Saturday, May 28, 2016

March of the robots continues. company called Otto is testing driver less semi's

I have been reporting on this for a while now. many people keep dismissing the fact that these autonomous driver-less trucks are going to happen. They are going to be proven wrong. It is a statistical fact that after 10 hours of driving the accident rate for drivers goes up exponentially. If you are a truck driver you have about 4-6 years before you will out of a job.

This Otto outfit makes gear that automates existing semi's so no special gear needed. The company is run by former employees of Google that ran that company's driver-less car efforts. I believe the approval for this technology will be sold on the basis of safety, which is true, but it will be a boon for company's that can get rid of employees.

Friday, May 27, 2016

Altius Minerals CEO letter to shareholders and some of the best advice I have ever seen on resource investing


My favorite excerpt from the letter and some of the greatest free wisdom on resource markets I have seen. Read and heed:

At the heart of our operating strategy lies a recognition that the entire minerals sector is highly cyclical and will likely always remain so. It is characterized by wonderfully alternating periods of mass investment euphoria (which leads to production growth and oversupply) and then by complete sector disdain (which shuts off production growth and causes undersupply).

We believe that the secret to success is to take the opposite course of action to most companies in the sector ‐ meaning that we don't stick our heads in the sand when it's "ugly out there" and that we don't become over confident when the sentiment is strong.

And that folks is how you get rich in the resource sector. The problem for most people is they cannot overcome the psychological hurdles in their reptilian brains. Our brains are programmed and our survival instinct is to stay with the herd as there is safety in numbers, at least in prehistoric times. It is easier for a saber-tooth tiger to attack and kill one person than a group of people. However, we are not living in prehistoric times. When speculating and investing we have to be contrarian and that means deviating from the herd. Many people cannot do this and want affirmation of their actions. That is why they buy at the tops and sell at the bottoms. People want to feel good about their actions so they rationalize new highs in a market and the fact that everyone else is buying as confirmation of their actions. It is also why most people do not make money investing and speculating in the markets. As the billionaire Rick Rule says, "You are either a contrarian or a victim". 

I had to learn this lesson the hard way and it has cost me a ton of money. You can listen to this advice a hundred times but you have to train yourself to swim upstream. You have to overcome the doubt and the feeling that you could be wrong and suffer a loss. This is especially difficult when everyone else is on the other side of the canoe. Most people I have found cannot do it and therefore should not be in the markets speculating. They worry and cant sleep because of an investment or speculation they have made. One of the ways I helped myself overcome this is to spread out my risk. Use position sizing and appropriate stop loss strategies. Another technique is education and studying those that have accumulated great wealth in the markets. Last but not least seek out and research people that have been successful in doing what you want to do. You do not have to reinvent the wheel. 

A perfect example is Rick Rule. If you watch his videos and interviews he will talk about the cyclical nature of these resource markets. They are inevitable and reoccurring. If you whiff on a speculation there will always be another chance down the line if you are patient.

"People who confuse what they wish were true with what is really true create distorted pictures of reality that make it impossible for them to make the best choices." - Ray Dalio, Bridgewater Associates

Cub Energy reports earnings


Revenue from hydrocarbon sales for the three months ended March 31, 2016 was $1.5 million (2015 - $1.8 million).

Revenue from hydrocarbon sales by KUB-Gas for the three months ended March 31, 2016 were $12.7 million (2015 - $17.0 million) of which the Company’s 35% share was $4.4 million (2015 – $5.1 million).

 The total pro-rata revenue from hydrocarbon sales, a non-IFRS measure combining the Company’s revenue and 35% of the allocated KUB-Gas revenue, totaled $5.9 million (2015 - $6.9 million) for the three months ended March 31, 2016.

 The Company’s net income from its 35% equity investment in KUB-Gas for the quarter ended March 31, 2016 was $1.7 million (2015 – $0.1 million) which improved as a result of the reduced natural gas royalty rate. 

 The net income for the Company for the three months ended March 31, 2016 was $1.5 million or $0.00 per share (2015 – $1.2 million net loss or $0.00 per share).

There were $0.1 million in capital expenditures for the quarter ended March 31, 2016 (2015 - $0.1 million) and the pro-rata capital expenditures, a non-IFRS measure combining the Company’s capital expenditures and 35% of the allocated KUB-Gas capital expenditures, totaled $0.3 million (2015 - $0.5 million) for the quarter ended March 31, 2016.

 During the three months ended March 31, 2016, the Company’s Ukraine subsidiary, Tysagaz, entered into an unsecured, non-interest bearing loan agreement with KUB-Gas, whereby KUB-Gas agreed to lend Tysagaz approximately $1.2 million for general working capital. The loan is due and payable on December 31, 2017. The Company expects to repay the loan if, and when, the National Bank of Ukraine lifts the dividend restriction in Ukraine and contemporaneously receive the same amount as a dividend from KUB Holdings. There is no guarantee that the dividend restriction will be lifted or that dividends will be available from KUB Holdings.

 With the current cash resources, no further funding in 2016 under the existing line of credit, temporary suspension of the RK Field, dividend restrictions, currency fluctuations, reliance on a limited number of customers, and impact on carrying values, the Company may not have sufficient cash to continue the exploration and development activities. These matters raise significant doubt about the ability of the Company to continue as a going concern and meet its obligations as they become due.

On the surface the results are encouraging. The one negative is that the dividends from the KUB-Gas partnership are not allowed to be repatriated due to currency restrictions by the National Bank of Ukraine. I was a little concerned about this but the company is getting an interest free loan from KUB-Gas which it will pay back when the NBU lifts the dividend repatriation ban. That should happen sooner than later as brokerage firm Concord is reporting that the NBU is going to allow transfers for the years 2014-2015. 

The National Bank of Ukraine (NBU) is going to satisfy all the demands of international investors for the repatriation of their dividends for 2014-2015 from Ukrainian companies this year, NBU Head Valeria Gontareva told journalists on May 26. “We do not see large amounts, as the years were not very profitable,” she said, as cited by Interfax-Ukraine.

 Recall, a ban on purchases of hard currency for dividend repatriation abroad was introduced in late 2014 during a currency shock. A month ago, the NBU requested Ukrainian banks to collect by May 20 information from their clients on their intention to pay dividends abroad. After analyzing this information, the NBU will prepare a schedule of dividend transfer abroad.

Alexander Paraschiy: We learned from the NBU earlier that it estimated possible demand for dividend repatriation at USD 0.5-0.6 bln. From Gontareva’s statement, we conclude that real demand is below its expectations, possibly within the range of our estimate of USD 0.4-0.5 bln. This does not look like a painful amount for the Ukrainian ForEx market – e.g. it’s less than the amount of dollars that the NBU purchased on the market over the last 30 days (USD 0.53 bln). We expect repatriation of the dividends for 2014-2015 may start as soon as June 2016. The key question now is when the NBU will remove restrictions on dividend repatriation for future periods.

All in all I am getting more and more optimistic about Cub in 2016. The Ukrainian authorities are being forced,due to their need for outside financial help, to make changes that are in the best interest of companies like Cub. This is still a risky speculation but money is definitely flowing into the stock. My view is that we will see continued albeit slow market reforms in Ukraine. The policy of increasing domestic gas production is in our favor. The currency is recovering and the forecast is for the economy to slowly get better. I think Cub has survived the worst and these improvements at the margin could be sufficient to cause a revaluation of the stock. 

Thursday, May 26, 2016

Galaxy Resources CEO recent presentation

When my speculation in Orocobre, another emerging lithium producer I own, recently doubled I took my original investment out and put it into Galaxy Resources. I liked what Mr. Lithium Joe Lowry said about the company and his view that in five years or so it could be one of the major producers of lithium.

Lithium has really been a windfall for me this year and is the best performing commodity. I suspect that if the price for lithium stays elevated than sufficient supply will brought on line to meet demand. However this will be several years from now. The really good news is that demand for lithium will grow about 20k tonnes per year each year for at least the next 3-5 years. Here are Lowry's comments on lithium and Galaxy:

Developments in Australia will also play a key role in the future of at least one Argentina property. Since Neometal’s production is initially committed to Ganfeng, Galaxy is the only uncommitted new supply of spodumene going to China until another resource (such as Pilbara) comes online later in the decade. I do not expect the Talison JV’s output to increase significantly in the next couple of years which means that Galaxy is in an enviable position to supply converters in China who currently cannot operate at capacity due to a shortage of raw material that has driven carbonate and hydroxide pricing in China up 3X since the end of Q3 2015. Unlike other junior companies, Galaxy is again a “real lithium company” (i.e. one with production) who will be able to sell their entire output for the foreseeable future and likely at a premium to the spodumene market price in China. I took the digression through the Australia situation to make it clear that Galaxy is no longer the debt ridden mess they were just a short time ago but are now in a position to access capital markets on their own to develop Sal de Vida. Expect Galaxy, driven by cash flow from spodumene sales beginning in Q3, to be profitable sooner than their fellow ASX listed company, Orocobre. Once Galaxy develops Sal de Vida they will become the next lithium major. Yes, that is a prediction. Galaxy has the best new brine project on the planet in Sal de Vida located on Salar del Hombre Muerto. This is the same salar that FMC has been producing great quality product on for almost 20 years. While it is unfortunate that FMC’s corporate leadership has recently shown no vision for the lithium business and has no plans to expand (or attempt another expansion) in Argentina, the “other side” of Hombre Muerto is likely be producing for Galaxy by the end of the decade. 

Wednesday, May 25, 2016

McDonald's former CEO says humans to be replaced by robots


Former McDonald’s President Ed Rensi warned Tuesday that replacing workers with robots is far less costly than hiring new employees at $15 an hour.

Democratic lawmakers and advocates from across the country have fought to raise the minimum wage to $15 an hour. Those in support believe the policy could help address poverty, but critics say it could also lead to less employment opportunities. Rensi noted it will be cheaper for many businesses to purchase a $35,000 robot instead of hiring a new employee at $15 an hour.

“If you look at the robotic devices that are coming into the restaurant industry — it’s cheaper to buy a $35,000 robotic arm than it is to hire an employee who’s inefficient making $15 an hour bagging French fries,” Rensi told Fox Business. “It’s nonsense and it’s very destructive and it’s inflationary and it’s going to cause a job loss across this country like you’re not going to believe.”

This is exactly what many including me have been predicting. If you are paid $15/hr but produce only $7.50/hr in value the owner of the business is losing money. Businesses exist to provide goods and services at a profit. If a business can do what it needs to do with no humans believe me they will do it. If you are a business owner or manager who wants to deal with this crap? Not me bring on the robots.

Here is a tip for these dim bulbs. The reason fast food jobs pay minimum wage is because they require little to no skill and anyone can do it. The pool of available labor for these jobs is large so the cost goes down. If these stoops want to protest something that depresses wages they should protest immigration into the US both legal and illegal which increases the labor supply and pushes down wages for low skilled Americans. You should be careful what you wish for because you never knpow about unintended consequences.

After the automation of these fast food jobs and the disappearance of any low paying jobs I expect what we will see is a call by our "leaders" and the unemployed for a minimum guaranteed stipend. Don't say it will not happen. The Swiss are going to vote on this exact plan in June.

In early June the Swiss will be called upon to make a historic decision. Switzerland is the first country worldwide to put the idea of an Unconditional Basic Income to a vote and the outcome of this referendum will set a strong precedent and establish a landmark in the evolution of this debate.

The Swiss public will have to approve or reject a change in the constitution that would allow for the introduction of an Unconditional Basic Income (UBI), or a preset, monthly minimum income to be paid out by the government to every adult and child in the country if their income falls below a specific threshold. Even though details of this proposal have been few and far between, the most commonly cited amount of this guaranteed income would be 2,500 Swiss Francs for adults and 625 francs for children. The architects of the proposal stress that this government-guaranteed payment, unlike the current benefit programs, will be entirely “no questions asked”, i.e., it will not be means-tested and will apply to every person legally living in Switzerland.

Of course no thought is given to how this will be paid for except the same old "tax the rich" (however that is defined) bullshit the left always repeats. The proponents of this bill say that it is a defense against continued automation and rise of the robots. It will also supposedly give people more freedom to pursue the arts and self development. LOL! Yeah like if everyone wasn't working we would have an explosion in music, painting, and poetry. What it will create is a class of immoral, shiftless layabouts and a morally and economically bankrupt society. I guess the pot dealers and video game companies will do ok though.

Tuesday, May 24, 2016

Oil discoveries at six decade low


Oil discoveries have fallen to a six-decade low as explorers cut billions of dollars of spending to ride out the biggest market slump in a generation.

About 12.1 billion barrels of oil reserves were found in 2015, marking a fifth consecutive year of decline and the smallest volume since 1952, Oslo-based industry consultant Rystad Energy said in an e-mailed note.


The bottom has completely fallen out for conventional exploration, and the result portends a supply gap in the future that is going to be challenging to overcome,” Smith said. “In the current cost-cutting environment, the outlook for 2016 discovery volumes is not likely to be better, either.”

Longer term this will cause oil prices to move higher
Depletion of an average 6% per year coupled with demand growth of 1% a year means you need to bring on the equivalent of one Iraq per year to meet oil demand. That will be a problem in a couple of years due to the big cuts in investment in new reserves. 

The continued reduction of the American people to serfdom


The Central States Pension Fund has no new plan to avoid insolvency, fund director Thomas Nyhan said this week. Without government funding, the fund will run out of money in 10 years, he said.

At that time, pension benefits for about 407,000 people could be reduced to "virtually nothing," he told workers and retirees in a letter sent Friday.

In a last-ditch effort, the Central States Pension Plan sought government approval to partially reduce the pensions of 115,000 retirees and the future benefits for 155,000 current workers. The proposed cuts were steep, as much as 60% for some, but it wasn't enough. Earlier this month, the Treasury Department rejected the plan because it found that it would not actually head off insolvency.

This is the pension fund for the Teamsters. The pension fund is underfunded so now the people who were working their whole life driving trucks will have to accept a lower pension, if they even get one, unless the government bails them out. How exactly is the government going to bail them out? The entity created by government to insure against this, the Pension Benefit Guarantee Corporation, is out of money. Where will they get the money? We are running huge annual deficits and will pass the $20 trillion dollar threshold on the nations debt this year. In addition, we are looking at over $100 trillion in unfunded Social Security and Medicare liabilities. Also many state employee pension funds are way underfunded and will require a combination of lower benefits and higher taxes which will still not save many of them. Can the Federal government bailout everybody? No, 'murica is broke dick.

 Get ready for a big downgrade for many peoples standard of living and a continued bifurcation of rich and poor with a smaller and smaller middle class. Higher taxes and of course more government will be the norm because "somebody needs to do something". Of course most people are not paying attention. Most dimbulbs figure out what is going on when they get a letter in the mail like these people.

Surprise you work 30 years and get nothing

If you are reading my blog for any length of time you know that I advocate taking control of your own life and financial affairs. I cut all ties to all corporations and governments for my retirement funding. I set up a self directed IRA and created an LLC that my IRA owns and I control (checkbook control). I can now invest in a multitude of things that most people cant invest in. I control everything without getting ripped off in admin fees and other valueless rakes that the financial industry has in place to cream off your money.

You cannot rely on corporations and government to take care of you. I have provided example after example of people getting wiped out because they were not paying attention to what is happening in the world and even more important their own life. Time to wake up and take control of your finances and your life. One way or another you will get what you deserve. It could mean the literal difference between life and death.

Pakistan economic outlook at six year high


According to the survey, the results of which have been released recently, the economic outlook in Pakistan is at a six-year high now and is continuously improving.


It says, “the business confidence in the country has improved to a positive 36% in the last six months (October 2015 to March 2016), up 14 percentage points compared to 22% in previous six months (April to September 2015).”

The survey results also show that the confidence level of foreign companies operating in the country was also at a positive 55%, a record high for the last six years.

One of the big negatives holding back the economy is the continuing energy crisis. However quite a bit of the money being invested through the CPEC is earmarked for new power plants and electrical distribution. This is important because the energy shortages are costing Pakistan an estimated 1% of annual GDP growth per year. 

Pakistan currently has a building wind behind its back and has a market that is undervalued relative the rest of the world. I continue to like the country as an investment destination going forward.

Monday, May 23, 2016

10 common traits of the wealthy


“Perceptions of the wealthy in history and popular culture have been painted with a broad brush that doesn’t reflect the majority of financially successful people in society,” said Keith Banks, president of U.S. Trust. “The insights we’ve gained through extensive research over the years give us a more accurate portrait of the modern day wealthy. It’s an increasingly diverse group of men and women of all ages and backgrounds. Their advantage in life is not rare financial privilege but rather basic values, discipline and sense of potential shaped by family from an early age, which equipped them to make the most of every opportunity.”

They built wealth over time: 77 percent of those surveyed came from middle class or lower backgrounds, including 19 percent who grew up poor. They earned wealth over time, most of it through income from work and investing.

Basic, long-term approach to investing: 86 percent of HNW investors made their biggest investment gains through long-term buy and hold strategies, traditional stocks and bonds (89 percent) and a series of small wins (83 percent) versus taking big investment risks. Their use of more sophisticated investments grows as their wealth increases.

Invest in valuable tangible assets: 48 percent of HNW investors invest in tangible assets, such as farmland, investment real estate and timber properties that can produce income and grow over time with legacy value. One in five collects fine art, including one in three ultra high net worth art collectors who are now using art as an alternative asset class and a core part of their wealth structuring and philanthropic giving strategies.

Disciplined savers, opportunistic buyers: 81 percent of HNW investors say that investing to reach long-term goals is more important than funding current wants and needs. This disciplined approach to saving and investing was instilled at an early age and becomes easier with the financial freedom that wealth affords.

These are the principles that I lay out in my "How To Be Rich"series. The principles really are not hard. What is hard is making yourself do it and controlling your impulses to spend. Notice that the wealthy are mainly from the lower and middle income backgrounds. They were disciplined savers and invested prudently in income producing assets over the long term. They let their investments compound over time. Not hard but as I pointed out yesterday if 66% of the people in US can't scrounge up $500 for a car repair they can forget about being wealthy.

Sunday, May 22, 2016

Are you one of the 2/3 of Americans that cant handle a $500 emergency?


Whenever I see one of these stories about how little Americans have available for an emergency, my blood starts to boil. I understand that poor people making $25,000 per year are forced to live paycheck to paycheck. But when 63% of all Americans can’t handle a $500 emergency, and 46% of  households making over $75,000 can’t handle a $500 emergency, then they are just plain stupid, frivolous, and incapable of distinguishing between wants and needs. Delayed gratification is a trait almost non-existent among Americans today.


So the majority of Americans can’t handle a $500 expense, but for the last two years there have been 35 million new cars “sold” to blithering idiots on credit or leases. Even though they have no money, they decide it’s a brilliant idea to commit to a 7 year payment of $300 to $500 per month on an asset that declines in value rapidly. Morons abound. These are the same people who must have their Starbucks coffee every day. These math challenged boobs could defer buying a Starbucks coffee every day, save the $3, and accumulate $750 of emergency savings in one year.

There are millions of brain dead Americans who are going to reap a whirlwind of consequences when this shit show implodes. They’ll be wailing and gnashing their teeth when their years of living for today catches up to them. Too fucking bad. The only way to accumulate wealth is to spend less than you make. It’s a lesson they failed to heed, and they will regret it for the rest of their pitiful lives.

Ouch! I really like "The Burning Platform" site and it cuts right to the point. I have written about this type of behavior in my "How to Get Rich" series of articles. Most people cannot control themselves and their spending. They have skewed time preferences and think everything will be the same tomorrow as today. Then when their life goes off the rails they want someone else to fix it or pay for it. 

I have known quite a few so called victims of circumstance in my life. Inevitably it was mostly the persons own choices that led to the state they were in. Sure there are the people who get a terminal cancer in their twenties and die young. That is an exception. Most people get exactly what they deserve in life. If you make good choices and follow the tried and true ways of wealth accumulation you can become safe and secure financially. If you are a person who lives for today and can't put together $500 for an emergency you probably have a whole lot of other issues besides being short $500 bucks. 

And guess what no one really cares about you and your problems which is another kick in the nuts for these people. When they start in on me I just tell them I am not interested in hearing about their problems that they caused themselves. They normally go away mad. 
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