July 22, 2002; Diversify Internationally

We think the better performance of non-U.S. energy stocks can continue.  Most have lower valuation that likely will not persist to the same degree.  Our close neighbor, Canada, offers some diversification as the prosperity of its economy depends more on energy resources than does that of the U.S.  Recommended Canadian Oil Sands Trust is an income stock with long life and inflation protection without high fees.

Other Canadian companies with currently positive price momentum and attractive valuation include Petro-Canada, represented in natural gas and East Coast oil, as well as Suncor whose oil sands plant we visited last month.  Canadian royalty trusts that also have positive momentum may have some premium valuation relative to producers, but appear to be far better value than high greed U.S. partnerships.

It should be easy for Americans to own European energy companies as American investors have long been familiar with BP and Royal Dutch and have had good experience becoming more familiar with Total.  The stocks with positive momentum currently, Norsk Hydro and ENI, are advancing from a long established stable price base.

Our experience has been favorable with our China recommendations.  Valuation is still low.

We have not stepped up to recommending a Russian stock yet.  That day is coming closer as Russian business practices become more predictable.  Moreover the country has always been rich in resources.  Lukoil is a leading producer.