Some shares I’m looking at, and macro thoughts

“There is a time to fish, and a time to hang your nets out to dry”

– Deng Xiaoping [Source Mad Hedge Fund Trader]

After selling down many of my holdings, rather than load up on more value picks I’ve decided to hang my nets out for a while, apart from a few precious metals miners who have been beaten down in the recent bear market for gold shares.  I won’t go into these as they don’t fit the philosophy of value investing, apart from the opportunity to eventually experience a dramatic re-rate.  Needless to say the last couple of weeks have been pretty terrible for precious metals.

 

I did run my value filter for the first time in about a year recently, and didn’t turn up anything too exciting.  If global markets cop a battering these stocks are likely to make for good buying, but right now I am very defensive.  The only stocks on here that I still hold are BGL (doing pretty well lately) and CKL.  Having seen NEA close at 27c today I’m a little miffed to have sold at 11c but still booked a 50% gain so I can’t feel too upset.

 

The impact of austerity in countries like Spain and France shows that the Eurozone is now past the point of no return and is in a death spiral.  Deficits have to be reined in, by lowering government spending.  Lower government spending reduces demand in the economy, and the cycle continues.  ZeroHedge have painted a rather bleak picture using European economic data.  Spain has revised their 2013 deficit from 4.5% to 6.3%.  Everything has gone to shit but none of the European governments are willing to admit that they are completely fucked, because as soon as they own up the party ends.

 

The only reason that the US hasn’t joined them yet is that the Fed is printing $85b per month to buy up bonds.  Once the party stops, the reset button is going to get pushed and and pain is going to commence.  I expect to see a GFC 2.0 in the next 12 months, which will smack down prices of things like base metals.  I intend to load up on miners like MCR (well-run nickel producer) and BHP (best mineral assets in the world), and some of the quality, low-debt mid caps that may get beaten down.  I will use my value filter to find bargains.

 

For this reason there hasn’t been much else to write about, I’m still playing defense and focusing on paying down my mortgage and working on my personal and professional development.