Discuss Wealth-building Investment Secrets with Ian Wyatt

Hi Susan!

Opecker — Wed, 20 May 2009 19:08:51 GMT

Who has come over from IV?

Reaffirm or Collapse

JCHarper — Wed, 06 May 2009 21:03:31 GMT

Unless the current powers that be in Washington DC reaffirm the sanctitiy of constitutional property rights and contract law unequivocally and immediately, the USA will collapse like the old USSR. That is my opinion.

The reaffirmation (in deed, not just talk) is necessary because recent government actions cast serious doubt on support for those basic principles. In the name of political expediency and ideological commitment, the federal government has:

decimated investors by forcing stock dilution (Banks and financial institutions)
interfered with management at non-government institutions (GM, AIG)
regulated and legislated retroactively (oil and gas leases on federal lands)
forced allocation of capital to politically favored individuals at the expense of those out of favor (union activities, "green" projects, Fannie and Freddie)
spent public funds to achieve political ends and campaign financing ( ACORN, Fannie and Freddie)
threatened to subordinate private senior debt (GM, Chrysler)
forced mergers not approved by the owners (B of A - Merrill)

I could go on but that covers enough for now. Similar things have happened in the past, but never with the speed, breadth and scope we are seeing now. As far as I can tell (I am not a lawyer but I have read the constitution recently) there is no constitutional authority for the federal government to do any of these things.

These things have not been debated or legislated. They have been done by federal bureaucrats run amok in the absence of elected oversight and direction.

At the beginning, I said that if property rights and contract law were not reaffirmed forcefully and soon, the USA will collapse like the old USSR. I would add that it will be for the same reasons too.

That won't happen overnight. The US is a huge economy. It took over twenty years for GM to be looted by labor and management acting in collusion. It will take a lot longer than that to loot the entire nation. But, there is a point of no return in the looting process where it will take on a life of its own and cannot be reversed or stopped. In my opinion, we are nearing that point.

As an individual investor who has managed my own money successfully for almost 30 years, I can manage risk, hedge, trade, and find opportunity and bargains under most market conditions. I can hold winners and dump losers without batting an eye. In 2008, we managed a 2.5% return in a market that cost my retired contemporaries 40% to 100% (Stanford investor) of their life savings. So far this year, we have about a 4% unrealized loss. That may be nothing to brag about but I am proud of it.

What I can't do is invest when the laws governing lending, borrowing and shareholder (owner) rights suddenly change by federal decree.

Any comments or ideas?

From Platts - 5/5/09

JCHarper — Tue, 05 May 2009 13:52:42 GMT

"The spot coking coal market may not pick up until 2010 at the earliest as carry-over tonnage from FY 2008 is performed at full, or renegotiated lower price levels depending on the supplier and each contract."
http://platts.com/Coal/Resources/News%20Features/cokingcoal09/index.xml

"Electricity consumption trends would seem to provide a reliable indicator of economic health." Article is about European Electricity consumption at:
http://platts.com/Electric%20Power/Resources/News%20Features/eeedemand/index.xml

"The collapse in prices seen in the latter months of 2008 and the rapid deterioration in the financial climate are causing oil companies to rethink investment plans ... "
http://platts.com/Oil/Resources/News%20Features/crudeoil09/index.xml

"Sellers appear resigned to wait for uranium price uplift ... "
http://platts.com/Nuclear/Resources/News%20Features/uranium09/index.xml

"The situation has been forcing styrene producers into the spot SM market to buy product to cover their contractual supply obligations."
http://platts.com/Petrochemicals/Resources/News%20Features/styrenics/index.xml

Does anyone have any investment ideas based on these facts?

Refugee looking for a home

JCHarper — Sat, 02 May 2009 16:39:52 GMT

I am a refugee from the Investor Village message boards where I posted under the alias of "TwoHoot", primarily on the CWEI board. Thrivial posts and shrill politics drove away the serious, experienced participants. I have watched the non-activity on the Investor Insight forums for some time and thought I would try to begin some activity here by outlining my investments and goals for comment.

I am 66 years old and invest for income and capital preservation. I also allocate a small part of our money (I'm married) to trading and speculation. I manage our money and do not employ any advisers.

My primary core holding is Eastern American Natural Gas Trust (NGT). It provides income from tangible assets (as oppose to debt) and limited capital risk. There is a $20 zero-coupon treasury bond associated with each unit. The eintire trust will liquidate in April of 2013. Some of these positions have been on our books since 1999. The interest rate risk is hedged with an appropriate amount of RRPIX. NGT currently pays about 8.25% in distributions.

We also hold other asset based income producing US LPs but in much smaller quantities - SJT, HGT, PAA and KSP. These positions are partially hedged with URPIX and UCPIX.

Taken together, these investments more than meet our retirement income needs for now. Given the current dismal state of the natural gas markets, that may not always be true. However, lower energy prices should mean declining living costs overall. Conversely, they offer some inflation protection should deflation give way to monetary inflation.

Current trading positions (1 to 4 quarter time horizon) include TBT, SDS, ID and TINY. These change all the time and amount to less than 10% of our portfolio.

Does anyone have any comment or suggestions?

Apache Summaries and Reports

JCHarper — Mon, 04 May 2009 17:01:58 GMT

Britt Dearman and Michelle Markey have done an excellent job at Apache Corp of putting together information pertinent to O&G investing. It is a recent development which promises to become a premier investor resource.

The general link is http://www.apachecorp.com/Explore/Weekly_Energy_Perspective/index.aspx

Viewing the PDF version is better since the Weekly Summary, Topic Reports and Statistics are combined into one document.

For the latest, go to http://www.apachecorp.com/Resources/Upload/WeeklyEnergyPerspective/Files/722/WEP_20090504.pdf

A Little History

JCHarper — Mon, 04 May 2009 14:55:15 GMT

I notice that a few refugees from the Investor Village CWEI message boards are filtering to this forum. This is a temproary spot to regroup. Ian Wyatt may want his space back

Investor Village management decisided to begin deleting posts that were not supportive of Obama policies and rhetoric. This was particularly offensive to those who had endured years of the vilest "Bush Bashing" imaginable only to find that criticism of Obama was off-limits at IV. Over the past year or so, many of the thoughtful, knowldegble and experinced poster began to fall silent. Also, there was a group (including myself) who felt that the single most important investment consideration is government policy in todays environment.

Taxation, sanctity of contract, Federal regulation and mandates, government decreed allocation of resources, dictated management decisions, and massive unaccounted disbursement of public funds are just a few of the things that are uncertain under emerging federal policy. These things need to be discussed before rational investment decisions are possible, IMO.

For newcomers, the question arises about why long-time CWEI posters would want to "regroup" instead of just going their own separate ways. Here is a little history:

On Yahoo, there were a number of very experienced O&G professionals that began to exhange information and ideas on the CWEI board more than a decade ago. Just why there is open to question, but some of it had to do with the fact that many of them knew (or knew of) Clayton Williams personally and admired his aggressive style. The man is a true warrior in everthing he does. Most did not own his stock for the same reasons they admired his style.

The personal Claytie aside, he did attract top O&G talent and delegated well to them in his businesses. That core of talent drew other top talent to the CWEI message boards at Yahoo. (As a matter of interest, Robry made the first post on the Yahoo CWEI board) Since CWEI was a small, obscure company in the big scheme of things, it was largely ignored by the chattering classes. Then it got "discovered". The ignorant began to drive out the informed. So contributors moved to Investor Village CWEI board where the same thing happened quickly.

A lot of the old talent is gone, Claytie is getting old and, to use Stephen Kings words, the world has moved on. If the remnants want to get together again somewhere, sometime, they can make contact at the Investors Insight moderated forum (not a message board) and go from there. Fell free to make suggestions. When a consensus emerges among the O&G professionals I respect, I will go where they want to go.

Oilfield Pictures

JCHarper — Mon, 04 May 2009 04:18:48 GMT

Here is a link to some very good pictures of getting started with drilling an oil well. Hopefull, there are more to come because they stop with setting up the substructre. People who haven't been to the oil patch might be interested. Note that the blog isn't shy about politics, so sensitive folks should avoid looking.

http://www.survivalmonkey.com/forum/showthread.php?t=5541

The second link has a lot of good pictures plus information about how everything works.

http://www.itk.ntnu.no/ansatte/Onshus_Tor/Oil and gas production handbook ed1x3a5 comp.pdf

Thanks to Black Blade for the links.

Cordially,
JCHarper

Global Oil Demand

JCHarper — Sun, 03 May 2009 12:03:29 GMT

World oil demand in March was running between 84 and 84.5 million b/d in March. That is down from just under 88 million b/d last summer. Chart at http://www.platts.com/Oil/Resources/News%20Features/crudeoil09/demand.xml

Given depletion of major fields and curtailed exploration and development, my opinion is that the supply demand balance is still tight.

The key for oil prices is global economic growth. If the economy continues to deteriorate globally, prices will probably weaken. On the flip side, there may not be adaquate supply to support an economic rebound.

Any time supply and demand are this closely balanced, price volatility can be expected.

O&G Links

JCHarper — Sun, 03 May 2009 19:41:42 GMT

Since this is a forum instead of a message board, it will have to be used differently.

The message board is conducive to argument, which is fine as long as those arguing are informed. Everyone is entitled to their own opinion, but not their own facts. It will be less exciting on a forum where the goal is presentation of information for discussion.

At their best, the CWEI (an obscure company with small following) message boards at Yahoo and later Investor Village attracted only informed members who discussed things rationally. Then the crowds of uninformed came to present opinion as fact and argue endlessly and uselessly. Like bad money driving out good, the ignorant drove out the informed.

Sometimes I feel like arguing for the sake of arguing and I like to win. When I feel like that, I will post at IV.

The strong point at Investors Insight is their blogs. The neat thing about the blogs is that you can ask the writer questions and add comment. With that in mind, Here are some of the items I found pertinent to O&G investing:

Bret Boteler is the resident O&G blogger at Investors Insight. His comments are worth reading at http://www.investorsinsight.com/blogs/bret_boteler_on_oil_gas/default.aspx

“There is a good deal of evidence that we are now a little past "peak oil". Many of us find it doesn't feel quite like we had imagined.” The article is at http://www.theoildrum.com/node/5348#more

Chinese Oil demand is probably a decent indicator of the state of their economy and certainly affects global energy prices. Platts is set up to track it (maybe?) http://www.platts.com/weblog/oilblog/2009/04/platts_estimates_chinese_appar.html#more

For some comments on the state of refining in the US, see http://www.platts.com/weblog/oilblog/2009/04/new_refineries_in_the_us_more.html#more

Some discussion on the relationship between Capital Expenditures and production - http://www.platts.com/weblog/oilblog/2009/04/cera_report.html#more

Let us know what questions you asked the authors and whether you feel the information is useful or not.

May national gas average drops 18 cents to $3.02/MMBtu

JCHarper — Sun, 03 May 2009 12:06:49 GMT

Washington (Platts)--1May2009

US spot monthly gas prices for May declined by an average of 18 cents, or
5.63% to $3.02/MMBtu from the previous month's $3.20/MMBtu, Inside FERC's Gas
Market Report said Friday.

     A number of pricing points plunged to multi-year lows, following the
declining May NYMEX gas futures contract, which ended at the lowest
prompt-month contract expiry since the September 2002 contract's close.

     Amid an abundance of gas in storage, ailing industrial demand because of
the nation's recession and the shift into the low-demand shoulder season, the
May contract rolled off the board at $3.321/MMBtu, down 31 cents compared with
the April contract's final close of $3.631/MMBtu.

     Pricing points in the Northeast settled in $3/MMBtu territory for the
first time since IFGMR's September 2002 survey. For May, Transcontinental Gas
Pipe Line zone 6-New York averaged $3.82/MMBtu, off 34 cents, or 8.17%, from
the prior month. Texas Eastern Transmission zone M-3 also hit a multi-year low
to average $3.71/MMBtu for May, down 31 cents, or 7.71%, from April.

     The Henry Hub index for May came in at $3.33/MMBtu, down 32 cents from
the month before and less than 1 cent above the final NYMEX close. In Texas,
Houston Ship Channel declined by 46 cents, or 12.6%, to $3.19/MMBtu.

     In the upper Midwest, Chicago city-gates averaged at its lowest monthly
level since August 2002, declining 40 cents, or 11.36%, from the month before
to $3.12/MMBtu. The decline was not as steep at Michigan price points, with
the Michigan Consolidated Gas and Consumers Energy city-gates, each shedding
just over 30 cents to average $3.56/MMBtu and $3.52/MMBtu, respectively.

     Midcontinent points, meanwhile, closed for May within several cents of
the prior month. Some, such as Panhandle Eastern Pipe Line, gained modest
ground from their April averages; Panhandle averaged $2.58/MMBtu for May, up 6
cents, or 2.38%, from the prior month.

     Rocky Mountain price points followed similar trends as the Midcontinent,
gaining or losing just a few cents on average compared with April. Northwest
Pipeline in the Rocky Mountains averaged $2.30/MMBtu, down 3 cents for May,
while Cheyenne Hub rose 1 cent to $2.41/MMBtu.

     In California, where Bentek Energy analysts are predicting storage could
fill as early as July, Southern California Gas declined by 37 cents, or
11.88%, to a $2.87/MMBtu index, and the Pacific Gas and Electric city-gate
skidded a whopping 77 cents, or 19.3%, to $3.22/MMBtu for May.

     Volumes for IFGMR's May bidweek survey declined to 19,915 million MMBtu/d
from April bidweek volumes of 22,757 million MMBtu/d. Transactions used in the
survey decreased to 3,542 from 3,935 in April.

		--Jessica Marron, jessica_marron@platts.com

Hello, Welcome to the Forum Discussion with Ian Wyatt

Ian Wyatt — Fri, 05 Sep 2008 15:22:30 GMT