Begun Thursday June 27 2013
As predicted here, municipal bonds are attracting some interest, and funds. REITs are also picking up inflows.
This is not a long term idea but who knows what the FED will do next, it might last longer than I imagined if the FED goes back to buying bonds.
Friday June 28 2013
LONDON (Reuters) - World shares hit their highest level in a week on Friday and bonds and oil rose after two U.S. central bankers moved to calm fears of an early withdrawal of monetary stimulus.
Bonds will not make a straight move to higher rates. We outlined a plan to take advantage of such occasional dips and rallie in our update yesterday.
An alert reader brings SSRI Silver Standard Resources to our attention.
SSRI closed yesterday at 5.78. Yes that means the company can be bought for less than the cash per share it has in the bank. The current ratio, current assets to current liabilities, is a whopping 9.59 to one. It is 41.7% of book value. At market extremes investors throw good companies out the window. the debt equity ratio shown here is not in evidence on the balance sheet.
The left hand column represents 12/31/2012. Long term debt has been erased.
I will take a longer look at this over the weekend. But such irrational valuation is a hallmark of what has been a massive sell off. I am not recommending any mining stock at this time. The market fears that the price of silver will fall below its cost of production. this is typical fo commodity market bottoms, only the strongest companies survive, often buying the weaker ones for stock.
The Big Picture
The target for HUI remains the 2008 low, due apparently five years hence this October. There is no support between 221.52 and the 150 level. Now for those who think HUI, ABX, whatever are so oversold they must a great buy now, consider this. In the final fall as the numbers approach lower levels, the percentage declines are even greater.
221 - 150 = 71/221 = 32%
Which makes the point that an expected fall to the 2008 low at 150 is a loss of one third of existing values, probably for every metal stock out there.
How low can metals stocks go?
ABX
American Barrick has already taken out its 2008 low. It is trading at 66% of book value.
Newmont NEM
The seven point to 20 for NEM means a 25% drop. So cool your jets on jumping in here.
October, the historic worst month of the year for markets awaits. For the record, the daily lows in NEM and HUI were October 24-28, 2008. WE are a mere four months from that date. Patience.
In the meantime our idea of buying closed end munis yielding 7% is working with bond prices up again this morning.
A Professor writes about the looming Student Debt Debacle in the op ed section of the WSJ today. Like myself, he advocated putting the school on the hook for part of the loan if the student defaults. This would force 'prudent banking' on the part of the school. Loans would only be extended for student deemed probable to graduate and in a field in which job prospects are such that re-payment is likely.
Thanks for reading TMP.
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