“The Only Safe Thing is to take a Chance” Mike Nichols
I was out of the office this afternoon, hearing Super Bowl star David Tyree give an awesome talk at Montclair University. It was nice to meet some readers there. My phone had been turned off. I got back to my car to find numerous messages from friends and others, all of them in different degrees of fear and panic. And these were mostly people who have been out of the market! I have not seen this type of fear since the crash of 1987. It was that type of fear that led me to go from bear to bull the day after that crash.
The main difference today is the economy here and abroad is in far worse shape and there’s nothing on the horizon that can change that. I noted a few days ago (and already a thousand + DJIA points higher) that Paulson’s change of heart would lead to a further sharp fall. With a vacuum of political will to at least January 20th, only God knows how far we can fall.
On the way home today I had time to think since the Garden State Parkway was a crawl most of the way. Back in 1987, I was my God so the conversation was easy. Now I realize I not only put my pants on one leg at a time like others, but the Creator of everything remains fully in control no matter how much chaos is taking place. To some, stating I spoke to God about all this mess will be a signal to stop reading this blog. That’s okay. I would too if not for experiencing His hand in my life, especially this year.
An enormous peace engulfed me despite horrific traffic. I felt God had allowed all this in my life so he could have a voice in the midst of this financial calamity. I know some will never understand this and say I’m one of those religious nuts, but I’ve been so moved to share this with you despite knowing the ramifications of alienating some. This is a totally different than in 1987 when the door opened to me becoming a legend in my own mind.
So, what does all this mean? I believe I’m to first tell you that no matter what your financial situation may be, you’re to know that the Creator of everything is not sitting somewhere going, “How did that happen?” He wants you to know now more than ever, you need to put your trust in Him and not ourselves. As we’ve seen, some of the smartest and worldly successful people are in far worse shape than us.
Okay, let’s get to the markets.
My target of 7,500 on the DJIA has basically been achieved. We’ve been blessed to basically avoid the second worse stock market decline in history. While it looks as bleak as ever, I feel it’s come time to ask ourselves two things:
- Has fear totally replaced fundamentals in the stock market? If so, hasn’t history shown this to be the best buying opportunity?
- Is it really different this time (almost always it ends up not different)?
As of today, I believe fear is now the main engine driving the stock market. Knowing this, one should become a buyer knowing it won’t be different this time. But after being extremely bearish and knowing things are not going to get better anytime soon, should I take a chance and think it won’t be different?
“Facts do not cease to exist because they are ignored.” Aldous Huxley
With option expiration tomorrow plus breaking many technical support levels, there’s the possibility we could see the DJIA down several hundred points. If this occurs, I’m likely to pull the trigger and get back into the stock market on the long side. I don’t think it will be a fully invested move. I think the closer one is to retirement, the less they should follow me in with. I fully don’t expect to be catching “the” bottom as we’re likely to see an “L” shape bottom when it finally occurs.
Stay tuned tomorrow.
Hi Peter. I’ve just started reading your blogging, and am encouraged to know that you are also a Christian. Could you maybe tell us about your experience with God? Would you happen to have a link to a blog entry that talks about it? If it’s something that’s very private, then I totally understand you wanting to keep it to yourself.
Take care.
Peter,
I fully agree. If not for my faith in the Lord I probably would have leapt from a tall building by now.
I sold SKF at 195 two days ago because I wouldn’t be able to sleep if it went back down to 158 again without me doing so. It closed today at about 262. But you know what? If I hadn’t sold at 195, I certainly would have at 222 – no one knows the top or bottom.
I guess I’ll have to look up some long ETF’s, for a couple of years I have only watched and bought the shorts.
Regards,
Roger.
http://www.youtube.com/watch?v=MVBFd9PbcNg
Slightly off topic but I thought it was a good video
Ron Paul questions Bernanke about world currency
Hi Peter,
I have been reading your articles for about 3 yrs and find them very informative.I always found you to be straight forward and honest in talking about juniors and investing.I was happy to hear you enjoyed listening to Charles Stanley.My dad directed me to his preaching about 10 yrs ago and have been blessed in his preaching of God’s word.That is what is keeping me grounded in these times of financial turmoil.One of my favorite verses is Phil.4:6 Be anxious for nothing ….. Now to a present day matter …. you mentioned that CNBC had a decent show called Fast Money.I decided to watch it today and guess who they had as a first time guest ? Peter Schiff. It is worth a watch.
Continue mixing your faith with your work (I enjoy it).I am in construction and do that with my business.Prov.3:5-6 are a couple of verses that are special to me and I believe in living by them.
God Bless you and GO OILERS
Great comentary Peter, You are quite right this is signidficantly worse in that the general state nut just of North American economies but also other fully developed countries is also terrible.
Worse than that is the corruption you have agreed exists. The issue of fear and its affect and what happens resulting from that really doesn’t change, but unlike 87, the givernment is also afraid … why they are out of tools and we all know the losses still can not be quantified after over a year of knowing there are dodgy assets behind so many investment vehicles and the people who could least afford losses (least ability to generate income) were only the starting point.
The fact so many real estate asets were inflated in price and people went out and refinanced means how many people can whether this monsoon is questiobnable.
Another major difference of now and 87 is massive overcapacity. How many households have cars for everyone, tvs in every room, 3000-4000 sq foot homes for fewer people than can comfortably live in them. What we are hearing is sucking sound of the giant drain of value on those places and all of the extra cars which have little value because there is so little scarcity … the old supply and demand curve is critical to understand ,,,, the auto industry kept finding ways to push more demand through financing and leasing and way over produced …. the foreign companies are in a better position to weather the storm …. but … the truth is the consumer storm is just hitting. I have held senior positiions in retail, consumer goods and now run a heavy equipment mfg plant (basically for the auto industry) … (whats left of) the competition is falling by the wayside … huge century old companies out … we remain debt free and although we have had to reduce employment numbers … we did that in such a way that when we call people to see if they are interested in work, they come back.
Your values in 87 in which you were your own god have increased and become more of the standard and that lack of moral integrity since 87 has probably doubled or more as the “old school” business leaders were replaced by the revolutionary types of the 60’s and 70’s.
The situation is bleak … You have had a great sense and wonderful analysis of the market for a number of years and I do hope your right …. but I also sense your are not …. incidentally back in 87 I was heading to Portugal with my wife for a 16 day trip and knowing I would be unable to get much in the way of information and feeling uncomfortable with the markets, I asked my wife to contact our investment agent and sell essentially all of our holdings .. that was Oct 16.
She was a terrible procrastinator in those days and forgot … when Monday came along and I saw the rams traded Eric Dickerson to the rams, I was more concerned with that then the market carnage.
Well as it turned out … I got 2 lessons from that since as I old my wife about my outrage regarding the trade and also btw … sure was a good move to get out of the market … its crashing …she broke my heart telling me she forgot to call our adviser. YeeeeOuch … set the stage for a fairly stormy cpl weeks since a dark cloud hung over my head.
Lesson 1 …do it yourself if it is important.
After we returned …. I averaged down on all the holdings and doubled my position believing still in their fundamentals.
they bounced back above there old values in short order and I made not lost money.
Lesson 2 … trust your fundamental analysis and stick with what you know is right.
I remained liquid and held my strongest and best juniors …. the majority of my selling took place 2 years ago in Montreal when i took some losses but felt much better.
I have been averaging down on those companies that I feel are fundamentally strong (gold and silver producers and prospects for the most part 90%+)
I passed on buying more this last little while but have taken the fallback in Teck to jump in …
My current liquidity is being saved for the next big drop …. yesterday was not enough … I just think we woke up the general public who for the most part have been grumbling … this one will scare them change there habits and kill retail
Add to that the probable “terrorist:” attack people like Colin Powell are preducting and we got a ways to go.
“Seek ye first the kingdom of God and all these things shall be added unto you” … sorry can’t recall the precise location I’d guessa around Matt 5.
Orgy
PS …. my wife and I are still together and have never enjoyed a better relationship.
Jamie http://grandich.agoracom.com/2008/11/sunday-message-from-peter/ also visit http://www.trinityfsem.com
Peter,
I would have absolutely no clue about what you were saying if it were not for experiencing my own path. I got a ways to go. If people are not receptive to your message as you offer it, that’s ok. It doesn’t matter what they think. It only matters what you think. That is evident by the peace in your heart and that’s all that matters. Where there is peace there is no ego. It doesn’t appear that being right is what is satisfying you. Recall how wrong you looked just 1 year ago. Instead you went inside found the answer, let us know and the rest was up to us. You are blessed because you believe and have not seen. Your heart tells you you’re in the right place…and i believe you are. Don’t you feel like the Preacher in the Poisidien Adventure when after the tidal wave hit that turned the ship upside down, Gene Hackman was just unable, save a choosen few, to convince them that the only way to save themselves was to, counterintuitively, move up to the bottom of the ship? (because they were upside down). They instead decided to do nothing and it was only a massive exploson did they get it.
Hi Peter,
First I would like to tell how much I appreciate your posts. Thank you so much for that!
Being Canadian, I recently switched some funds with US holdings to some with Canadian holdings since I believe the CAD will do better than the USD and that the TSX will do better than the DOW due to OIL and commodities.
Today I read this article:
http://www.istockanalyst.com/article/viewarticle+articleid_2820673.html
Describing a likely scenario that could bring OIL price even much lower than what it is now.
I would be curious to know what you think about this.
Thanks!
Nick
Hi Peter,
It would be unfortunate that some would dismiss you because of your faith and world view. Issues of faith always come to the fore front in times of distress and rightly so. It is a time of reflection and God’s way of drawing people closer to himself. Your own personal circumstances and testimony demonstrates the peace and knowledge that only God can give.
Also, the global financial issues that we are currently going through, have much relevance to the future prophetic outline described in the scriptures. It is to everyone’s benefit to at least know what it tells us about the future. Whether people believe it or not is irrelevant. History and current events will show if it is true or not.
The One World Government viewpoint held by the money masters and those that run the Centre on Foreign Relations, I believe, is very much alive and well. They are the ones pulling the strings to keep their system of Central Banks and FIAT monetary system alive. They control the ruling elite, the global banking system, and thus control the masses and market behaviour. They also control the media and private companies that help them build their empire. Evidence of that is outlined by this two part interview of author John Perkins who wrote “Confessions of an Economic Hit Man” which was #1 at Amazon books.
See: http://www.youtube.com/watch?v=yTbdnNgqfs8.
This is a illuminating and interesting interview in empire building and who is behind the scenes.
One of the steps in the biblical prophetic outline is the collapse of the existing political and financial system and the introduction of new global system and political leader. Maybe this collapse is one of the steps in the process.
Another interesting link is Money and Markets, Larry Edelson “The G 20’s Secret Debt Solution”. http://www.moneyandmarkets.com/the-g-20s-secret-debt-solution-27996.
This solution, may not be as far out there as some might think and is very bullish for gold. Also it could be another step in globalizing the monetary system.
Keep informing us!
Mark – nice to see another Christian and Oiler fan to boot in here. My personal creed (among others) Det 8:18 But thou shalt remember the LORD thy God: for it is he that giveth thee power to get wealth,
Take care
hudbay and lundin merge…so lundin gone…do they not own rockwell diamonds….rdi
HudBay and Lundin Announce Friendly Business CombinationHUDBAY MINERALS INC HBM 11/21/2008 12:14:51 PMTransaction creates a new Canadian leader in mining
TORONTO, ONTARIO, Nov 21, 2008 (MARKET WIRE via COMTEX News Network) —
HudBay Minerals Inc. (”HudBay”) (TSX: HBM) and Lundin Mining Corporation (”Lundin”) (TSX: LUN)(NYSE: LMC)(OMX: LUMI) are pleased to announce that they have agreed to a business combination (the “Transaction”) that will create a new Canadian leader in global mining.
The Transaction will be structured as a plan of arrangement under the Canada Business Corporations Act.
HIGHLIGHTS OF THE TRANSACTION
- On completion of the Transaction, each Lundin common share will be automatically exchanged for 0.3919 HudBay common shares, and Lundin will become a wholly-owned subsidiary of HudBay.
- The consideration Lundin shareholders will receive pursuant to the Transaction represents approximately a 32.0% premium over Lundin’s 30 day volume weighted average trading price on the TSX based on HudBay’s 30 day volume weighted average trading price on the TSX.
- On completion of the Transaction, HudBay will have approximately 306 million common shares outstanding.
- The CEO of the resulting company will be Allen J. Palmiere.
- The boards of directors of both companies have approved the Transaction with all voting members in favour.
CREATING A NEW CANADIAN LEADER IN GLOBAL MINING
After the combination, HudBay is expected to be the second largest base metals company in Canada measured by market capitalization. It will have a broad portfolio of producing assets in Canada, Portugal, Sweden, Spain, and Ireland, along with a strong growth pipeline that includes the world-class Tenke Fungurume and Fenix projects, located in the Democratic Republic of Congo and Guatemala, respectively.
Following the completion of the Transaction, the combined company’s profile will include:
- Combined 2007 actual metal production of 187,115 tonnes of copper, 278,289 tonnes of zinc, 44,560 tonnes of lead, 3,270 tonnes of nickel, 102,587 ounces of gold, and 4,184,536 ounces of silver.
- Cash on hand of approximately C$900 million and total debt of approximately US $240 million based on reported amounts at September 30, 2008.
- The financial strength to capitalize on opportunities arising from turbulent markets.
- A strong management team and an experienced board.
“The combination of HudBay and Lundin creates a company that is financially strong, has excellent internal growth projects, and has the size and strength to take advantage of opportunities over the next 18 months,” said Phil J. Wright, president and chief executive officer of Lundin. “This arrangement is in the best interest of Lundin shareholders, and I look forward to making a contribution toward building what has the potential to be a major new Canadian mining house.”
“We’re excited to create a Canadian base metals company that we believe will be a major presence on the world stage,” added Allen J. Palmiere, chief executive officer of HudBay. “We will continue to grow the company with discipline, and use its financial strength with a view to creating future value for all of our shareholders.”
Following the completion of the transaction, HudBay’s board will be composed of Allen J. Palmiere, Philip J. Wright, Lukas Lundin, M. Norman Anderson, Colin K. Benner, Donald K. Charter, Ronald P. Gagel, R. Peter Gillin, and William A. Rand.
PRIVATE PLACEMENT AND LOAN
In connection with the Transaction, HudBay and Lundin have entered into a loan agreement, pursuant to which HudBay will lend Lundin approximately C$135,800,000 on a subordinated basis. Lundin will use the proceeds of the loan to fund capital investments and other general corporate purposes. HudBay and Lundin have also entered into a share purchase agreement, pursuant to which HudBay will acquire approximately 97.0 million common shares of Lundin, representing approximately 19.9% of Lundin’s outstanding common shares, at a price of C$1.40 per share in a private placement for total gross proceeds to Lundin of approximately C$135,800,000. The proceeds of the private placement will be used to repay the loan. Completion of the private placement of the Lundin common shares is subject to the satisfaction of certain regulatory requirements.
BOARD RECOMMENDATION
The Transaction has been approved by the board of directors of Lundin (with interested directors abstaining), following the unanimous recommendation of a special committee comprised of independent Lundin directors. The board of directors of Lundin recommends that holders of Lundin shares vote in favour of the Transaction. The Transaction has also been approved by the board of directors of HudBay.
The definitive agreement includes a commitment by Lundin not to solicit or initiate discussions concerning alternative transactions, including the sale of material assets. Lundin has agreed to pay a break fee of C$24,250,000 to HudBay in certain circumstances and has granted HudBay the right to match competing offers. HudBay has also agreed to non-solicitation provisions.
In addition to the 19.9% ownership to be acquired by HudBay pursuant to the private placement, certain shareholders holding approximately 21.1% of the outstanding Lundin shares, as well as certain directors and officers of Lundin have agreed to vote in favour of the Transaction.
ADVISORS AND FAIRNESS OPINIONS
GMP Securities L.P. (”GMP”) is acting as financial advisor to the Special Committee of the board of directors of HudBay (the “Special Committee”) and GMP has provided an opinion to the Special Committee of HudBay that, subject to certain assumptions and limitations set out therein, the proposed Transaction is fair, from a financial point of view, to HudBay shareholders. Haywood Securities Inc. has provided an opinion to the Special Committee of the board of directors of Lundin that, subject to their assumptions and limitations and their review and analysis of current market conditions, the consideration to be received by the shareholders of Lundin in connection with the Transaction is fair, from a financial point of view. Cassels Brock & Blackwell LLP and White & Case LLP are acting as external legal counsel to HudBay and Osler Hoskin & Harcourt LLP, Shearman & Sterling LLP, and McCullough O’Connor are acting as external legal counsel to Lundin. Fraser Milner Casgrain LLP are acting as external legal counsel to the Special Committee of HudBay.
CLOSING
Completion of the Transaction is subject to customary conditions, including a favourable vote of two-thirds of the Lundin common shares voted at a special meeting of shareholders called to approve the Transaction, and the receipt of court and all necessary regulatory approvals.
An information circular for the special shareholders’ meeting of Lundin is expected to be mailed during the first quarter of 2009. The Transaction is expected to close prior to May 30, 2009.
CONFERENCE CALL
Allen J. Palmiere, HudBay’s CEO, and Phil J. Wright, president and CEO of Lundin Mining, will host a joint conference call to discuss this Transaction. The details are as follows:
Date: November 21, 2008 Time: 2:00 pm (Eastern Time) Webcast: http://www.hudbayminerals.com or http://www.lundinmining.com Dial in: 416-644-3415 or 800-733-7571 Replay: 416-640-1917 or 877-289-8525 Replay Pass code: 21290286#
The conference call replay will be available until midnight (Eastern Time) on November 28, 2008. An archived audio webcast of the call also will be available on HudBay’s and Lundin’s websites.
ABOUT HUDBAY MINERALS INC.
HudBay is a leading base metals mining company with assets in North and Central America. The company is investing for the future in one of the most ambitious exploration programs in Canada, targeting its 400,000 hectare exploration territory in the Flin Flon Greenstone Belt. An integrated mining company, HudBay operates zinc and copper mines, concentrators and metal production facilities in northern Manitoba and Saskatchewan, a zinc oxide production facility in Ontario, the White Pine Copper Refinery in Michigan, and owns the Fenix nickel project in Guatemala. In addition to its primary products, the Company also produces gold, silver and zinc oxide. HudBay is a member of the S&P/TSX Composite Index and the S&P/TSX Global Mining Index.
ABOUT LUNDIN MINING
Lundin Mining Corporation is a rapidly growing, diversified base metals mining company with operations in Portugal, Spain, Sweden and Ireland, producing copper, nickel, lead and zinc. In addition, Lundin Mining holds a development project pipeline which includes the world class Tenke Fungurume copper/cobalt project in the Democratic Republic of Congo and holds an extensive exploration portfolio and interests in international mining and exploration
hi
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good luck