A Frustrated Investor (Me), Novus Energy and Mr. Market
It has been a long year for me investing wise. I started positioning my portfolio a couple of years ago toprofit from the growth of unconventional oil production in North America. I selected mainly Canadianlight oil producers because they were much less richly valued than their American counterparts. Inthose companies I saw growth at unreasonably low prices.The companies as a group have done pretty much exactly as I expected. Steady and sometimesdownright spectacular reserve and production growth funded internally by cash flow. Yeah for me!The stock prices on the other hand have performed quite poorly. Boo!
So what has happened? That silly Mr. Market hasn’t been agreeing with me. Check out
what the entireToronto Venture Stock Exchange
(where I’ve been doing much of my investing)
has done:From a high of 1,700 in March we sit today at 1,200. That is a drop of 30% in half a year which is madeeven more painful as I watch the major American exchanges march steadily higher.Am
I frustrated? You bet. I’m I ready to give up? No way.
At times like these I usually turn to Warren Buffett for guidance, and in this case I turn to what he wrotein the 1987 Berkshire Hathaway shareholder letter about my friend Mr. Market:
Whenever Charlie and I buy common stocks for Berkshire's insurance companies (leaving asidearbitrage purchases, discussed later) we approach the transaction as if we were buying into a privatebusiness. We look at the economic prospects of the business, the people in charge of running it, and the price we must pay. We do not have in mind any time or price for sale. Indeed, we are willing to hold astock indefinitely so long as we expect the business to increase in intrinsic value at a satisfactory rate.