Thursday, April 23, 2009

TXCO Resources Gets Hit

TXCO Resources (TXCO) looks like it may become the first casualty of the credit crunch in the exploration and production sector.

The company just received an acceleration notice from its lender demanding full repayment of the $150 million owed under the agreement, an amount the company does not have.

It's a shame since the company has some interesting properties in the Maverick Basin in Texas, and is also exposed to the Eagle Ford Shale.

I uploaded a few pictures of drink coasters I received from them at an investor meeting some time ago.

Tuesday, April 14, 2009

What is or What Was The Financial Crisis?

Here’s the bitter truth about the “financial crisis.” Things were never as bad as people thought, and now things are not as good as people think. Over the last six months, there was too much pessimism around what was going on, and now we are moving toward too much optimism.

Why is this happening? One reason is that too many investors and commentators take cues from the stock market and use that as a fundamental barometer for whether things are “good” or “bad.” This is reflected in media commentary by these pundits who go on TV and say something like this:

“The market doesn’t believe it.”

“The market is saying this….”

“What the market is telling us.”

The market is a poor substitute for doing fundamental research on stocks, yet millions of people use it as the Oracle of Delphi instead of what it really is – the uncontrollable collective mass hysteria of terrified investors and short term traders.

Bank of America traded as low as $2.52 last month and peaked two years around $47. Which was correct? Neither. Bank of America was never worth the 2-3 times book value it traded at when it peaked, nor was it ever worth as little as the 15% of book value it traded at in March 2009.

Yet now everyone is breathing a huge sigh of relief, as the crisis is over, and as evidence of this, the stock market is cited as the determinant of that conclusion.

Here’s the bottom line. Don’t use the stock market to tell you the fundamentals of our financial system, as it is a terrible indicator of those fundamentals.

Monday, April 13, 2009

Festival of Stocks Number 136 - April 13, 2009

I humbly present the 136th edition of the Festival of Stocks. This is the eighth time I have hosted, and if you want to sign up as a host then go to this web page.

Stock Ideas

Jae Jun presents Cheap Graham Stock Ideas posted at Old School Value.

Dividend Growth Investor presents Best High Yield Dividend Stocks for 2009-1Q Update posted at Dividend Growth Investor.

D4L presents Federal Realty Investment Trust (FRT) Stock Analysis posted at Dividends Value

Bootstrap presents Company Update: Miller Industries posted at Bootstrap Investing.

Zach Scheidt presents Netflix - High Flyer or Falling Star? posted at ZachStocks.

Andy presents Warren Buffet's Berkshire Downgraded as AAA Credit Rating Lost posted at Saving to Invest.

Ray presents S&P Dividend Aristocrats to be changed? posted at Financial Highway.

Steve Alexander presents 5 Points to Look For When Evaluating Management posted at MagicDiligence - The Best Magic Formula Stocks.

George presents Special Situations Real Money Portfolio March 2009 Update posted at Fat Pitch Financials.

Mutual Funds/ ETF's

Cody Butler presents How Do Mutual Funds work? posted at Investment-For-Beginners Blog.

Darwin presents Colombia ETF - A Return to Supercharged Frontier Market Returns? posted at Darwin's Finance.

Ripe Trade presents Ripe Trade: Leveraged and inverse ETF pitfalls posted at Ripe Trade.

Walter W. Fouse presents 7 Ways to Pick the Best Noload Mutual Funds and ETFs posted at Top No Load Mutual Funds.

Precious Metals

Shaun Connell presents The Case for Buying Gold posted at Learn Financial Planning.

Declan Fallon presents Gold and Silver under Pressure posted at Zignals blog.


Dr. Barry Burns presents How Day Trading Works According to Einstein posted at Top Dog Trading.

Stock Trading Terminology posted at Stock Tips.

etrades presents Day Trading Tips From The Pros - Time To Cash In! posted at eTrades.

Mike Pastore presents Get the Right Type of Day Trading Software posted at Mikes

Sun presents Individual Country ETF First Quarter Performances posted at Earn More Invest Wisely at The Sun's Financial Diary.

Stock Trading Brokers presents SEC Considers Proposal for Uptick Rule posted at Stock Trading Brokers.


Patrick @ Money Saving Deals presents TradeKing Offers up to $150 in Transfer Fees posted at Money Saving Deals.

Patrick @ Cash Money Life presents Leave Your Money in Your Retirement Accounts! posted at Cash Money Life.

RJ Weiss presents What is Inflation? posted at Our Financial Planner.

Michael Haltman presents Mark To Market Eased: Making A Silk Purse From A Sow's Ear? Example Included posted at The Political and Financial Markets Commentator.

James Fowlkes presents 5 Steps to Becoming a Better Investor posted at

Frank B. presents Beginners Guide to Investing posted at Investment Basics.

The Smarter Wallet presents Investing In The Stock Market? Rules To Help You Sleep At Night posted at The Smarter Wallet.

Dorian Wales presents The Recent Rally in Stock Prices is Nearly Over posted at The Personal Financier.

Tushar Mathur presents Getting finances in order posted at Everything Finance.

Silicon Valley Blogger presents Best Online Stock Brokers For Cheap Stock Trades posted at The Digerati Life.

Sunday, April 5, 2009

Lympho-Maniac Charity Event

Chad Landry is an institutional equity salesman and works for Capital One Southcoast out of New Orleans. Once a year he organizes a charity event to raise funds for research into cancer. He is a survivor himself and lives life to the fullest because of that. Here's an interview that the local media did with him last month in connection with the event:

Chad is a good friend and has done everything he can to help me ever since I went off on my own two years ago and started my investment partnership. He lives up to his motto of "Reputation over Revenue."

Donations can be made at this web site:


Thursday, April 2, 2009

Tom Gayner of Markel Insurance (MKL)

Thomas S. Gayner, the Chief Investment Officer of Markel, will be interviewed on the blog - Manual of Ideas - on Monday, April 6th. Gayner manages the investment portfolio at Markel and has a strong long term track record of outperformance, and follows a value investing approach.

I wrote an article on Markel for Investopedia back in late 2008.

Here is an excerpt from the interview:


You have stated that the businesses you seek should have

(1) a demonstrated record of profitability and good returns on total capital,
(2) high measures of talent and integrity in management,
(3) favorable reinvestment dynamics over time, and
(4) a purchase price that is fair or better.

Perfection, however, is rarely attainable in the stock market. Have you had to compromise on these criteria, and if so, could you illuminate for us how you decide on acceptable versus unacceptable trade-offs?


Tom Gayner: While you say that perfection is rarely obtainable in the stock market, I would go so far as to say that it is never obtainable in the stock market. Perfection doesn't exist in this world. All of my choices involve various degrees of compromise and trade offs. As an accountant, I can tell you that my wife and children are sick of hearing me use the phrase "opportunity cost".

Every decision is also another decision (at least) and every non-decision is also a series of other decisions.
The challenge is to get the balance roughly right between the choices that actually exist. All of the 4 points I lay out are north stars that guide me. I admit though, that I have never personally been to the North Pole.

The one area where I will not compromise is in the area of integrity. I may not make every judgment correctly when I'm trying to make sure I'm dealing with people of integrity but I will never knowingly entrust money to people when I am concerned about their integrity. Even if you get everything else right, the integrity factor can kill you. My father used to tell me that, "you can't do a good deal with a bad person." And he was right.

The other factors can be thought of as shades of gray and nuances. We look for as much of the good as we can find and weigh that against what we have to pay for it, our expectation of how durable the business will be, and what our other alternatives are. I don't have a formula or algorithm to get that precisely right, I just spend all my time thinking, reading, and adapting as best as I can.