Nervous Jimmy, Hillchaser etc

jimmyc1985 · Post by **jimmyc1985** » Fri Jul 20, 2007 1:23 pm

I am not nervous about any of my holdings.

hillchaser · Post by **hillchaser** » Fri Jul 20, 2007 1:51 pm

Yeh saw that article and a little bit nervous.

You can see that everything is in place for a bit of an episode...Mind you I've consolidated (lately) out of resources into oil/gas plays..

I'm no expert but I'm thinking that oil and gas is pretty shock proof and can even go up during a crash. Especially if you think we have reached peak oil then the price can only go up...right !...???

which actually leads to my theory on how this whole thing could unravel..I'm not talking about a correction but a major crash..

1. We've reached peak oil
2. Oil producion set to slide as demand increase in the next 2 years
3. Higher Oil prices
4. Higher Inflation
5. Higher interest Rates in Western World
6. Massive consumer debt in Aus, England, US, Canada etc ---
7. The house of cards comes creashing down
8. China and Asia to follow since due to all their forex reserves etc etc.

Would love to know what you guys think !

jimmyc1985 · Post by **jimmyc1985** » Fri Jul 20, 2007 2:13 pm

hillchaser wrote:Yeh saw that article and a little bit nervous.

You can see that everything is in place for a bit of an episode...Mind you I've consolidated (lately) out of resources into oil/gas plays..

I'm no expert but I'm thinking that oil and gas is pretty shock proof and can even go up during a crash. Especially if you think we have reached peak oil then the price can only go up...right !...???

which actually leads to my theory on how this whole thing could unravel..I'm not talking about a correction but a major crash..

1. We've reached peak oil
2. Oil producion set to slide as demand increase in the next 2 years
3. Higher Oil prices
4. Higher Inflation
5. Higher interest Rates in Western World
6. Massive consumer debt in Aus, England, US, Canada etc ---
7. The house of cards comes creashing down
8. China and Asia to follow since due to all their forex reserves etc etc.

Would love to know what you guys think !

If you believe in that then sell every one of your possessions and buy Woodside. For the record i don't believe in your doomsday scenario as set out above, but i still think WPL is a must-have for any person who enjoys making money.

hillchaser · Post by **hillchaser** » Fri Jul 20, 2007 2:25 pm

On that scenario I'm not saying it will happen .. but I can see that all this consumer debt is going to come back to bite. It has to. And I reckon that an event that causes some serious inflation will do it.

I'm not really into the majors.. I used to be but then got into some small caps a few years ago like Mincor, Oxiana, Beach etc.. that all did well and turned into really good quality mids... Of course picking them is the trick but I agree with what you say about Woodside..

jimmyc1985 · Post by **jimmyc1985** » Fri Jul 20, 2007 2:55 pm

hillchaser wrote:I'm not really into the majors.. I used to be but then got into some small caps a few years ago like Mincor, Oxiana, Beach etc.. that all did well and turned into really good quality mids... Of course picking them is the trick but I agree with what you say about Woodside..

Well done. When you back small commodity producers, i.e. Oxiana or Zinifex of 5 years ago, you're really backing the quality of the managers more than anything else. There's nothing special about the business they're running (i.e. they're not 'franchises') and commodity companies are price takers, so save for periods where commodity prices run like crazy (as they have over the last 5 years), a vast majority of small commodity producers fail dismally. Those that fail dismally are almost always those with shit management.
The reason why you backed a couple winners is because guys like Owen Hegarty and Greg Gailey actually know what they're doing, whereas most managers of those prospectors wouldn't know how to run a company if their arse was on fire. Guys like Hegarty and Gailey would chase 5c down the streets if they took if from the petty cash tin and it fell out of their pocket, and that's exactly what you want.

If you actually really (really) know the quality behind a small commodity company's management, then you're a long way ahead of the game. Of course, i don't, ergo i avoid them.