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Hi Guys,

Nice article that features CPN. If the article is right, CPN should do well...

TER: So has the individual investor missed out? Or are there still some plays in the equities side?

PS: There are still lots of good buys on the equity side. For example, something I talked about when we last spoke that is still very attractive is Calpine Corp. (NYSE:CPN). Calpine owns a fleet of power generation plants. They’re the largest unregulated power generator in the United States, and they run on natural gas. I happen to be very bearish on natural gas, so I think we’ll see a long-term decline in the cost of Calpine’s fuel. I also think we’re going to see a long-term increase in the cost of electricity, thanks mostly to new cap-and-trade legislation that is going to be put through Congress.

We saw the first of that new kind of legislation in mid-April, when the EPA ruled for the first time ever that carbon emissions cause global warming and that global warming is a threat to the country. That is the first in a series of what I expect to be more and more restrictions and taxes on carbon emissions. Of course, that affects most directly the power industry. About half the country runs on coal.

These things are secularly bullish for Calpine, and meanwhile, you can still buy the stock. It was at $5 when I recommended it six weeks ago. It was at $8.98 May 5. It’s not quite as incredibly attractive as it was but it’s still very, very cheap relative to assets and relative to earnings. A stock like that is a better investment than just an ounce of gold.

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