Miscellaneous Thoughts and Updates for the Friday File

By xiexgp@gmail.com, October 31, 2014

I’m going to keep it brief for you today — and we’re not going to have a formal “Idea of the Month” piece for October because, well, we’re at the end of October and I haven’t recently come across a new idea that’s compelling enough for me to argue you should own it.

In some sense, I’d say the “Idea of the Month” would be “raise cash levels in the portfolio” to prepare for buying opportunities in the future. I’m a bit surprised and frustrated that our little correction of early autumn was so quickly reversed for most high-quality stocks, I was kind of hoping that more of them would get down to a “this is stupid not to buy” range… but it was not to be. At least not for most sectors — almost all of the commodity stocks, from miners to oil companies, have remained clobbered… but there are awfully good reasons why those stocks are down, and why they could fall substantially further if oil prices or other commodity prices don’t recover.

I think there are likely opportunities in commodities now for the very long-term and patient investor, I’m happily holding on to the more passive holdings like Dorchester Minerals (DMLP) and Altius Minerals (ALS.TO, ATUSF), but I don’t particularly want to be even more overweighted to that sector personally right now — not when it seems like we’re very likely to have some substantial tax loss selling in most of these names over the next couple months to drive them down further, and the prices of the non-price-sensitive stocks in the sector haven’t gotten silly yet. And those following Sandstorm Gold (SAND), which I also continue to hold, note that Nolan Watson has been snakebitten again — their latest deal, a very solid looking one in partnership with Franco-Nevada, was with True Gold, which is getting clobbered after the coup in Burkina Faso (where they’re building their mine). That’s not as big a deal as the continued struggles with Luna Gold, which I wrote about two weeks ago, or nearly as big a deal as the falling gold price (at four-year lows after a big drop today), but it doesn’t help.

If companies in the energy sector who don’t rely on high oil prices are falling, like the pipeline owners who are going to collect their flat toll regardless of the price ...

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