Friday, November 18, 2011

The Lost Art of Asset Stewardship

The mega-banks have assembled armies of "Wealth Advisers" charged with the mission of rounding up all liquid assets located in their orbit.  Once on-boarded, funds are sent to the New York sausage factory to begin their slow yet volatile descent in value.  All of these firms sing the same tune.  If you get to know former employees closely you will notice that heretics are swiftly removed and often find a tarnished reputation difficult to overcome.

What ever happened to forward thinking, seasoned, responsible asset stewardship?  Well, obviously if you demonstrate the ability to think for yourself objectively, you are not going to be the team player that the NY boys are looking for.  Herd thinking has been rewarded so heavily that the financial industry has nearly disposed of all free thinkers.

It appears that there is at least one left and the Wall Street Journal recently found him.  Click the link to view the entire article.


Wednesday, November 16, 2011

Uranium Prices

We currently live in a yield starved environment which is man made.  Average citizens are experiencing a painful deflationary portion of the business cycle characterized by poor access to credit, high regulation, a decreasing standard of living and an increasing cost associated with basic life.  Connected citizens have access to risk free capital and special arrangements in an effort to create continuous prosperity at the expense of the nation.

Consider that MF Global blatantly used cash held in client accounts to relieve margin calls placed on the firm.  Razor thin capitalization is the secret to extracting excessive profits.  This is required to keep up with your peers in the New York banking scene.  Trusting clients are left with margin calls of their own and must liquidate positions while waiting for a bankruptcy court to recover their cash balances.  Do not expect to see any senior management from MF Global headed to jail though because being connected in the US is the key to legalized theft.

If you are a regular citizen investing is difficult in a manipulated, centrally controlled system.  Unfortunately you must venture to sectors of the market where the cartel has not yet dispatched its criminals to begin taking what they believe is rightfully theirs.  One market that is ripe for future exploitation is the Uranium mining shares.

Consider this chart of uranium prices.  Notice that the post Fukushima reaction did not reach the prior support established in the late summer of 2010.
This next chart is perhaps easier to focus on as it tracks physical uranium:

If you are not aware of the incredibly bullish fundamentals present in the uranium market please consider this article Uranium Market Fundamentals.

The emotional selling that occurred after the Japanese disaster was a severe overreaction.  The world is approaching 500 active reactors.  If Japan and Germany close 20 over the next decade that will be merely a speed bump on the way to 750.  Saudi Arabia alone will close 80% of that gap.

In this type of misunderstood market you should consider equity positions in firms with quality uranium deposits in economically meaningful grades.  Also, make sure you are buying firms run by competent men who are properly financed.  When you purchase equity in a sector that is massively under supplied while at the same time loathed by a society that refuses to live without power you are setting yourself up for excessive capital gains.