Saturday, February 11, 2012

Friday videos - Saturday edition



Unfortunately, by Bedevere's logic, they might have proven only that she's made out of ducks.

Don't worry, by the way; she got away and found a job as a maid at Fawlty Towers.

Friday, February 10, 2012

BREAKING NEWS: BEAR CREEK'S SANTA ANA WILL BE A MINE!!!!!!

In last month's corporate presentation from Bear Creek Mining, there's an interesting development!

See page 13:

"Initial talks with new Peruvian administration are positive"!!!!
"Bear Creek’s legal standing is strong"!!!!
"Government sending positive signals for a negotiated settlement returning Santa Ana's rights"!!!!!
"Management is optimistic regarding negotiated settlement"!!!!

And on page 16 it says they'll begin building Santa Ana by Q4 2012 or so, if I can read their chart correctly!!!!!

Yes indeed, kids, there is a Santa Claus!

SANTA ANA WILL BE A MINE AFTER ALL!!!!!*
* - this sentence contains a forward-looking statement

short interest

ZeroHedge interprets this as meaning the rally's over.

However, I learned how to read graphs in school, so I say something different.

quick note

OK, while I certainly did think the market should go downish from here, my concern is the following:

I see no reason why BTO going for $3.90 yesterday should be down to $3.65 today. So I bought.

I see no reason why RIO was worth $4 a few days ago and now is worth only $3.70. So I bought.

Repeat for BCM, AR, AMM, and whatever else got puked this morning.

So I bot another $30K in stocks. Absent an impending doom, this mornings puke into thin bids was overdone, I felt. This is precisely the time when I should buy!

S&P is not the $HUI is not the junior miners is not these particularly well-performing stocks (well, if you want to call BCM or AMM "well-performing"....). Also S&P is not gold is not silver is not copper.

Also, AAPL is still going up, so obviously the world is still not ending.

Thursday, February 9, 2012

Pragcap on AAII

Ooh! Ooh! "Bullish Sentiment Surges"!

And I quote:

"Bullish sentiment is now above its historical average of 39% for eight out of the past nine weeks."

and

"Bullish sentiment is now more than one standard deviation above its historical average, placing it above the typical range that has been registered over the course of the survey."

So? What do you say to that? Hint: if you're one of them contrarian bloggers who likes talking about dumb money being wrong all the time, then you'd best put your money where your mouth is and go short. Or at least speak up.

Ultimate top indicator - you need ME to remind you of the dooooooom

Nouriel Roubini is now bullish.

Insider selling is high.

The smart/dumb spread is at an extreme.

The rally is long in the tooth.

Now that Greece is finally fixed (fnarr fnarr), I'm thinking markets should go down.

I'm just saying the above things because absolutely everyone on the intarwebz is now bullish and ready to go long. So, if you are one of those contrarians who always tries to flee the crowded trade, you should sell everything right now.

No? Don't think so?

miners versus metals - short term toppy perhaps








Over the short-term (i.e. outlook of the next few weeks), it looks like all the miners are underperforming the metals. That is, they're rolling over.


We'll see, I guess. But I'm about ready to give up on seeing any more rally this month.

Turd Ferguson on miner charts

Turd Ferguson is a twit, and a member of the -5000 points crowd, but he had a somewhat entertaining post on miners charts today.

His fave stocks include Randgold and Yamana. And he laughs his arse off at Agnico and Hecla. So it's good to see that at least one other person agrees those two charts are vomit on ice.

Sabina Silver's Hackett stream and fun with excel

Was reading thru Sabina's latest presentation. On page 20, there's a little chart showing the purported production at Hackett. Shows the production starting in 2016 (I know one of my 5 readers has an issue with that), and the yoy production figures.

I took the production for each year, multiplied by .225 for Sabina's share, and then fed it all into an Excel spreadsheet with a 10% discount factor each year. 10% cos I like huge discount factors, also because there's no mine there yet and Nunavut hasn't yet proven itself (to me) to be a green-light mining jurisdiction.

That 10% per year is also applied to the lead-up years, btw, where there's zero production. So, good heavy discounting all around.

The numbers assume only 39Moz total Ag production, no discoveries, no mine life extension. So, only by the book, what's given. Probably fair, as maybe you could assume any extension of silver production would be offset by higher production costs. Who knows? I'm only aiming for a +/-30% accuracy, here.

So if you assume the numbers as given, 10% discount factor, and $20 long-term Ag price, the silver stream is worth $284M. At $15, it's $213M. If you're a Sprott fan, the best I can give you without shitting myself laughing is a $30 long-term Ag estimate, where the stream value is $426M.

I wanted to do this exercise because I figured it was too approximate to simply assume "3Moz/y" by Sabina's own estimation. Yes, it is like that, for the first 10 years, on average, more or less; but I wanted to try to get more exact with when how much silver is mined. Also, their chart finely illustrates that silver drops off markedly after 2025, and is gone by 2030. Kinda sorta.

Anyway, I'd personally think (until Jim Rogers is proven correct about the looming end of the commodities bull market) a decent conservative number to use is $20 silver. So, Hackett's worth $284M. That looks to me to be a safe, fairly conservative number, without injecting personal bias at all.

Though I'd have to think, if you're going to sell that silver stream to SLW, as some bullboard trolls suggest Sabina should do to pay for building their own mine, they wouldn't pay full value for it, would they? So, what would they want it discounted to? 80% of NPV?

(I guess Sabina's own preferred strategy right now is to leverage a loan against their silver stream; maybe securing it that way gets them a cheaper interest rate? I have no idea. I just read it somewhere.)

But then again, the closer Xstrata gets to ever actually building Hackett, the lower your discount factor will become, plus you lose the intervening discounted years... so the value of that stream would go up I guess by 12% per year between now and 2016, if and only if you can safely assume that Xstrata truly is moving toward production.

Anyway, there's my analysis for you, just to prove that I'm not a total chartist dolt and I do try to undergird my investment theses with at least the tiniest amount of purely amateurish fundamental analysis.

Tuesday, February 7, 2012

New game: rate your analyst! (post 777)

I've decided to write a fun little game. Rate your favourite stock analysts!

All you have to do is answer each question, and get the score in the brackets. Multiple points allowed for each question. Then tally up the score at the end. You can figure that out on your own, can't you?


Persona:

  • writes under real name (+2)
  • writes under real name for a real investment house or other professional business (+5)
  • writes under pseudonym (-5)
  • writes under a witty pseudonym (-10)
  • writes under a pseudonym stolen from Fight Club without understanding the irony that this novel was about an urban metrosexual's flight into homoerotic authoritarian fantasy to escape the existential dread of post-industrial America (-50)


Business history:

  • actually maintains a job in the financial sector today (+2)
  • once had job in financial sector: details of termination murky, has since fled country (-10)
  • doesn't seem to have had a real job outside of podcasting or blogging (-20)
  • previous career was in the porn industry (+100)

(And yes I really do get +100 points, above.)
(No, it was just a cashier at a porn shop.)
(But thank you for asking.)

Legal history:

  • doesn't seem to have been sued or censured yet (+1)

  • doesn't seem to have been sued or censured yet, but the way he carries on it's only a matter of time (-1)
  • has been censured by SEC (-1000)

  • has been censured by BCSC, OSC, or QSC (-5000)

(The higher points for Canadian censure are due to the fact that you apparently have to be 80 feet tall, green, breathing fire, and destroying Tokyo before the Canadian authorities begin to pay attention to what you're up to.)

Opinions:

  • wants you to know his opinion on base metals (+2)
  • wants you to know his opinion on potash, uranium, or metallurgical coal (+3 each)
  • wants you to know his opinion on rare earths (-5)
  • wants you to know his opinion on gay marriage, school prayer, Ron Paul, the US Constitution, money supply, Chicago School economics, or the gold standard (-10 each)
  • wants you to know his opinion on the Jews, Islam, the second coming of Christ, the Vancouver Canucks, the Federal Reserve or Ayn Rand (-50 each)


Stock Picks:



  • major (NYSE/TSX) listed stocks (+2)
  • Venture stocks with no liquidity and a bid/ask you could drive a fucking container vessel through (-2)
  • CDNX, pinks, OTC, or shiny mail-order coins (-10)


Politics:



  • left of centre or otherwise realistic and intelligent (+1)
  • member of Tea Party (-50)
  • founded Tea Party, now hates it (+1)
  • Tea Party doesn't go far enough for this fellow (+2)
  • nobody really knows (+20)
  • nobody really knows, but might involve a dystopian future of giant wardroids driving over piles of human skulls (-1)


Posts:



  • generous use of italics, bold, or underline (-2)
  • generous use of sarcasm (+2)
  • such quiet and unassuming hidden sarcasm that James West didn't even know he got punk'd in front of 200 people at PDAC (+200)
  • boring (+30)


Followers' blog comments:



  • serious questions on valuations, risk considerations, interpretive models (+10 each)
  • veiled racism, references to guns, empty libertarian threats of government overthrow (-20 each)
  • repeated parroting of memes like "BTFD!", "JP Morgan and the Joos", "ctrl-P", "gold, bitchez!", and various bastardizations of the names Obama and Bernanke (-50 each)
  • first commenter writes "First!!!!" (-10,000,000,000)


Public appearances:


Typical interview topics:



  • personal outlook on metals (+1)
  • personal outlook on global growth (+1)
  • personal opinion of specific mining stocks (+1)
  • favourite whiskey (-1)
  • gold standard, Federal Reserve, Obama, Ron Paul (-20 each)
  • Jesus, aliens, death panels, David Icke doesn't go far enough (-100 each)


Valuation methodology:

  • calculates target prices based on DCF NPV models (+5)
  • calculates target prices based on EPS multiples (-1)
  • calculates target prices based on ounces in the ground (-5)
  • methodology unknown, utter bullshit, possibly involving use of shamanic ritual using hallucinogenic mushrooms/chicken bones/chart analysis (+2)

(The points for "utter bullshit etc" above are due to the fact it doesn't really matter anyway, you're probably deceiving yourself by buying and selling based on a price target, it's best just to buy stocks that are going up and sell them if they don't. A price target will just get you stuck holding junk like GOZ. May as well know the target's been pulled out someone's ass, and trade based on that.)




I'll add more and repost when I can be arsed. If I even remember. Time for bed, I think.

Another ZeroHedge bugaboo - "lack of volume"

ZeroHedge insists the broad market rally is an illusion. See, they say, volume has been lowest since 1927 or something, and any trader knows that a rally on decreasing volume is dooooooomed.

I was thinking about this in conjunction with the New York Magazine story on the death of Wall Street, and I thought... maybe the reason volume has (long-term) decreased is because of the end of prop trading, and the slow collapse of the hedge fund industry?

After all, most of these guys can't turn a profit... it's often been pointed out by the smart traders I've been reading that prop desks are usually money-losers (unless you're Goldman Sachs and can get insider info from your former executives now running the various governments around the world). So if they don't contribute to advances, maybe all they do is contribute churn? And same with hedge funds - now that they're going through a major cull, does that also reduce the churn in the market?

Maybe ETFs do the same thing... I dunno if the "NYSE volume" reported includes ETF trading. Then again, I also don't know if it includes secondary/electronic exchange volume.

And also, when (say) I buy 5000 CAT thru TD, and the shares come from some other TD customer selling his CAT instead of being bought on the NYSE (as can easily happen nowadays), does that count towards "NYSE volume"? Because I reckon if more people are trading on discount brokerage platforms, more and more of this infrabank volume will be happening.

In any case, this is little more than another attempt to justify not listening to the whining coming out of the US One-Percenter Patriot Movement.

I don't have the answers and wish someone more clever like Ritholtz or Reformed Borker could provide answers to the above. But they don't read me cos I'm not cool. Oh well.

Quick note invalidating the previous note

And all of a sudden a lot of stocks and ETFs become unbroken.

So, yeah, sold some BTO at a profit, and added some RIO and AR (actual producers this time, instead of more shitty explorecos). Also added a touch of GPD, since it's supposedly going to take off some day. Or something.

Still not thoroughly convinced this is more than a one-day thing. But we'll see.

Convincing myself to stay on the sidelines

While not all miner indices or miners have broken down, a fair number have. ZJG, GDXJ, JJC, GDX and HGU look broken. SIL, SLV and COPX don't.

BTO, XG, AR and ITH look broken; DPM, GUY, NGD and ATC (really?!?) don't.

UUP has given up double-bottoming and is moving lower. And yet SPY doesn't want to go up anymore, and SLV and GLD look to be in correction/selloff/Zerohedge's-Evil-Zionist-Empire-illegally-suppressing-prices mode.

In a situation like this week's churn, it looks harder for me to make money. So I'm sitting tight and waiting for the field to open up again for me. I have to recognize that while I can take a position in hope of a move up, either in an index/commodity or in a particular nice-looking equity, I'll probably just end up averaging down into a position that moves yet lower afterwards. I'd rather buy at the bottom so that I've got a lot more green in my summary when things move up after. But I don't have to buy right now cos I'm not certain it's the time yet.

The green felt very nice in January - I had several positions with 4- or 5-figure unrealized profits showing. Even my tiny $5K exploreco positions, generally, showed fantastic profits, sometimes. I like that, and want to keep myself happy like that more often.

So I'm continually telling myself not to buy anything. Yes, I could turn a quick $200 profit by flipping GUY for a 2% win today, if things continue to bounce back; but why go to all the effort if there's a better chance that GUY will continue falling?

I don't think there's a serious correction due this month, anyway. Maybe March, if Greece really screws the pooch. But not February.

Monday, February 6, 2012

Josh Brown lays the smackdown on ZeroHedge's asses

Joshua Brown at Reformed Borker wrote a highly entertaining post this weekend, where he essentially lays down the bull case, sets parameters for the worst-case scenario, and incidentally truly puts the ZeroHedge morans in their place.

Read it! You must!

Get Your Shit Together

Most important, for a newly-minted chartie like me, is his incisive analysis of the last few bear markets. Essentially, say goodbye to any chance that we'll see S&P 666 ever again. (Snif... that's sad for a Satan worshipper like myself....)

Sunday, February 5, 2012

Re last Friday's action....

On Friday, remember, you saw a dip in the PMs, a dip in the miners, and decent selloffs in stocks like SWD.

FWIW, to me, that might have just been psychology:

1) There was a rumour the Greek PM was resigning. People might have wanted to go back to this fall's strategy of staying out the market over the weekend. They forget, of course, that it's not last fall right now.
2) A few explorecos, whose prices had mysteriously skyrocketed, settled back down when it was realized there was no e.g. Yukon Supermerger play, but that someone had pumped one of the stocks to his flock.
3) S&P hit its 1340 target, now people expect it to go down. FWIW, I'm with the one blogger I read who said he expects "1340 will look like a great point to short the market, just like 1220 did in November 2010."

I'll wait and see what happens to the PMs and stocks tomorrow, but I really don't think there's any concern for anything more than a mild short correction right now. And as much of my money is either in a crap shitpile beaten-down stock (Sabina, my new GOZ) or a beautiful exploration play with promise (SWD), I don't think I'll see a market drop as anything other than a huge buy opp.

We'll see.