An Investment Strategy for Saudi's 'Day of Rage'

The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.

NEW YORK ( TheStreet) -- Rumors are swirling that Saudi Arabia's "Day of Rage" protest planned for Friday will be postponed because of the weak turnout at smaller protests on Monday and Tuesday. Demonstration organizers had planned originally to build momentum into Friday but that has been halted by the threats being issued by the Saudi government as well as the religious clerics who exert tremendous control over the 97% of the Saudi population that is Muslim.

"The Council of Senior Clerics affirms that demonstrations are forbidden in this country," said a statement. "The correct way in sharia Islamic law of realizing common interest is by advising, which is what the Prophet Mohammad established. Reform and advice should not be via demonstrations and ways that provoke strife and division, this is what the religious scholars of this country in the past and now have forbidden and warned against. The Council warns of deviant ideological and party-political connections since this nation is one and will adhere to the ways of the pious ancestors, the kingdom has not and will not allow ideas from the West or the East take away from this Islamic identity and divide the unity of the whole."

In Saudi Arabia, the practice of any religion other than Islam is strictly forbidden. Even foreign visitors are forbidden to openly practice any other religion. The extreme punishments levied by the Islamic Absolute Monarchy make it hard to believe that these people would risk their lives to protest. From my perspective, it seems like it would take a severe, severe, severe situation for these citizens to revolt against their government and religion and I don't believe the well-being of the people is yet bad enough.

Although the violation of human rights sounds like a strong enough motivation to us here in America, it's important to understand that these people know no different. For a broad explanation of what life is like under Saudi rule, read the following excerpt from Wikipedia:

The Saudi legal system prescribes capital punishment or corporal punishment. Theft is punishable by amputation of the hand, although it is rarely prescribed for a first offense. The courts may impose other harsh punishments, such as floggings, for less serious crimes against public morality such as drunkenness. Murder, accidental death and bodily harm are open to punishment from the victim's family. Retribution may be sought in kind or through blood money. The freedom of women is seriously restricted in Saudi Arabia. Women are not allowed to travel without the permission of their closest male relative, who may be a son or a younger brother. Women who are divorced, return under their father's authority and like any other adult woman is denied the right to live on her own and to marry of her free will. Furthermore, the Saudi government considers filial "disobedience" as a crime for which women have been imprisoned or have lost custody of their child. Saudi Arabia is the only country in the world where women are banned from driving in major cities and towns, although they may drive in small towns and villages or in private housing compounds. In Saudi Arabia, homosexuality is illegal and punishable by a range of penalties, including corporal punishment and the death penalty. The Government views its interpretation of Islamic law as its sole source of guidance on human rights. A Saudi blogger, Fouad al-Farhan, was jailed for five months in solitary confinement in December, 2007, without charges, after criticizing Saudi religious, business and media figures.

In addition to this brutality of law, there are other variables that have us questioning if Saudi can follow in the footsteps of its revolutionary neighbors. Seeing that Libya's Moammar Gadhaf is faring better than his peers in Egypt and Tunisia also seems to have lessened the resolve of the Saudi people. The Saudi stock market has actually risen 15% over the last week which gives us another signal that the national "Day of Rage" could be a flop.

Nobody understands the Saudi stock market better than billionaire investor Prince Alwaleed, who on Feb. 24 wrote an op-ed in The New York Times calling for reform through meaningful interaction and dialogue rather than revolution through violence. That seems to be the prevailing sentiment not only among the royal family but also from reading a sampling of Facebook posts on one of the "Day of Rage" pages.

On March 9, Prince Alwaleed further expressed confidence by saying he would invest another $267 million in the Saudi stock market. Overall, it seems unlikely that the Saudi people have the appetite to bring war to their holy land that contains Mecca and Medina. If the MENA region revolt does not spread to Saudi Arabia then the oil run will soon run out of gas.

If Friday surprises us and there is a "Day of Rage" then it will be time to load up on United States Gas ( UGA), United States Oil Fund ( USO), United States Brent ( BNO), Exxon Mobil ( XOM) and Suncor Energy ( SU).

If Friday comes and goes without any negative news we will be able to reinvest the 76% of the Economic Timing.com portfolio that currently sits in cash. Friday is hugely important for this market.

At the time of publication, Schwarz was long Exxon and Suncor.

This commentary comes from an independent investor or market observer as part of TheStreet guest contributor program. The views expressed are those of the author and do not necessarily represent the views of TheStreet or its management.

Jason Schwarz is an option strategist for Lone Peak Asset Management in Westlake Village, Calif. He is also the founder of the popular investment newsletter available at www.economictiming.com. Over the past few years, Schwarz has gained acclaim for his market calls on the price of oil, Bank of America, Apple, E*Trade, and his precision investing in S&P 500 option LEAPS. His book, The Alpha Hunter, is set to be released by McGraw Hill in December 2009.

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