Its not long ago common knowledge was that peak oil would cause the price of oil to rise, and anyone owning oil stocks would be guaranteed of a comfortable lifestyle.
In a great book called Unlimited Wealth by Paul Pilzer many of our perceptions of commodity's are challenged.
Pilzer makes some great points that we should always be thinking about.
His opinion is that resources are in fact unlimited makes for a refreshing opinion of how we should look at resources, a brief assessment is that technology will always play a huge role in determining the price of commodities, his example of the electronic fuel injector back in the 80s improve the fuel consumption by a large amount that the commodity now went further. (effectively increasing supply)
conversely the rising price of oil encouraged huge investment in exploiting difficult to access source's of oil, the resulting technological success now making the commodity more plentiful.
So his hypothesis of unlimited resource's makes sense, if oil was $200 a barrel, you can bet they will find it, dig it out, squeeze it out or manufacture it out of corn!
Of course this doesn't help how we assess stocks, but economic efficiency and size will be a huge help in surviving the commodity cycle.
Looking at BHP and WPL they have had a huge hit to their share prices, as have the whole field, but you would have to think that their size and diversity would have to hold them in good stead, it may be a bit early but bought some today.
Picking resources at this time is impossible, so looking more at long term dividends to justify the purchase.
They may have trouble maintaining their dividend , but will probably beat your term deposit with some capital growth potential, many small players are hurting very badly, see previous on this blog re shale oil by Charles Morris in his book Comeback.
Also bought some Woolworths, as I think the depression in consumer staples is overdone, and same thing, should beat a term deposit.
Sold corporate Travel, as I think they are now a bit expensive, also Sold CSL although not confident that's smart, still an excellent company, just needed the cash to take a position in the new stocks
But who knows the Greeks may leave the euro, stocks could be smashed and gold could soar.
Everyone's trying to devalue their currency.
on that note, some people are talking about peak gold, I think Pilzer might have something to teach us here, you can imagine if we get back to Gold at $1500 and rising, you can expect plenty of new exploration.
So already have a few Newcrest and Evolution in another portfolio along with a loosing position on MML here, so will leave them out of grumble.
still think 5 % gold in your portfolio is enough stress to endure.
http://www.paulzanepilzer.com/books/uw-htm
A great Read!!
| Performance | 22/01/2015 | ||||||||
| Code | Company | Buy date | buy price | current | profit loss | all ords performance adjusted to purchase date | all ords at time of purchase | Sell Date | Sell price |
| CRZ | Caresales.com | 23/05/2014 | $10.53 | $10.39 | -1.3% | 0.3% | 5403 | ||
| REA | Realestate.com | 28/05/2014 | $44.19 | $47.26 | 6.9% | -1.6% | 5506 | ||
| SUL | Supercheap auto | 7/07/2014 | $9.16 | $8.63 | -5.8% | -1.6% | 5506 | ||
| TRS | The Reject Shop | 7/07/2014 | $9.66 | $6.01 | -37.8% | -1.6% | 5506 | ||
| FLT | Flight Centre | 15/07/2014 | $45.84 | $35.46 | -22.6% | -1.4% | 5495 | ||
| BRG | Breville Group | 27/08/2014 | $7.24 | $7.06 | -2.5% | -4.1% | 5648 | ||
| BSL | Bluescope Steel | 27/08/2014 | $5.42 | $5.22 | -3.7% | -4.1% | 5648 | ||
| AGI | Ainsworth gaming | 3/09/2014 | $3.41 | $2.55 | -25.2% | -4.2% | 5654 | ||
| MML | Medusa Mining | 15/09/2014 | $1.09 | $0.84 | -23.4% | -1.0% | 5473 | ||
| BHP | BHP | 22/01/2015 | $28.95 | $28.85 | -0.3% | 0.0% | 5419 | ||
| WPL | Woodside Petroleum | 22/01/2015 | $33.85 | $33.62 | -0.7% | 0.0% | 5419 | ||
| WOW | Woolworths | 22/01/2015 | $31.06 | $31.14 | 0.3% | 0.0% | 5419 | ||
| 5419 | AORD | 22/01/2015 | |||||||
| Stockgrumble performance | 0.7% | -1.9% | AORD Performance | ||||||
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