JDH Commentary Cracks in the Armour (Armor?)

[sunseeker]

Re JDH Commentary:

Obviously I should have invested every penny in whatever stock I could find during the April lows, and I would have massive profits to show for it today. I didn’t. I’ve stayed on the sidelines, and watched the profit pass me by.

John Templeton:
“He also looked for beaten down and neglected companies. He famously bought $100 worth of 104 companies trading at less than $1 in 1937 and quadrupled his money in four years.”
http://www.bloggingstocks.com/2008/07/08/sir-john-templeton-best-contrarian-investor-of-the-20th-century/

Jim Rogers:
“I got to the capital city and bought shares of every company on the Botswana Stock Exchange because I saw that things were going right.”

http://tjmather.com/value_investing/cache/jimrogers.html

I heard an interview with Jim Rogers talking about buying up stocks in Botswana. People were saying don’t you know that there’s a war on? The war will come to an end one day and when it does these stocks will rocket. It’s a matter of being patient.
                               -----------------------------------------------------
At the moment any sector could fall apart in an instant. Looking at the two examples above a contrarian approach seems a reasonable strategy if you have the time, the patience, and don’t mind your capital being tied up until the turn around occurs.

The most successful investors seem to be those that invest with a good time horizon. Investing at what they believe are the first signs of recovery in the most beaten down areas, and ignoring the vagaries of the stock market in-between. Some people make it by being extremely lucky but most of those disappear without trace if they continue in the same vein. Chasing the fast buck for most people is a recipe for disaster. Patience is a virtue especially in a recessionary environment.

Sector performance (UK):
http://www.iii.co.uk/markets/?type=sectors&period=year&orderby=change

http://www.iii.co.uk/markets/?type=sectors&period=month&orderby=change

ATB 

[Bottomfeeder]

Great post Sunseeker, and exactly right IMO.  You have to focus on companies that you think will get to the other side and prosper.  In this environment, it HAS to be companies with strong balance sheets, and little to no debt, and preferrably with alot of cash.

It is just the thing that has kept me from adding to my Dennison position, but made me put some more money into Microsoft and Intel, in spite of their lousy decade long performance.

But I just keep thinking about China, India, and Africa, and believe that those guys are going to be using alot of energy in the future to power their computers......and I go with it, long term macro outlook.

For me it is a heck of alot easier to sleep at night not getting wrapped up in 30% moves from a 1.50 stock.

On the other hand everybody's situation is different and sounds like for JDH, to take such risk may not be prudent or necessary, so really can't fault him for how he manages his risk.

JDH...stop kicking yourself, sounds like you are doing just fine!  If I were you I probably wouldn't be putting fresh money to work either.  Me I am at about 40% cash currently.

[sunseeker]

Hi BF

You think pretty much on the same lines as I do. Although I am only 25% cash.
I don’t have anything in computers, internet, and communications at present. But you got me thinking that airlines are suffering at the moment, especially the business class passenger reliant ones like BA.

Some reasons why:

It is easier and much more cost effective to set up online meetings and presentations than to travel.
 
You can video conference to any number of people at the same time anywhere in the country or worldwide if necessary without any of them leaving the office.

You don’t have to go through all the security checks. They forbid you to take drinks, and other items through passport control. You are allowed to take those self same items on your flight, but only if you’ve bought them at vastly inflated prices in any of the airport shops.

There are security considerations in some cases, but it’s also more environmentally friendly to conduct business over the net.

You don’t have to buy them all lunch afterwards. LOL

ATB 

[Bottomfeeder]

Good points Sunseeker.....

I think that should we have a jobless recovery, that airline flight will turn into a luxury item for the wealthy and  for business necessity, for the most part.

Back to hard work and pulling up the bootstraps, respecting money, saving it, and not squandering it.  I know that is what I have been doing for a few years now.  Exercising alot more patience on "acquiring things".

I liked your comments though, and it is the battle.  Exercising patience so your visions can come to fruition, not easy in such a "I want it now" world.  Gotta step back and chill or otherwise you just keep taking yourself out long term secular bull markets.

I have two buys on Mr Softy, one about a decade ago near a top, and one recently near a bottom.  Ha...dollar cost average once a decade has me probably at a pretty good point for 10 years from now...the element of time....LOL

[Uboat]

Sunseeker, BF
I share your opinion on airlines after just boarding my 13th in 3 weeks. Lots of inconvenience at airports, but planes are full to the last seat at low fares. The biggest expense are accommodation, lunches and dinners. And in missing out on sitting at the computer and investing more in this hot market. 

[onlooker]

JDH:

Speaking of cracks in the Armour (Armor), I think there are such cracks between Harper and Obama.

Prior to Obama being President, PM Harper had a negative stance against China.  He did not show up at China’s 2008 Olympics.  He sided with America on its foreign policies towards China – namely , human rights issues.

It is now past 100 days of Obama becoming president.  I suspect that PM Harper, a trained economist now has a much better handle on who controls the American economy.  He notices that America is putting up trade barriers. 

As a result, Harper’s honeymoon with Obama is over.

See: Why Barack Obama is bad for Canada  Written by Luiza Ch. Savage on Wednesday, June 24, 2009 16:25   
http://www2.macleans.ca/2009/06/24/why-barack-obama-is-bad-for-canada/

and 

See:  Harper attacks Liberals, Obama in private speech to party  By Jennifer Ditchburn   Mar 13, 2009 05:30 PM   http://www.thestar.com/News/Canada/article/602131

Consequently, there are cracks in the Armour (Armor) between America and Canada. 

Canadian Banks.

In 2006, Canadian banks were severely limited in operating in China.

See:  http://financialsector.blogspot.com/2006/11/foreign-bank-restrictions-in-china.html

Recently, unlike in America, China is permitted to buy a Canadian bank with no complicated restrictions.  There are no quickly set up American-like senate hearings to block such a deal.  China doesn’t get the “anti-commie” treatment.   

See:  China's ICBC buys 70% of small Canadian bank  Reuters  Published: Thursday, June 04, 2009

http://www.financialpost.com/story.html?id=1662121

Canadian banking system is well regarded in the world.

See: Well-regulated, well-managed Canadian banks overshadow freewheeling U.S colleagues'  By Mia Rabson

http://www.winnipegfreepress.com/business/well-regulated-well-managed-canadian-banks-overshadow-freewheeling-us-colleagues-52827872.html?viewAllComments=y

There are now future co-ordination talks between Canadian and China banks.  The likelyhood of successful outcomes for complete cooperation between Canada’s and China’s banks are high.

Canada banks, insurers in China to drum up business  By Andrea Hopkins
August 07, 2009

http://finance.sympatico.msn.ca/investing/news/breakingnews/article.aspx?cp-documentid=21080211

Recently, China has got Asian institutions to sell its China Bonds.

So, at the upcoming Canada-China banking meeting, I can easily envision China asking Canada to use its banks to sell China bonds.  TD bank and RBC both have made inroads in the American banking markets.  China bonds could be sold through these two banks.  Then looney toon(?), Jim Willie’s article on his preceived threat of China Bonds being sold in America may become a reality.

See:  http://www.financialsense.com/fsu/editorials/willie/2009/0729.html

Oil
 
Oil producing province Alberta is now forging ties with OPEC.   By doing this, I doubt that in the future, Canada blindly fall in line with America’s Cap and Trade plans.   

See:  Alberta forges ties with OPEC  By Claudia Cattaneo  Published: Monday, May 25, 2009
http://www.financialpost.com/news-sectors/story.html?id=1626748

Plus, Canadian commodities are looking good to China.

Should see:  Financial analyst, Michael A. Berry comments.   

Yes indeed, it is different his time. Canadians are being forcefully weaned from Washington’s apron strings. Is this a window of Canadian opportunity and destiny or a problem? Is Washington listening? Is Ottawa listening? Today President Obama, Prime Minister Stephen Harper and Mexico’s President Felipe Calderón are meeting in Guadalajara Mexico. The shifting sands in North American geopolitics are palpable. The US is a little less powerful. This is in part because she is printing money, running trillion dollar deficits, badly needs Mexico’s stability and China is gobbling up Canadian energy and mineral assets.

www.discoveryinvesting.com/uploads/MNs_Monday_August_10_2009.pdf

To me, all these economic and political shifts mean that Canada will decouple more and more from America.  If the next time America sneezes, hopefully, Canada will be less likely to catch a cold or be caught in a depression.

IMO, time to have a second look at Canadian home grown products.

-  -  -  -  -  -  -  -  -  -  -  -  -

To all American readers of my comments, please note that I am not giving out anti-American comments to disrespect Americans.   I am just trying to point out the best investment possibilities for the current global financial crisis.

Whatever I have said that may be perceived as anti-American is nothing in comparison to what some Americans are saying against their American government.  Just google Geithner and Jimmy Cayne.

[jjj000]

onlooker you dirty Anti-American!!!   Hah... I'm joking of course.  Don't worry man, you're preaching to the choir here.

And the US Gov't will ALWAYS have anti-gov't protesters (and they should).  Every administration.  Every President.  Namely, because they are all crooks.  Thomas Jefferson lamented that the Government was already completely corrupt by the time he became its... THIRD... President.

What amazes me now is how much whining and crying about it the media is suddenly doing, like it's all new.  Every President gets called a mother f-er commie bastard and has his or her face made to look like the Joker and covered in Nazi swastikas.  That's just what people do.

Personally I think it's an insult to the Joker, and not a particularly clever or creative statement to make, but hey that's just me 

But yes, you make a good point about potential investment in Canada based on it's growing relationship with China...

[onlooker]

jjj000:

Whew!  I very, very much appreciate your comments.    I really do value and have learnt from all comments given by Americans.  Guys, I hope you never leave this site!  There are no borders on camaraderie and learning how to invest wisely. 

[Bottomfeeder]

Good post there Onlooker.....and I completely agree.

3j....man your a funny dude, and of course I completely agree with your comments, especially the "disgrace to the joker" part.

Cap and trade....hahahahaha....The US government running around the world trying to get other countries to follow cap and trade rules, while the dirtiest coal plant in America powers our Congressional buildings has got to be the most telling statement of them all.

Unable to even influence change within their offices, yet running around the world trying to tell others what they should be doing, while China has committed huge resources to sustain their future energy needs with clean energy (nuclear primarily).

Gotta steal from 3j again, but seriously, what a bunch of dickheads.  Too bad we cant use all the government hot air to power something positive huh.

Just gotta keep paying attention to what is going on around us and invest accordingly.  If the US government doesn't get it, oh well, what can you do.

[onlooker]

Again, speaking of cracks in the Armour (Armor), there cracks between China and Australia.

There was big news on uranium and commodities which occurred on the opposite side of the world and appeared not to be reviewed much in North America.

In February 2009, China Aluminum Corporation and Rio Tinto signed a strategic cooperation agreement.  Do note that Rio Tinto was first to approach Chinalco for investment money.
http://www.sourcejuice.com/1178501/2009/06/05/Aluminum-confirmed-Rio-Tinto-withdrawal-inject-195-dollars-transactions/

It should have been easy to conclude that more ownership of Rio Tinto by Chinalco would have meant that China would have more legal ownership to Rio Tinto’s uranium.  So, by May, 2009, the Australia government wanted to stop the Rio Tinto / Chinalco deal.  Also, local Australia news media do not mention anything about uranium.  They mentioned that Australia’s iron ore and aluminum interests were being jeopardised.  At the same time, Australia noticed that China wanted to buy other Australia resources.

See:  China: wheeling and dealing in Australia  Published Date: 11-05-2009
http://www.minesandcommunities.org/article.php?a=9230

Eventually, the Rio Tinto / Chinalco deal eventually did not go through.  I think China can deal with a failed deal.  But, Rio Tinto got back together with their original suitor, BHP Billiton. 

See: Rio Tinto Scuttles Its Deal With Chinalco By DANA CIMILLUCA, SHAI OSTER and AMY OR June 5, 2009
http://online.wsj.com/article/SB124411140142684779.html

In June 2009, a solid deal between Rio Tinto and BHP Billton was struck.  Chinalco was out.  The deal makers involved such companies as Goldman Sachs JBWere and Gresham Partners, Morgan Stanley. 
See:
http://www.businessspectator.com.au/bs.nsf/Article/LUNCH-DEALS-BHPs-wish-list-pd20090605-SQ43C?OpenDocument

Despite, the Rio Tinto setback for China, China will survive.  China has other U suppliers.  One non-Australian journalist truthfully reported Australia was concern that China would use the uranium in its nuclear weapon programme.

See:  China’s race for nuclear energyIsrael Rafalovich   Monday, July 6th, 2009
http://www.thoughtleader.co.za/israelrafalovich/2009/07/06/chinas-race-for-nuclear-energy/

However, China has now learned something new from this China – Australia fiasco.  Australia confirmed that they will apply double standards to China and is a strong ally of America. 

China is told by all countries, it is wealthy because it has a massive amount of the world reserved money, U.S. dollars.  But, America and allies will only permit China to spend its acquired U.S. money on non-productive objects or events such as the 2008 Olympics.  But, if China wants to buy productive things such as commodities, then there are restrictions just for China.  China is not permitted to dominate the commodity markets with its stash of U.S. dollars.  America and allies confirmed to China (and other BRIC countries) that the greenback continues to best serve America and allies. 

IMO, China will continue its current quest of getting America and allies to value the Yuan in order for China to feel respected.  And in the process, devalue the greenback. 

Also, IMO, China’s own domestic economy is in shambles and could get worst.  The major difference between China and America is that China has an aggressive and successful plan to promote its own currency to be used for international trade settlements.   

Canada’s U and other commodities may benefit from the China and Australia trade fiasco.  Maybe CanAlaska Uranium Ltd will benefit. 

See:  Cameco, M'bishi to buy Rio Tinto uranium mine By Reuters July 11, 2008
http://www.canada.com/montrealgazette/news/business/story.html?id=b719686a-ccc0-4a05-ab5a-f772cf8867fb

and see: China now biggest spot uranium buyer - Cameco
http://www.miningweekly.com/article/china-now-biggest-spot-uranium-buyer---cameco-2009-08-12

However, increased trading between Canada and China will depend on how, PM Harper, a no-show at China’s 2008 Olympics reacts towards China in November 2009.  Will PM Harper be another American ally? 

See: Flaherty in China Sets Stage for Trade, Harper Visit (Update1) By Theophilos Argitis  Aug. 14
http://www.bloomberg.com/apps/news?pid=20601082&sid=axXQLnmfhCTo

If Harper does decide to visit China, he should not think of himself or Canada as pure as virgin snow.

See: Canada exporting 'misery' of asbestos: Indian MD  By The Ottawa Citizen December 15, 2007
http://www.canada.com/ottawacitizen/news/story.html?id=e84067b8-1429-40a3-b55f-0d0aca4da358
 _ _ _

All uranium followers:

I very often forget that this site is supposed to be about uranium.  It looks like I am finally able make a connection between my constant harping on gloom and doom economic news  and something potentially positive about Canadian uranium companies.   

[Bottomfeeder]

Onlooker.....China doesn't want a strong Yuan, as it is negative for their export business, of which they are still too reliant.  I do think ultimately that they, like other countries, would like for their currency to be strong, but they have so damn many people to move into a "middle class lifestyle" that they cannot kill their export business and drive a domestic economy at the same time.  Another "catch 22".

As far as the Chinalco deal, I don't know that I would make it about their relationship with their allies, as much as it being an issue about Austrailian soveignty and employment.  China is being very smart about depolying their US dollars though, simply buying depressed assets with depressed dollars and of course "you cant win them all".  If your Austrailia, with 40% of the U reserves in the world, you don't want to just give away the store, so to speak.  This is more like "self protectionism".

Also I would differenciate between Canadium companies and Canadian uranium reserves.  There are as you know, great Canadian Uranium miners, that are producing/exploring that are Canadian based, however what I am seeing is bearishness on the pounds in the ground specifically located in Canada, due to many of them being too expensive to mine at this point in time.  I think those reserves are a long way away from being pulled out, as more cost effective Uranium will get mined first, due to spot weakness and tight capital markets.

Basically a greater focus on surface deposits and ISR operations vs. deep open pit deposits.

[onlooker]

Bf: 

I really do not know much about uranium except that there is a strong future market for it.  And it is a market that I should not be ignored, especially China.

There are a lot of uranium companies given here.  I am new to uranium, so I think would stay with something like Cameco and Mega Uranium Ltd.

You said:

Basically a greater focus on surface deposits and ISR operations vs. deep open pit deposits.

Does this mean that uranium mining is more of the deep open pit variety in Canada and therefore more expensive to mine?

[Bottomfeeder]

Yeah Onlooker, obviously there are exceptions, but most of the reading I have done in the last 6 months or so has been a bit bearish on Canadian reserves because of cost of mining.  Surface deposits are low capital cost projects as are ISR projects.  Deep open pits are ok too, but when you get into projects like Cigar Lake and others where you are dealing with deep shafts and such, then it gets really costly.  Often times deep shaft projects seem to have tremendous reserves though, so basically they are great long life ops, but very expensive to fund and develop.

When you see 43-101's that say that they are high grade less than 3 meters from surface, then in this kind of environment, you have a pretty attractive deposit.  At least that is the way I am looking at it.

IF you have a real long term time horizon, then you can certainly pick up some juniors super cheap right now, and wait for them to play out.  Crosshair comes to mind as such a miner, but I haven't checked the balance sheet on them in a while.

Be paitient and diligent no great hurry on the small Canadian miners in my opinion.  Hot areas are Wyoming, (URZ and UUU) Kazakastan (UUU) and Africa (Paladin) and Austrailia ( Energy Fuels, Mega) .  There are more in Austrailia, that I need to get up on.  Pinetree is a nice catch all for juniors and "on sale" IMO if you have some patience.

Just my opinion though, so get yourself comfortable and enter slowly would be my best advice.

[sunseeker]

Bottomfeeder yesterday

Be paitient and diligent no great hurry on the small Canadian miners in my opinion.  Hot areas are Wyoming, (URZ and UUU) Kazakastan (UUU) and Africa (Paladin) and Austrailia ( Energy Fuels, Mega) .  There are more in Austrailia, that I need to get up on.  Pinetree is a nice catch all for juniors and "on sale" IMO if you have some patience.

Just my opinion though, so get yourself comfortable and enter slowly would be my best advice.

I endorse that 100%.

ATB 

[onlooker]

Bf:

When you see 43-101's that say that they are high grade less than 3 meters from surface, then in this kind of environment, you have a pretty attractive deposit.

Thank you for bringing me up to super quick speed on uranium, and on what specific nugget of mining information I should be look out for.    If there is anyone on this site who knows most about uranium, it would be you.  And of course, I will be patient with uranium and investigate more. 

One thing I have learned about uranium in Australia is that the Australia government will not sell out any of its resources (cash cows) to just anyone with money.  This helps to keep future uranium prices high. 

In June, China made a sudden detour trip into Canada from a June New York business trip for no particular reason.   It certainly could not be to visit our cold shoulder PM Harper who gave absolutely “no face” to China during its 2008 Olympics.

I wonder if the official collapse of the Rio Tinto / Chinalco in June and that China has many nuclear power plants under construction, has anything to do with the sudden detour trip?  Hummm?   Should look for any future trade news between China and Canada.