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Strategies & Market Trends : Booms, Busts, and Recoveries -- Ignore unavailable to you. Want to Upgrade?

To: Haim R. Branisteanu who wrote (38195)	9/13/2003 11:08:00 AM
From: Seeker of Truth	Read Replies (2) \| Respond to of 74559

I can guess Jay's answer to that. He doesn't mess with such details. That's up to his managers :o). The big picture is that gold has to rise a lot more. NEM is the world's leading gold mining company, selling puts and then selling some calls if you are assigned has to be on the average very profitable. Advances in the gold price are accompanied by disproportionate increases in the profits of gold miners. So 47 times last 12 months earnings isn't too much to pay right now. It would be too much to pay if the general politico-economic situation changed; in that unlikely case 10-12 times earnings would be more suitable. Jay is a genius for seeing the main trend, the direction of the big move. I remember he called the collapse of the internet tech boom before it happened, on the basis of 1. Tech companies are constantly making competitors' products outmoded. The very dynamism of the tech sector means that the champions are constantly being destroyed by new companies. This made the PE's of that time insane. 2. Real inflation is more than the U.S. admits. 3. High price of oil. 4. Incredible overborrowing by US consumers. His timing: during the tech boom he had a large position in a Japanese internet-new economy stock. He said it would go way up and then crack. He sold shortly after the stock had begun to drop, when most of its awesome rise was still in the stock price. I disagreed with his opinions about the general direction of tech stocks until I had lost over 60% of my capital at which point I finally awoke and did something. There are ALWAYS a multitude of reasons why stock X or the whole market in country Y should go up and a multitude of reasons for the opposite to happen. So we have to decide which are the primary factors and which are the secondary ones. The correctness of that decision determines our investment results. Hence on this thread there are many many posts which are seemingly off topic but which really are not. We have to weigh all the factors, political, economic, sociological, etc. That is Jay's tremendous talent. Of course we mustn't blindly follow him or anybody else. That would lead to an underdeveloped financial acumen; it would make us into clueless investors.

To: Haim R. Branisteanu who wrote (38195)	9/13/2003 9:15:50 PM
From: TobagoJack	Read Replies (1) \| Respond to of 74559

Hello Haim, <<How you value NEM on proven reserves or operating profits ? If reserves how much per ounce?>> I have actually never done such an exercise. I have simply shorted puts when the price hits certain points, bought at other points, shorted calls at higher points, and sold when I wanted a break. I have the annual reports of HMY, GFI, FCX and NEM within arms reach right now, but have always favored NEM because of its size, liquidity, domicile, and management philosophy. I hold bunch of energy royalties, unable to select the potential winners from the losers, even though I had built complete P/L + balance sheet + cashflow Excel models for all of them. I bought on the basis of size, track record, reserve life, geographical location (from all over Canada), and dividend yield. The valuation of all except Vermilion is in-line with each other as far as price/reserve is concerned, but definitely not a single determining factor. Chugs, Jay