I would suggest that now would be a prudent time to double up on VMS at a price of $.57 or better.
Per VMS CEO Rick Mark (in a recent Email to investors):
<Both VMS News Releases in July (July 3 and July 28) described our recent drilling success and we expect more to come. VMS is well financed to continue expanding our deposit and we are actively generating drill targets on several other properties within the company.>
Again he said: <we expect more to come>. and so do I. VMS top management are all very serious and sober and they would not have made such a prediction lightly.
In less the world is really heading to a new stone or ice age and demand for metals such as copper drops of the precipice, I think VMS has as good a chance of success as anybody else out there.
The complete Email:
Dear VMS followers,
It has been a brutal six weeks of intense market "shelling”. Is it over yet? Are we at (near) the bottom?
That, of course, is the question we have dealt with almost every day for eight months as we talk to our shareholders and interested investors.
I have been hesitant to make any personal comments, one man's opinion et al, but our stock price has clearly been impacted by this very big storm, and particularly this recent deluge.
That said, we continue to move VMS forward. Both VMS News Releases in July (July 3 and July 28) described our recent drilling success and we expect more to come. VMS is well financed to continue expanding our deposit and we are actively generating drill targets on several other properties within the company.
Below is a comment from Marquest Asset Management Inc. based in Toronto. Their CEO, Andrew Cook, whom we met with in May, knows the exploration space well and I was pleased to read his opinion on the opportunities investors face right now.
I invite you to take a moment and review it. If Marquest is right, good news/results may actually matter and we will all see our monthly statements reflect growing wealth again.
Please remember, we are here to discuss our progress with you and invite you to call at 1-866-816-0118 or 604-986-2020.
Best Regards,
Rick Mark,
CEO, VMS Ventures Inc
Marquest Market Comment
“It’s All About Expectations”
August 11, 2008
The market has been dealing with three issues - inflation, the credit crunch, and the prospect of a recession. The recent sell off from the May high had all these issues putting pressure on the markets. Since its high in October, the S&P 500 declined 24% to its low in July. This has occurred while the economy has held up relatively well and with it corporate earnings. We believe that if we were going to have a recession we would be in one by now given, “The Credit Crunch, Rising Inflation, High Oil Prices, House Prices Declining and the Worst Consumer Confidence Surveys in years”.. The fact that we are not yet in a recession is due to the continued strength of the world economies - particularly those of the emerging economies. Remember the Fed began to ease monetary policy a year ago. It takes about a year for a change in policy to impact the economy. Therefore, we think it is more likely that the economy will begin to improve by late this year or early next year.
Now what about inflation? What has become clear in the past few weeks is that there was a significant amount of inventory building in most commodity markets earlier this year. This was sparked by China as they stockpiled oil, coal and any other commodities they felt were necessary to ensure a successful Olympics. Due to the tightness of most commodity markets this caused other players to follow suit which led to a particularly sharp run up in oil, coal and fertilizers where supply was the tightest. As a result of rising commodity prices the June U.S. CPI number jumped to 5%. This contributed significantly to the sharp decline in markets and the July lows. The Price Earnings ratio for the market has compressed about 3.5 multiple points from 16X to 12.5X, which accounts for a 21% decline in the market!
We believe that this marked the high water point for inflation. In the past few weeks commodity prices have come under pressure as inventory building has subsided and end demand has weakened due to the high prices. World economies are still slowing and this, in combination with the current declining trend for most commodities, will result in a decline in inflation in the coming months. Commodity prices will likely remain soft until the inventory correction runs its course. The positive longer term supply demand picture for commodities remains intact. This should set up a good buying opportunity in commodity stocks as most companies are currently trading at very low valuations.
On the credit crunch front there are signs that the worst is over. U.S. housing sales have stabilized over the past four months and as a result inventories are beginning to decline. Financial institutions are cleaning up their balance sheets and raising much needed equity. The greatest risk from the credit crunch was the unwillingness or inability of the financial system to make sufficient credit available to accommodate the needs of the economy. This is where the U.S. Fed and the Treasury Department stepped in with a series of unprecedented moves to in effect underwrite the financial system.
We are not out of the woods yet. However, the equity market has discounted the worst case scenario with the price levels achieved in the mid-July lows. Therefore we expect that consumer and investor confidence will rise from these extreme levels as credit conditions improve in the months to come.
If our assessment is correct and inflation is peaking, the credit crunch is bottoming, and the economy will be improving in the coming months, what does this hold for the stock market? Simply put a major buying opportunity! The key to this potential opportunity is consumer and investor confidence. The Conference Board Consumer Confidence Index currently stands at 50.4 (See attached chart). There are only five other periods in the past forty years when it was near these depressed levels - 1974, 1980, 1982, 1991, and 2003. In each case the stock market bottomed and began a multi-year rally as the negative sentiment had already fully discounted the concerns of the day. One must remember that the equity markets always discount current events and anticipate what lies ahead. Which is to say that the stock market tops on GOOD news and bottoms on BAD news. It's all about expectations. We anticipate that there will continue to be negative news in the coming months as these major economic issues work themselves out. The question is, “will the news about the credit crunch, housing, inflation and the economy prove better than current investor expectations?” We think so.
Our current investment strategies are focused on taking advantage of this anticipated shift in investor expectations. If you have any questions regarding our investment thinking please contact Andrew or Gerry.
Gerry Brockelsby Andrew Cook
416-777-7373 416-777-7358
gerry@marquest.ca acook@marquest.ca
For further information, Phone (604) 986-2020 or Toll Free 866 816 0118
or visit our website www.vmsventures.com
The TSX Venture Exchange has not reviewed and does not accept responsibility
for the adequacy or accuracy of this news release |
