Month: February 2010

BTE.UN, Baytex Energy Trust, Feb 2010

Hamilton

Energy companies come in all sizes and shapes. Some are vertically integrated and large like Shell and Exxon, some are small and very specialized in their particular field. Others are mostly in the business of finding gas and again others in the business of finding oil ( the two go hand in hand only to a certain degree). Some are “service” companies such as Schlumberger or Precision Drilling and again others are more or less utilities delivering the stuff to the consumer, like Enbridge. Consequently they all behave differently but in the main all have lost about 5-10% of their value since oil came of the $86 or so level a few weeks ago – EXCEPT this one, Baytex (and Enbridge). Not sure why that is exactly but it is a sell here or on the next dollar up, as it will double top like IVN above. This is not a certainty but it does happen too often to ignore and I have yet to meet the guy that lost money taking profits.

BTE.UN feb 2010

IVN, Ivanhoe, Feb 2010

Hamilton

The stock dropped some $5 right on schedule. Since then it has rebounded and should soon go for the second leg down as a minimum. About $11 would be an ideal initial target. This may come about partly as a result of what is going on with copper itself. Here is the chart.

ivn feb 2010

MCD update see Jan blog.

Hamilton

As anticipated the stock needed just one more slight push up to about $66, which it did on schedule. It is now a short for a minimum target of $48. If using options chose a relatively long one as this process could take between a year and a year and a half.

MCD feb 2010

CDS , Credit default swaps, 2010

Hamilton

 

cds 2010

There is this myth that sovereign (countries) do not default. Actually this is a rather amusing concept as, with a very few exceptions virtually all have at some point in their history. Outright reneging or, what amounts to the same, refusing to pay , is actually  quite normal. For obvious reasons simple debasing one’s currency is to be preferred, especially if much of the debt is held by foreigners that do not vote. Better yet obfuscate the issue, your municipal bond, even if issue by ,shall we say a very big US city , may be entirely dependent on the use of the swing-set in the park for its repayment and not that city’s general revenue, this is clearly explained on page 234, paragraph e, subsection 21. Did you miss it ?

And, if you assume you do not own any of this stuff you may be surprised to learn that the 7% that you are supposed to earn on that XYZ bond fund, is entirely predicated on the proper functioning of this market.