SharperDingaan

Merry Christmas. May the taxman tremble as we all run into the new year! SD

Different experience with war lords. It's an inherently unstable business, it's continuous gambits that don't always work, and it's a limited time engagement. The war lord can extend the engagement for a time (assassination/purges, internal security forces, fear/propaganda, etc.), but every war lord is eventually displaced/dispatched. Same as all politicians, a war lord comes to power with 'capital'; in the political arena we call it 'political capital'. Thereafter, that 'capital' is progressively depleted, at different rates, until a new politician/war lord shows up (and repeats the cycle). Some places have a 'free and fair' election to decide the outcome, and the vanquished politician is outcast. Other places do it the 'old fashioned way', and the vanquished sleep with the fishes. The 'best' war lords come from the slums; life expectancy of maybe the mid-50's net of the multiple deprivations along the way, whereas the vanquished war load lives maybe a little longer. So if you're 'good' at what you do ..... you have a strong incentive to become the 'best' at what you do. There is a reason why the multi-level marketing structure works so well SD

Keep in mind that today's dog is a star as soon as the payback period is over. SD

Consider swing-trading around core positions, and reinvesting the net wins in alternative energy, crypto, etc; the o/g weighting falls over time, as the alternative energy roll-in progressively rises. You also might want to look at waste-to-energy plants. https://en.wikipedia.org/wiki/Waste-to-energy_plant The better vortex engine plants are essentially very large covered concrete silos, with tornado driven turbines generating power, and the waste heat co-generating hot water. Cheap like borscht, every municipality has a waste disposal problem, and the more remote a community the more practical these solutions are. An arctic community could burn its own garbage to power the community, power the container greenhouses producing fresh veggies, and heat the community swimming pool. Put these in the oil sands areas, and you could have a low tech solution (reduced carbon footprint) right up there with horizontal drilling. SD

Gaza is not an isolated 'problem', it is linked to the tanker attacks in the Red Sea It is in the Saudi/Iranian interests to create/maintain a war premium; Operation Prosperity keeps the premium in place, and it pays for the proxy war. Shooting down drones/missiles is one thing, defensive surgical strikes is quite something else; while it might terminate today's leadership, it doesn't get rid of it ... the survivors come after you, & you can't get out of the tar pit. The smart thing is no strikes .... odds that it actually turns out way? It is safest for everyone if Israel withdraws from Gaza, and goes a different way; which really means one man going. Warlords need perpetual instability, peace sidelines them and makes them obsolete. SD

This isn't going to go well. The big and strong seem to think a few defensive surgical strikes, and that will be the end of it. Take out the launch sites, decapitate the leadership, make some examples, everyone gets the 'message', and there is no possibility that any of the fleet ships sink. The Moskva also thought it was big and strong; the underdog Ukrainians thought otherwise, and now it sails with the fishes. https://ca.finance.yahoo.com/news/us-weighs-whether-attack-houthi-204958449.html https://en.wikipedia.org/wiki/Sinking_of_the_Moskva Thing is, this is the land of the 'eye for an eye'; the initial 'take out' is easy, surviving the reprisal ... not so much. Russia lost in Afghanistan, the US lost in Vietnam; and Iran can close/harass BOTH the Arabian Sea AND the Gulf of Oman egresses, threatening much of the Saudi production (Iran doesn't even have to be successful). The real 'why' the coalition fleet is there. https://en.irna.ir/news/85328464/US-to-face-Vietnam-scenario-if-Yemen-attacked-Ansarullah It really all comes back to Gaza, and Bibi stepping aside; what Israel wouldn't do for 30 years+, and eventually proposed to do, now being imposed. SD

What does the world really expect them to do? destroy Houthi launch sites on Yemen, and start Gulf War III? The only things this does is ensure that crude oil carries a war premium for longer, extends that premium into global shipping (8 days of additional transit time), and allows the world to demonstrate active/global support for Gaza. Parking your thug on your opponents doorstep has no value, unless you intend to use him/her; and as soon as you do ... crude prices spike. Give up the Gaza invasion, and this whole thing disappears. Israel very likely ends up with a new government, Houthi leadership gets replaced, the UN demonstrates its mandate, oil prices return to higher 'lows', etc, etc. Everybody wins ... the dictators handbook prevails ... and the ME returns to a more peaceful norm. Just not so hot ..... if you're an opponent. SD

Go look at the quarterly reports of the Canadian names in the WCSB ... quite a few names in there. OBE is one example. OBE started the year at 80.7M shares and a 2PNPV10 reserve value of 2.8B; a 2PNPV10 of CAD 34.70/share (2.8B/80.7M). They bought back 3.6M of those shares at < CAD 9.17 and added a gain of CAD 92M to the IV of the now 77.1M shares of the company, or CAD 1.19 (92/77.1). All else equal, cash flow/share is now 3.8% HIGHER than it was (80.7/77.1); and most would expect that OBE has very likely bought back even MORE, since Nov 08. Yet according to the press .... this was a stupid idea? According to the market this was also a stupid idea ..... as the share price is down quite a bit, versus up by at least 3.8%? Maybe ..... 'cause the market is short-term trading orientated, this is a long-term investment orientated idea, and media is incentivized to sing the traders tune? Can't get rich unless there are lots of bunnies to slaughter. And really rich if/when the magnificent seven falters/fails, and the bunnies run to the fat yields and buybacks of o/g. An enterprising lad could eat very well! https://obsidianenergy.com/press-releases/obsidian-energy-announces-third-quarter-2023-results-2/ Continued Share Buyback Program – In the third quarter of 2023, a total of approximately 1.6 million shares were repurchased and cancelled under the Company’s normal course issuer bid (“NCIB“) for $14.4 million ($9.17 per share). In total, we repurchased and cancelled 3.6 million shares as at November 8, 2023, for approximately $32.9 million ($9.13 per share) for the year. SD

It is far more likely that the shipping chaos is deliberate manufacturing of a 'war premium', intended to raise the price of all crude. The Houthi's are proxies in the Saudi-Iran contest for control over Yemen, and both Saudi/Iran will benefit in a big way- if a 5% war premium can be tacked on. Dropping drones/rockets on passing tankers is simply good business; that also demonstrates anti-Israeli protest over Gaza. The magnificent seven is little different to Nortel back in the day; PM's were forced to hold it on penalty of being fired, and dumped it en-mass as soon as they could. In the the age of 'bots, we merely go down quicker! The financial press is currently doing near everything it can to slag "buy back's"; it's not a buying signal, management uses it to 'goose' results, it's a way of getting around stock options, been burned on these before, yada, yada .... Yet utter silence, about o/g production manufacturing, big stock buybacks (>5% of o/s shares) at well below book value, high dividends, etc, etc. Good! cheap like borscht, and more for me If my dividend paying energy stock has a very good chance of at least doubling in two years, I really don't really care if today - she looks like a curvy pig wearing lipstick. With sizeable monthly/quarterly dividend cash, and a 36%+ CAGR; I just call my pig Marilyn, and give her a kiss every day PM's measured by quarterly performance are at a disadvantage, use it. SD

Dollars will mostly replace the peso for everyday activity, larger dollar amounts will require bribes to both get around the capital controls and periodic shakedowns; however all of it is subject to the usual theft and security costs. BTC/Lightning gives you a capital control workaround, has similar anonymity to cash, and mitigates most of the security and cost issues. One of the bigger niche markets is journalists; if they don't have to carry wads of USD around with them to pay the fixers they are less of a target, and K&R insurance is cheaper. There is a reason why the press uses free lance war correspondents in conflict zones. SD

Refinance Argentine assets with Argentine debt to minimise/eliminate FX exposure. Where you can; pay for BTC in Argentine Peso's, and direct ranch exports through an NA/European agent minority owned by you. Worst case you lose the Argentine ranch/mortgages, but most of your wealth is out. Many a Patron knows how to fly; the small planes/airstrips on these ranches are not just for getting around. SD

Wait for the bond to default on non payment of USD interest, a restructuring into a zero coupon USD denominated bond with all deferred interest paid on maturity, and the financial press to bash it as a example of the sorry state of Argentina's finances. Buy it a 50% YTM, while everyone sings 'Don't cry for me, Argentina'. Then simply sit on them. A few years out there's a change in government, an IMF debt forgiveness/refinancing, the YTM drops to 44% or less (600bp +), and there's a refinancing at market; a Latin American version of the Greek Sovereign Debt Crisis resolution. The prospective gain is a simple duration calculation. SD

Argentine 2035 Dollar bonds currently at 34.9c, and going down at least another 2%/month for some time. https://financialpost.com/pmn/business-pmn/argentina-bonds-rise-to-two-year-high-after-milei-debuts-shock-plan If ever there was a business case for BTC this is it ... 8 months from now these now 11 year bonds could look even more interesting, should interest non-payment result in a restructuring and reclassification as zero coupons. An eventual 600bp favourable net decline in the YTM, realised in USD, could make you a very rich man. Everybody still has to eat, Argentina's agricultural exports aren't going to go away, and a very good steak is now half the price it was a week ago. SD

A lot of the 'tax loss selling' is the inexperienced, and the day traders, who need to blame anything else but themselves. Human nature. It is also relatively predictable; look at the junior's who did multiple acquisitions over the last 2 years, and which have had expiring lockups throughout the current year. Lot of sellers aren't investment people, don't talk to their advisers until too late, and acquisition/lock-up information is not hard to find; most every deal has a press release disclosure SD

Just use the calendar; for most folks, a December sale that hasn't taken place by the 24th, probably isn't going to - BTC being the exception. Most folks sold by mid-November, so that the 31 day period was over by mid-December. They are the ones buying today, when everyone else is selling . Despised by the many (who didn't think), for most - tax loss selling is actually a smart thing to do. The longer term (mid November), vs short-term (mid December) orientation often realising a 5%+ cash return on the swing trade; that both lowers your cost base, and pays for Christmas. SD

European option, plus back in the day the spreads were much higher than they are today ... if you could even get a bid. https://www.investopedia.com/articles/optioninvestor/08/american-european-options.asp The reality is that if the strike on your call is much < 30% of the current market, it is a lot smarter for the would be call buyer to simply buy the stock and put up 30% margin. Your LEAP has essentially become worthless until there is a liquidity event - as it has gone no bid; if you need the exit, the bidder wants a minimum 40% liquidity discount. Of course if you don't need the liquidity, and can do something else while waiting, you screw up the bidders plan SD

What the BoC intends has been quite obvious and for quite some time; the chattering class just chose to deny it until they saw it - which is now. We have been successfully rolling into Province of Newfoundland debt for a while now, in anticipation of the coming decline. The BoC intends a short, sharp downtick of negative growth; at worst, maybe a technical recession of two quarters of negative growth. Negative growth and layoffs dropping inflation like a brick, immigration picking up much of the minimum wage work that still has to be done. Many of the laid off also retiring to the CPP/OAS/GIS, and RRSP/RRIF/Pension income much less exposed to the availability of ongoing work. Lower the yield curve by 150bp and everything looks very different. The TMP expansion will also be delivering, and an additional 300,000 boe/d at USD 70 will help out the Balance of Payments in a big way. Debt gets termed out, toxic ministers shuffled out of portfolios, and the spotlight refocuses on good governance. The chattering class also assumes ‘business as usual’. When we know there is a Canadian CBDC in the wings, the BoC has floated components of it for comment, and the US is progressing on BTC-spot ETF’s as a mainstream product. Canada already has BTC-spot ETF’s, as well as the related option market, and has had them for some time; all with no ill effect. Question is: do you make more on a bond-fund rising as the yield curve declines, or on the BTC-spot ETF as/when the next halving does its thing, and/or a US BTC-spot ETF gets approved? The surer $50, or the less sure but $700+ if the stars align? SD

Two of the better ones. Personal vs business life. Way back in the day I worked for a prominent US Company doing business in Canada. I had done very well, and was under overt pressure to move to the US HQ; resistance was meeting with very direct 'phone calls, from high placed people who refused to hear 'No'. While the US was not my first choice, ultimately I was OK with moving; but my girlfriend at the time flatly would have nothing to do with it. End of the day the company and I agreed to amicably part, the girlfriend become spouse, and we're still together decades later. Investment. Long time ago, MX-T used to be in the Nova orbit (now merged into TCE), and per common practise at the time - was overextended. There were issues, the shares were well < CAD 2, and to survive - the company sold 5 yr LEAPS at a ridiculous strike, that rapidly sank like a brick. Methanol is a base industrial chemical, it was clear to me there were no other real choices, and I put nearly all of what I could lay my hands on into these LEAPS. It eventually went my way; but I learnt that when options go very deeply in the money (& stay there) there is no market for them, and they cannot be put up for collateral. I had to sit there for years until the LEAP finally expired, with a house sized unrealised gain that changed daily, unable to do a thing about it. Hence today, we almost always use stock/margin, 'cause that sh1te ain't never happening again! Point to all this is that it's just money; you have to be able to walk away, and you have to understand that it works for you - not the other way around. Lot of ways of accomplishing this, and the colourful 5% are some of the better people to talk to! SD

Keep in mind they are private; we have no idea what their depletion rate is. Assuming their production is primarily shale, they will be depleting at 20-25%/yr. Per the article if 331K was Q2/2023 production, it was 264.8K in Q2/2022. If there is no new drilling, and depletion is 20%/yr; it's back to 264.8K in Q2/2024, plus a good chunk of existing inventory burnt. There is a reason why they are selling. The majors now largely control the US shale basins; and the same as with OPEC+, they will be managed to maximise lifetime value-add. The are also partners in most OPEC+ basins, and the US itself is the 'security' partner in the ME. They will agree a range that everyone can live with, and the more that shale is manufactured the more profitable it will be. Over the long-term, shale fields are really gas basins producing light oil as by-product; and its value is maximised when it can be blended into heavy oil going into refining. The majors are just doing the Standard Oil thing; locking up the vast bulk of domestic gas while they can, then controlling the price as the US is forced to use it - as the transition fuel from gasoline to electricity. No different to the diamond and gold fields of yesteryear. SD

Keep in mind that US Shale is now largely controlled by the majors; deep discounting just lets them consolidate the basins faster, producing field oligarchs with cash break-evens close to OPEC+. The strong-arming happens behind closed doors, as the majors are partners in most all OPEC production. Much of the cartel's power rests on its very low production cost vs everyone else. OPEC's production costs have risen every year for many years, and shale production costs have fallen dramatically as 'manufacturing' has come on stream. Start a price war, and they have to go a lot deeper if the intent is to stop shale; today it's much smarter to just do a business deal with the majors. SD

Demand/Supply thing: Most people would add an annual 1% for natural growth to global demand, then adjust for demand effects primarily from Asia and the US. For global demand growth to flat-line, Asia/US combined need to consume around 1M boe/d less. Global demand is now back to what it was pre-covid; lot of upside should global affairs stabilise. https://www.statista.com/statistics/271823/global-crude-oil-demand/ Global supply comes from 3 sources. Long-cycle oil (mostly off-shore); steadily declining for some time, for a variety of reasons. Short-cycle oil (primarily shale); currently rising as 'manufacturing' kicks in. Disrupted oil ('locked-up' via sanctions, lack of egress, etc.); about to jump by 500,000+ boe/d in Q1/2024 once the TMP expansion kicks in. In the short-term most would expect supply to outstrip demand, hence the current pressure on WTI. Thing is - that short-cycle oil has a depletion rate of 25%, whereas the long-cycle oil depletes at around 6%. Even the simplest modelling, demonstrates material price volatility if things don't go perfectly. Hence the $150+/bbl forecasts. It's also 2023. Full-cost break-evens for field consolidators 'manufacturing' shale in NA's major basins is around USD 42-48/bbl; cash flow break-evens are a lot lower. At USD 70-80 WTI, most producers do very well. SD

Managed to get hold of a signed first edition of poor charlie's almanac for this years family meeting; plus had a couple of his better quotes printed and framed. Our mum always gets a good chuckle from the old guy, as some of his quotes work far better when applied 'to friends in low places'. Which ones .. to remain anonymous! SD

One of a kind. May the rest of us bow before the master! SD

You might also want to keep in mind where your bio-metric scans are, if you have a US NEXUS card. And who is selling/benefiting from your DNA data .... were you fool enough to send it in to an ancestry.com etc. All that you have to do is offer a 'perceived benefit', make it socially popular (social media), and charge a modest sum to process (validates the 'perceived benefit'). 'Somewhat' deliver on the benefit, and the data is yours; no paying people to give it, finding them, legal hassles, etc. ... and all the lemmings rushing to your door. Dictators feed stock. Always a need for good anarchists! SD

It is much more likely he eats/drinks something that disagrees with him; some of his friends catching a similar bug at around the same time. Dictators handbook. SD