China Shale Gas

Today, I made a big loss by selling my shares in ADN, BLY and FML.  These used to be profitable but in recent years, they have been disappointing.

China has the most shale gas in the world but it is grossly under-developed.  So, using the cash from the sale of those stocks, I ploughed the money into LYL and SEH.  These are listed on ASX and the tenements they have look promising especially SEH.  Am I smart or dumb, we will never know...

WBC

A great financial advice that I continue to give is, always go to bed fantasizing about Gail Kelly.  The banks have gone for a run and my net paper profit is over 50% for my WBC shares in my super portfolio.  The other lot of WBC were bought from 2001.  I don't bank at WBC but in recent years, I have great hope in this South African woman.

If there is no real bad news and people are dumping bank shares, it is always a good strategy to pick them.  I used this investment adage and bought most of it in 2008 during the GFC.  It also gives great dividend.  As I grow older and when I retire, this is the kind of shares to own.

Markets

Italians (economy-wise) are like gnats.  Relatively insignificant economically (but it isn't small) but gnats can be pesky.  And bites can be painful and irritating.

Yesterday, with an indecisive result with a clown holding the balance of power, DJ fell.  Today, the real thing is out.  BB talks in his testimony and DJ climbs.  Millions of people pay those idiotic fund managers and they dump shares to a low and buy back on the high.

And POG is doing its yo-yoing but I missed out on buying gold below USD$1600 per oz.  Damn!

GTE

What is going on?   Last week, it announced that it is starting to drill in Wiluna where historical grades and depths are fantastic.  No more new announcement.  Yet, in a day when the market plunged, GTE went up by 20%.  Obviously there is inside information...

Shale gas

The market is full of lemmings.  When Chevron decided that Cooper Basin is a bargain and bought into BPT and ICN tenements, suddenly everyone thinks you should buy stocks with interest in that region.  Well... it is always better to be ahead of lemmings.

Fund mangers know best....

Yesterday, those idiots who sold the shares massively are today buying at a higher price.  What a bunch of fools!  And you wonder why the media is going on about huge commissions paid on people's super funds.  These idiots make bad judgment at investors' expense.

Massive sell-off

This AM, I sold off my TSE because of prolonged poor performance, with bad news after bad news.  But the real reason for selling it off today is its fall is smaller than others.  So I used the opportunity to top up my holdings in WPL, OSH and SXY.  And then in the late afternoon, I notice I collected a small parcel of ANZ too.  Sometimes, I like to round up my holdings.

WPL had such a good announcement yesterday and its shares are cum dividend.

OSH is having some problem in PNG but it has a bright future with oil being discovered in Kurdistan, Iraq.

But SXY was also sold off by the market, slightly, because of sentiment.  It didn't drop as much because it found a lot of gas in Cooper Basin.  So I topped up.


The sell-off has been huge today following Wall Street example.  But why pick on one bit of news from the Feds and put so much weight on it?  Perhaps I don't understand how judgment is made by these financial wizards.

I heard on the radio this AM that huge amount of fees have been ripped off superannuation funds by administrators.  Well, I saved a huge amount last year when I stopped using Citibank.  There was very little service and my fund didn't perform better than average.

Recent purchases

It has been quite depressing because the market has been dumping resource stocks.  Good announcements are ignored and funds are switching their money out into high yielding stocks, like banks and Telstra.

When RRS announced a good find in Trinidad, it went down after I topped up at 5.5c (today 7.1c).  NST was 96c when it announced a good extension (after good extensionSSSS) and I topped up (today 89.5c after another good extension of its gold reserve).  PVD bought over a new tenement in Gabon (I think) where others have found oil... and the share price went down after I bought and remained lower.  And WCL went even lower although there is a Chinese state company interested in it but the offer is not firm.

In the market, life goes with but the logic is different from the mathematical world in the short term!

Margin Lending soars...

Just as margin lending soars for the first time in 3 years, I have paid off and killed off my margin lending facility with GSJB Were.  The cost is high (transaction and the interest rate) and I don't want a debt hanging over my head, even though it is a small debt.  Who knows we might go into property instead... and take out another debt!

I must be a real contrarian, moving in the opposite from the rest.  Pity I have very little cash left otherwise, I will still pump it into gold stocks.  Found out this AM that it was George Soros bailing out of Gold ETF that cause the POG to plunge by USD$24 per oz.  He is a very astute investor but George is not always right...  Neither is Warren who won't touch gold!

Gold bullion

The POG has been falling recently, more dramatic than usual.  That means on Monday, gold stocks will be hammered.  So will my portfolios.  However, if gold falls below USD$1600 per oz, it is time to ponder whether to buy an oz of gold instead.

Lots of central banks around the world do not hold enough gold reserve and lately have been buying the yellow metal according to RB of The Australian.  Indians and Chinese are still buying it and the demand outstrip the supply.  The balance is made up by gold which has been recycled.

At this stage, I do not have any idea why the POG has fallen.  But the supply-demand equation still holds over the longer term.  When the POG has dropped too low, some mines will stop operating.  However, desperate central banks have huge hoard of gold and can depress the price further if they sell.  Em... could one of the central banks be manipulating the price and hoping to buy back on the cheap?  Well, the last time the Australian central bank did that in 1997, it was made to feel like a fool...  Still is!  For it sold gold below USD$360 per oz; 167 tons of it at close to that price.

Gold stocks

I collected a lot of alpha today.  About time too!

However, the gold sector was punished due to falling POG.  Yet gold has not tumbled.  It is just yoyoing.  It is still above USD$1600 and has remained above that level for a while now.

Today, ABU, ERM, GOR, PRU, LSA, SLR were all in negative territory.  Otherwise, my alpha would have been even more spectacular.  However, I don't lose hope in gold due to simple arithmetic.  People are abandoning gold stocks for sentiment reason, like lemmings.

RRS

It holds around 20% of CTR which in turns hold 10% share in a oil exploration project in Guatemala.  Yes, it has found oil, light crude.  Yet the share price went up and at the end of the day remained unchanged!

I only saw CTR's announcement while reading RRS.  The market is showing utter disregard to this announcement at the end of the day!

RIO

Last year, I sold some RIO shares to generate cash to purchase SPP in RIA.  Wasn't a good move retrospectively as RIA has tumbled since.  Tumbled a lot.

But as soon as I sold for about $71 a share, I bought back about 70% of the share at around $64-67.  And of course, the share price dipped lower still and only recently, I can smile again.  In fact, I will look forward to returning my RIO to the number of shares I used to own in it.  The new CEO Sam Walsh is doing wonders to the shares.

Recent purchases

My portfolios have been suffering so I have nothing to brag about.  The small resource stocks are badly hit no matter how good they are.

Of the recent shares purchased, some are indifferent (PVD), some are down (CDU, RRS) and some are up (JIN, KAR, NEN).  Luckily, it comes to gains overall.  Good news do not equate to rises and rises.  And often patience pays.  I like to buy when there is good news, better if the share price is down but I am not always willing to wait.  Wonder how long before the resource sector turns...

RRS

You wonder what is happening with the ASX.  Don't blame the Chinese state firms if they move to take over this stock.  It found a 50-70 ft column of oil in Trinidad and the share price moved only a little.  At a Proactive Investors Forum, the CEO said the Venezuelan oil basin is next to its tenement...  Venezuela has the largest oil reserve in the world.

Canning Basin

A few weeks ago, LNC jumped because a journalist claimed it had the equivalent of billions of barrels of oil in South Australia.

http://www.proactiveinvestors.com.au/companies/news/39345/canning-basin-oil-and-gas-prospectivity-continues-to-grow-39345.html

Yet with BRU and OBL, there is nothing exciting at all!  If the above link is true, you wonder why the Chinese are not moving into cheap Aussie resource stocks.

HDX

http://www.asx.com.au/asxpdf/20130207/pdf/42cwmyn2hqnry5.pdf

This is its investor presentation.  By my calculation, the PE ratio is under 5 (NPAT of $8.4 million, market cap of $46.6 million).  Debt is not insignificant at $24.8 million but it is mostly for working equipment.

The contracts are for long life mines, blue chip firms and all in Australia.  But don't expect anything dramatic with this kind of stock.  The share price might even fall due to market sentiment against coal stocks.  This one is actually a mining service company.  Its rigs are not used for exploration but to open up the ground for mining.

Uranium

The real reason why the price of uranium is so low is the Russians signed a silly deal with the Yankees to supply uranium at extremely low prices out of their decommissioned warheads.  So you can imagine how many warheads there have been!

But that contract is expiring this year.  The supply will be outstripped by demand.  And today, I read that there was a storm in Kazakhstan which caused electrical outage to the uranium mines.  It is the world's biggest supplier of uranium.  The supply might take up to 6 weeks to re-establish.  Interesting that in Kitco, the price of uranium is down!

The Canadian had a uranium mine which got flooded many years ago.  It has not restarted!  That is the world's richest deposit.  I wonder what that mining engineer who was in charge is doing now.

BRU

Oil had been found, and recently found again.  Yet, the market takes a harsh view.  Until you can prove that the oil is extractable AND it is light sweet crude, the share price can drift downwards!

The company also has to prove that the quantity is sizeable, too.  In a down sentiment towards resource stocks, there is very little you can do to get the market to pay a premium for your discovery.  These are THE stocks to buy while people are uninterested.  Good announcements are ignored by sellers!

RSL

I wonder why anyone would want to pay 1.7c or 1.8c for my RSL shares.  It has been performing badly.  The SPP price has fallen to 1.5c so I sold my parcel on the market and bought a new lot with my entitlement.  Unfortunately, the new lot might tumble in price when they list on the market.  Oooops!

HDX

The CEO was extremely optimistic and confident about the profitability of his company.  But the market just does not like coal stocks so the share price has been down for a while.  Yet, even with confident announcements and today, stating that more rigs are required to meet up with new contract, the market is ignoring it.

The finance editor of The Australian has pointed out that Fe ore price has climbed but coking coal price is lagging.  And it is a matter of time before coking coal (NOT thermal coal) will rise.

Hence I am optimistic too about HDX.  Pity I don't have much spare cash in my super fund.

CDU NEN

While drilling for "pit dewatering", it found copper, mixed with cobalt, in decent grade.  And because the market sentiment is down, the share price went down, too.  I find it very hard to resist buying when there is good news and the shares are dumped.  I collected a small parcel at $4.32.

There was an excellent write-up on NEN by the financial editor of The Australian.  And the share price fell too.  Since it is below my average buy price and I need to round it up, I topped up NEN at 22c.

Looks like my February super contribution is accounted for!

RIO

Last year, I sold some RIO to fund a SPP in RIA.  But after selling, I bought back some RIO shares at a lower price.  The timing was not great.  The share price of RIA has fallen while RIO has come up!

My consolation is, at least the share price of RIO is over what I bought back in early 2012.  RIO has not been a good investment between 2006 and 2008 before the GFC.  But for those courageous enough to dip in in 2009, the reward has been great.  I did.  I bought the rights issue at $28.29.  It was silly not to buy as the share price has already climbed over that issue price.

RIO and BHP are very poor at paying dividends.  I sometimes wonder why they are classified as "blue chips".  The banks have been far more rewarding provided you don't touch NAB!

Resource stocks... Tin stocks

Of all the metals, the most optimistic one is tin.  If you look at the fundamentals, the supply side is falling and the demand side is rising.  Whether the supply side is manipulated, I don't really know but that is what the gurus are saying.  The Indonesian government is trying very hard to control the mines while China, the biggest producer, is gobbling up much of its own production.

That is where Aussies stocks become very attractive in the medium term.  As the supply demand equation gets sexier, these stocks (based on simple arithmetic) should rise.  Already Toyota is aware of the problem and has supplied KAS with cash for its operation.  What is incredible is how the market is continuing to punish VMS.  It has a growing deposit in Tasmania near the biggest tin producer in this country.  With all the news of diminishing supply and rising price of tin, it is amazing that the market SELLS off this stock.  I like Our Man In Oz article.  So I have put a buy bid on this stock to top up my loss on VMS and hope for an idiot to sell.  In the short term, I might get nowhere or downwards but I rarely buy to profit in the short term.

http://minesite.com/news/venture-minerals-is-poised-to-take-advantage-of-the-strengthening-fundamentals-in-the-tin-market

Banks

In the last few years, I have sold off NAB.  It had provided me with great disappointment.  Each CEOs failed to improve on the bank profitability and its investment in the UK continued to be a drain on its balance sheet.

The other 3 continue to provide me with me with good capital gains, especially in recent months, and reliable dividends.  My best decision was to accumulate WBC due to its great CEO.  It is virtually the only bank where I have increased my holding.  Gail Kelly is worth fantasizing every night.

However, with the recent acceleration in their PE ratios and funds switching their holdings in resources to big dividend yielders, I cannot pump any meager cash that I have now into any of the banks.  What I am proud to announce is that my recent investments in KAR and JIN have leaped higher than the market average.  The last lot of PVD was initially a disappointment but it is starting to move again.

One adage in investment that I follow is to buy when markets ignore good announcements... and hold even when the share price falls further.  Pity my cash situation is low.