Uccmal

If it works, keep doing it. I have been writing the 89-, 90-, and 91-strike weekly puts. The premiums are nice and if I get put to I have a great entry price. Boilermaker, Can you elaborate. I was just looking at the list for the 90s for dec. 20. Its $1.00. Is this what you mean - really short term. I guess it works okay until you get put to a few times and end up eating up your margin on XOM stock. Tx.

Speed reading is bunk. The ability of the eyes, the brain, and short term memory conversion, to long term memory makes it unworkable. Comprehension falls apart. If your talking about skimming that is a different bird but then your not really reading. I skim Financial reports all the time looking for specific things such as debt levels. The purpose of this is usually to quickly rule something out, much like an HR person skimming resumes. http://lifehacker.com/the-truth-about-speed-reading-1542508398

Wouldn't this just be a standard NAV calculation, assigning zero value to any goodwill on the balance sheet? The more pressing question to me is: How do you calculate NAV in the first place? Do you look through the reserve reports and adjust for a lower price of oil? Or are you talking about a NAV number as presented by management? NAV for E&P companies always seems like a moving target to me. All I have done is take NAV which Pwt has reported as 15.xx - taken away goodwill; and taken it down another couple of dollars to account for oil price decrease to get about $10. As far as I am concerned that is the best you could ever get to a reasonable estimate of what someone else might offer for the property, operation, and equipment.

I have started a watch list. These all have Debt to Cash Flows of 2.0 x or less based on recent earnings. Obviously The cash flow side of the equation will drop. The d/cf numbers have come from screens and may be variable. Arc Energy - ARX BNE CPG ERF TOG VET - noted earlier WCP - also noted earlier I am only looking right now but had to get a narrowed list.

Most of the quality small caps won't be E&P, they'll be energy-related products and services. I haven't done any work on most of these but here are a few Canadian small caps from gurus I follow: CEU DEE POU RRX SES SCL TOT HNL HWO KC, Will have a look. thanks.

As everything gets cheap I certainly would appreciate the ability to diversify, and maybe move up the quality curve, if thats how things unfold. My PWt position is as large as I want it. On the other hand it is trading at less than 30% nav - ex. goodwill.

I have been thinking about the price of oil and have looked at numerous charts, including inflation adjusted charts. Using about a 3% inflation, oil at $40, 6 years ago is $47 in todays dollars. Thats no longer very far away and was a brief point in time. From 1999 prices would be north of $62 in todays prices depending on real inflation. I guess the addition of shale oil could keep the prices this low for a sustained period. But has anyone ever known oil to drop in price over time. I just dont think this is a new paradigm, but rather a point in time.

Why bother with a basket if you are buying big, quality names? If you are buying a basket, there are plenty of quality small caps that have 2x or 3x potential. If you are playing it safe, you can buy CNQ or similar and sleep well at night but with limited upside. You have a point. Okay, What about a list of "quality" small caps.

For the Canadian Oil Patch what are some if the best buys in terms of management; debt/equity; size, etc. Without much research I come up quickly with: ARX, SU, CNQ, ECA, Husky?, MTL I am getting ready for shooting the fish in the barrel time. A couple of weeks ago I was looking at indexes but wasn't very impressed with their structure; so I figure an index of my own in the style of John Templeton makes the most sense. Any other ideas? I am thinking mid - large cap operations, only. I would probably buy ten grand of each idea when the time comes.

And they have taken the entire oil patch down with them. In addition, the LNG terminal news is bringing gas down.

It was much cheaper when I bought Sbux Leaps in April 2009 - stock was at $10. Unfortunately, well you know....

I started investing around 1997/98. The climate today is nothing like it was back then. Everyone had an opinion on markets. I got into an argument with a newly minted investment advisor on the eve of 2000 (a week before) about tech stocks. He said that everyone needed some exposure to tech in their portfolios because that was the future for investing. I told him he was full of it, and the end was coming. I guess I was right... Since then I have had no exposure to a stock bull, there hasn't really been much of one. I only had awareness of the housing bubble (no direct exposure in Canada). I am never clear whether a Bull actually starts with a new high, or right off the bottom. There is a big difference in the two definitions. One makes this bull 5.5 years old, the other makes it less than 2 yrs. old. I know we all hate to hear it but this time is different. The market bottom was very deep, and the degree of government intervention has heavily affected the normal business cycle. I am not sure what that means. Why is it that the ignorant are always drawn to certain stocks, which of course are the most expensive?

Dec. 1 - tax loss selling?? Nice synopsis Cardboard.

Precisely, XOM has raised its dividend ever year for 32 years, through the 90s oil price crash, and through 2008. I would think of it as an energy company. These super majors will also be the biggest players in the alternate space eventually as well.

I think the best way to think about the drop in oil prices is perhaps in a Templeton manner. Identify a dozen or so of the better capitalized companies and put 10 k into each instead of looking for a single big hit, assuming a couple will go down with the ship. So, the question then becomes simplified as to when to invest. On the aspect of timing, we will either have time or we wont. My personal feeling is to wait a while, and watch it swing way down,if it does, rather than scrambling to invest right now. If it goes back up quickly, we lose nothing. As a value investor my tendency is to often be too early too a party. So, some well capitalized energy companies: The obvious are the super majors such as Chevron, XOM, Royal Dutch, internationally. Canada: Encaca, Cenovus, ARX, CNX, SU (last two depends on how you feel about the viability of the tar sands - I dont think they are viable long term). Others to look at?

I think you thinking of Seaspan, the ship leasing company, my largest position. Will have a look at your idea though:-).

More accurately, Edwards sees oil plausibly spiking down to $30-35 and stabilizing at $70-75. But no matter. Even with a brief spike many O&G equities will get hammered compared to today's prices. And he has a crystal ball in his office. As we have seen this year, yet again, fossil fuel prices are completely unpredictable. I expect he would like to see it play out as he says, for CNQs benefit.

There is so much wrong with my mental picture of this: 1) If my math is correct you are over 40. What are you going to do next - a few lines of coke and fall out of a tree. 2) Two legs = two skis (Not One). 3) Independent wealth is apparently bad for ones health. That Rhymes BTW. I last snowboarded when I was around 35. I was sore for two weeks from doing face plants from 8 feet (5 feet plus 3 feet of hill). Still ski though. Beat my nephew on a straight downhill speed race last year. Happy Thanksgiving! To all!

I have read the essay by Grantham posted on the other thread. I dont always agree with his stock predictions, but I am on board with his oil predictions. Short term is anyones guess. Long term oil goes way, way up in price. It really depends how fast the US shale oil drilling gets used up. The present move by OPEC appears to be geared toward bankrupting more expensive operations. The long term trend has been price increases for the last 15 years. So, if the price goes lower yet I will be buying senior oil producers, should they fall in price. As Viking mentioned it is like a giant worldwide tax cut, or stimulus program. Lower oil prices will help all non producing countries and those who produce but are diverse such as Canada, and the US. The upshot for the EU and Asia will be improved economies. At 80 Million barrels per day a $30 price savings is .25 B per day. Thats 1 B every four days, 80 B a year. Thats alot of direct economic stimulus. I think we need some time to see how this plays out. Right now the price is caught up in the international gambling business, obscuring what is really going on.

Fairfax's portfolio has always been strange IMO. However, you also need to realize that when you see these SEC filings, you are basically seeing reporting of Fairfax's, non-OTC, US listed equity (and some bonds) portfolio only. You aren't generally seeing any foreign names (unless Fairfax is buying ADRs, etc). So if you look at one of the nice sites like Datarama or Whale Wisdom, they will show you that Fairfax has like 30% of their portfolio in BBRY, and RFP, etc, but their total listed portfolio via the SEC is only ~$1.5B USD... their equity portfolio (including everything) as of the last quarter was >$8B USD (this number includes several consolidated but not wholly owned businesses as well). So if they have 30% in a few names that make you scratch your head, just remember that they may be right or wrong, but the "bet" on those names usually isn't as big as it seems. I like to bring the large investments back to a % of book value in my mind so I can understand the downside better in my mind. So in this case maybe RFP is ~5% of Fairfax book... does that seem more reasonable? Probably (I don't have a great feel for the RFP investment myself, but it seems reasonable). Anyway, this is just another way to say that Fairfax has huge exposure to things we don't see directly in the 13HR, and also to some investments that we don't even know about. If you want to track their exposure more accurately, you can track THRE.TH, BKIR.L, and their other global investments. I'm not sure that is necessary to invest in Fairfax, but probably at least understanding the scope of what you don't see in the 13HR form is needed. Perhaps you already made this mental adjustment and still think they are concentrated in too many low quality businesses (you would not be the first to think so!), but my guess is that because the US investments are so well disclosed and so easy to find via the websites I mentioned above, they get relatively too much focus and the perception is that their US portfolio is a greater % of the overall equities than it really is. Just my perspective. Ben PS - The BBRY investment also needs to be adjusted for the Converts FFH owns which are probably marked at ~$750-800m ($500m cost) or so now, so that investment is actually larger than what is reported, but still not 30% of book). PPS - On a related note, I think Fairfax tends to buy into more leveraged, or seemingly "binary" businesses generally because of two reasons: 1) they (I think) prefer the leveraged nature of equities with massive upside because of their conservative portfolio (I guess you could frame this as leveraged businesses being good inflation hedges) and 2) they have a unique ability to wait out other investors and to not have to worry about death spirals because they can always (assume assets are still backing the investment) double down via debt, converts and even DIP financing in BK, so I think the fat tail negative outcomes for Fairfax aren't as bad as perhaps they are for us as retail investors because Fairfax won't even be diluted (if they don't want to be) - they will be the ones diluting. This may or may not be their mindset, but I think it makes some amount of sense from what I've seen over the years. BBRY is a great case in point, they are I believe M2M profitable on their BBRY investment at this point (+/- a few % maybe) I would estimate (obviously not a good IRR, but we'll see how it plays out). Same thing with LVLT... for years it was considered one of their big failures, but even when the stock was just in the crapper, their IRR was 7-9%, and their IRR over the life of the investments now I think is low teens (not certain here), due to their selling as well as doubling down in debt, converts, etc. Ben, That is an awesome summary of the way FFH operates. It squares with my observations over the years.

No kidding! One of my best friends bought Tony's tapes and made me and his Dad go to a seminar (sales job) with one of his franchisees. I am immune to Tony's BS, but my buddy has always been a seeker. I have heard from friends that Robbins is one of the best public speakers in existence. The reviews on the book on amazon seem pretty good. It should hit my office at Chapters any day now, for a free review.

My experience with buying puts has been pretty poor. I have only ever used them to hedge, not to deliberately short anything. Usually what happens is the market or stock goes up a little after a put purchase. A few weeks lapses, the market tanks, and the puts dont even get back to the level I paid for them. It is said that 70% of options expire worthless. I am *guessing* that puts probably expire worthless in 90-95% of cases. I have tried every permutation of buying puts and have found this to nearly always be the case. So, I find I am better at disciplining myself to move to cash, rather than buy puts. The problem here is the tax man. One day I need to sit down and do a tax versus losses on puts comparison. But, I am pretty sure that my losses from puts will exceed the taxes on selling gains by a long shot. The obvious answer to puts that nearly always expire is to sell puts, of course. This needs to be done with a very careful eye. I have goofed this side up badly at extremely bad times, or with really bad stock choices (re: RIMM). I may have got the hang of it now with much smaller positions and more careful choices.

Hmm, Someone at FFH is buying Pennwest? Mighty suspicious, I must say.

No! iIt is all of you who are mistaken in so many ways... All is unfolding according to my plan... Now young message board members, you will Die!

Worlds, Nice analysis!