the possible investments that one could make from part one. He gives companies for every category both domestic and foreign as well as mutual funds that specifically invest in the area.

The only aspect that left me wanting for more was a more detailed investment thesis. In his first two books, Rubino was very specific about how he would invest based on his ideas. Here, he is very general and does not give specific guidance. That very well may be a function of the field and its infancy making a definitive selection difficult to do accurately. Still, after his results in the prior two book, a reader would be wanting more detail.

But, for the information provided in part one alone, the book is worth a read…

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