kuppy, as things are deteriorating in the economy and the risk of a reset becomes greater, what kind of companies would you look for to maximize gains, assuming you’ve got alot of cash on the sidelines when/if shit hits the fan.
commodities obviously did great after 2008 but it doesn’t seem they’ll get hit as hard this time around. Likewise I can’t foresee a company like Apple ever hitting 80 again, even with S&P at 700.
No matter what’s happening, I try to find the best businesses that have the best cyclical tailwinds. Just because commodities aren’t dropping much, that doesn’t mean they’re bad–it likely means that they will seriously outperform in the next cycle and that’s why they won’t drop. Look at Mongolia. Markets all over the world are in freefall and the MSE 20 is down less than 1% this week…. Always buy the best assets in the best bull markets and you can be partly immune from what is going on around you.
Hi Mr. Kupperman, I was just wondering if you follow the Chinese reverse merger frauds that have been popping up in the last year and a half? I know you prefer not to short companies for good reason, but it seems like there is money to be made by tracking companies like Sino-Forest (TRE-Toronto), L&L Energy (LLEN-NASDAQ) who have research reports posted about their purported fraudulent activities. I’d be interested in hearing your thoughts on the matter.
I do not short. I’m sure lots of guys will make lots of money shorting these, but I just don’t do it. If the numbers are all fake, what’s to stop them from having fake news and having the stock go up a few hundred times? I have had it happen to me too many times in the past and just refuse to do it.
What books do you recommend to get started out in options?
There’s a book by Natenberg that you can find on Amazon but it’s a pretty advanced read. I have never bothered with fancy option strategies, and that’s most of what you’ll find in books.
For your reader in the 8/30 Ask Kuppy (what? did I lose a month? AUGUST 30th?): I recently completed opening a BDSec account. Very weird to not receive any acknowledgment of account opening for a week, nothing on wire transfers for 3-4 days, and nothing on stock purchases for a day or two. Life is definitely SLOWER in Mongolia than here. There is currently NO on-line access to your account. You simply get emailed your statement when things change, and the statement is a very (VERY!) simple Excel file. Very, very strange … but not for a market that’s only open 1.5 hours and has very thin trading. Hope this continues to improve.
As you’ve mentioned previously, Eurasia Capital, Frontier Securities & ResCap are places to do a little research on Mongolia (use Google!). Eurasia (free with registration) has a very nice article (dated 11 Apr 11) on their home page that provides the most in-depth research/solid numbers that I’ve seen so far. Also like you mentioned, very few of these numbers are audited, but at least it is a starting point. I tend to think that foreign capital is going to overwhelm the Mongolian economy & light the powderkeg on stocks, but I certainly could be wrong. Liquidity is a bitch in Mongolia, as my initial bid for BDSec stock at previous market close netted me only 30 shares (less than $100 worth!), and represented 100% of the BDS trading volume that day. I was filled on the remaining 970 shares the following day, but it’s going to require patience to build positions. Hopefully liquidity has improved by the time I want to sell!
I am extremely happy to have a portion of my net worth be positioned in Mongolian Tugrugs as I slowly work to establish Mongolian stock positions. It is definitely the wild west out there, though, so buyer beware!
Welcome to Mongolia….Nothing is easy, but it’s worth the effort. I posted this for other readers who are curious about how the exchange and brokers operate.
Any thoughts on the SPAC Blue Wolf Mongolia Holdings?
Guys want exposure to Mongolia. This is one of many public vehicles that will eventually be launched to invest in Mongolia.
How do you know when it’s the bottom? What if the market keeps on dropping? Can’t this be like 1987?
No one knows when the bottom is. I just know that we’re getting close in time to when the governments of the world will defend the markets. Look at Friday, there was an emergency press conference to defend the markets because of how they were dropping. I want exposure and I’m getting it at prices much below where most markets were trading a few weeks/months ago. No one gets the exact bottom, but I’m happy with the prices that I am getting.
Kuppy…do you keep a core position in large cap gold miners even though you state its a lousy business ?
I have a large core position in gold. I have a smaller position in some miners. I tend to trade a bit more around my miners because they are such lousy businesses. I rarely trade around my gold. I keep the miners because at some point, I think they will have leverage to the price of gold–thus far, it hasn’t worked out that way. That said, miners are great trading products as they’re amazingly volatile. Every time they overshoot to the downside, I buy more and then sell most as they rebound.
Kuppy, The ~109 rigs at Cabo drilling seem to be in the hands of a really weak player. Would the desperation at Cabo cause them to reprice the $/meter in places where they could mobilize a rig? Also, the business has been running lean for a while now, what do you think of the remaining life of their rigs. Are they utilizing everything they have and the rest is just junk? I suppose you can’t love all the North American business, but what do you think its worth?
At one point I owned some Cabo. I sold it long ago. The issue is that most of the rigs are obsolete and not capable of being deployed. They have too many different rig configurations and it is making their life difficult. I don’t think they can impact industry pricing as they operate in the commodity type sectors with much larger competitors. I prefer the more niche greenfield and environmentally friendly sector.
I can’t even guess at what it’s worth. I own my Energold because it’s the best operator in the sector. I haven’t looked at the others except for MDI CN and BLY AU, and only then, to check on earnings and see what the big guys are doing….
Why has this site become so Mongolia centric? Do you even follow small companies anymore?
It has become Mongolia centric because I think that the opportunity in Mongolia is the most exciting investment opportunity currently out there. I now live in Ulaanbaatar so that I can better focus on what’s going on in Mongolia and that naturally focuses my attention on things related to Mongolia. I get lots of questions about Mongolia because others seem to be interested in the country as well.
I still follow the markets and am looking for small companies, but my focus isn’t as intense currently as it used to be. I am just not finding much that interests me in the public markets. Since the super-computers took over, the big opportunities seem to be in the niche markets or the non-public markets. I’m still looking, I’m just not finding much that interests me–not now anyway.