Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
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By the way, just in case any of you were about to mention it JOG was my first purchase 4 years ago and I was that minnow.
And I'm not much bigger now ??
One other thing Dick doesn't go into big detail about is, often the kind of people who buy oil and gas shares are gamblers looking for a quick buck.
They sit at home watching for fast moving shares hoping to jump on board when the prices rises.
When prices start to fall they either panic and sell at the wrong moment or hold tight regardless of what happens often loosing everything.
These people are not seasoned veterans of share dealing and investing.
They don't know how to value a company nor do they do much if any research into the company.
Many will be folk using their savings/redundancy money or worse will have borrowed the money and a large percentage will loose most of it.
If you don't believe me go over to UKOG, VOG, HUR or SOU. How many LT holders bought these at ten times their current value and still have them?
The way I see it the stock market is a fish tank with a regular supply of fresh minnows coming in as fodder for the sharks.
"The stock market is rarely wrong" - Don't make me laugh.
The early bird catches the worm, excellent post Dick, hope your getting enough sleep and keeping well, it's a waiting game, patience is key.
........was the market right to value JOG's shares at 8.79p (my lowest entry point) in Feb 2016, VC? This valued the entire company at less than the value of my home? At this stage in its existence JOG already held Licence P2170 and employed about 8 or 9 people, all honest, enterprising and determined to succeed. The share price hit £4 less than 2 years later when the Verbier sidetrack drill hit oil.
Is the market right now to tell us that JOG's 190mboe of mostly discovered and flowed (by Repsol Sinopec) 33° API light crude 2C resources in one of the best NS postcodes are worth about 20 cents a barrel (based on JOG's present market cap of £44m - minus cash). If JOG was ORCA - owner of 78MMboe of 11°API heavy oil about 100m east of Aberdeen (which is planned at some future time to be produced using FPSO) it would be claiming its 2C Resources were reserves. Compare and contrast. JOG vs ORCA (market cap £25m, low on cash). Is the market right about this? I asked a senior figure in the oil industry yesterday what constituted reserves and what didn't. His answer was immediate and unequivocal and happened to coincide with my own understanding of the situation: resources can be called reserves when there's an approved FDP in place. Where is ORCA's?
Was the market right to value SQZ's shares at 3p five years ago, telling us that company was worth £7m? I'm still kicking myself for waiting too long to get in (which I did in tranches at 14p, 18p, 22p and 26p)? It's worth £400m today - again according to the market. You make money in this game by working out what the market has got wrong, buying into undervalued companies and having the patience to wait for the fundamentals to play out.
There's nothing wrong with belief in fundamentals generally playing out in the end. All the evidence suggests they usually do. Where they don't there's usually a reason which can be tracked back to the competence and/or integrity of those charged with the responsibility of running the relevant company. Good (intelligent, competent, hardworking, principled) people generally win in life; the others don't.
As far as I can tell, the market you refer to comprises people who trade shares short term without any real interest in or understanding of fundamentals (or anything else). My preferred approach is to understand the overall model, having assessed and formed views about the capability and integrity of the management and senior team, the work that's gone into the overall project (JOG really only has one), the likely view the industry is likely to take on ultimate value and I then factor in risk. It doesn't always work because I'm only interested in oil & gas and the nature of the industry is such that things don't always go to plan, particularly in regard to timing.
How about you telling us how you go about investigating companies you're interested in and we can then take discussions from there? I'm sure other would appreciate this too.
GLA
dyor
VK - i must take issue with your ‘the stock mkt is very rarely wrong’ comment! The Dow fell 930pts in 3 hours on monday since when it has regained all those losses. The market is always wrong until it finds equilibrium. At the moment the small investors with the patience of a gnat are betting no farm out. They have as much idea as u / I / Dick / Ajax or any other halfwit! Priced for failure and unbuyable for an immediate 100-300% uplift in the event of a farm out announcement or down to 50p on a ‘sorry couldn’t agree so well go it alone’ announcement! You pays your money….but plse no lectures on the mkt always being right - it isn’t!
You certainly should care that the market values JOG as a bag of salted peanuts if you've got any sense which we all know you have as the stock market is very rarely wrong .
..........usual deep, incisive assessment by the said individual............the result of painstaking research carried out over a long period no doubt.
Who cares what "the market" thinks is happening. It's largely irrelevant to the average LTH.
.............."the stock market is a device for transferring money from the impatient to the patient"............WB
dyor