Tony Lepage

The story behind this post takes me back one month ago, after I attended the Toronto Resource Investor’s Conference. There were a number of seminars and debates on various resource investment strategies like investing in uranium, oil, gold and even diamonds.

One of the panel discussions asked a question about Asia’s need for raw minerals. While all the members of the panel were more than willing to share their ideas on how Asia will affect the price of base metals, one man, Ian Doig, had a different plan. When his turn came, Mr. Doig could not offer any intelligent comment on the topic of base metals. I appreciated his honesty; however, I remained hesitant to dismiss his motivations.

You see, Mr. Doig has been bitten by a bug. Sure he was probably bitten over 35 years ago when he became an investor, but his symptoms were showing their face that day. My associates and I tried our dearest not to laugh and although it was hard, we kept it together. Mr. Doig is an oil investor from Alberta. He bluntly stated “it’s been a fantastic year.” He continued to speak about oil until he was told that the panel would discuss oil after covering some other topics first.

Earlier this week, I met with some old friends. I had accused them of polluting my air by each driving their cars, individually, to our meeting location. Once we had ordered our appetizers, they were quick to point out my hypocrisy. I had accepted a ride, in a car, to the restaurant.

My friend and I took the drive for granted. So much so, that we did not even know where we were going. We did enough driving just looking for the place that I too may as well have driven my own car. If I had taken public transit, I would have made damn sure to know where I was going before I left the house.

Further, when I drive (on the bus) over the DVP/404 on the Finch Street overpass I see four lanes, bumper to bumper and moving slowly. I also see one lane, moving quickly, and I swear, there is barely anyone using the lane. It’s the carpool lane! While I’m glad that most people don’t abuse the lane, I am shocked that there is such a small percentage of people carpooling.

Back at the restaurant, my contradictions were not limited to just accepting a ride, after all, carpooling is much better than driving individually. I am not sure of the purpose of some of the comments, but I will take them as constructive criticisms. One of my friends likes to point out that I shop at high end retail stores, like Harry Rosen.

Well, that, my friends, ends TODAY.

Over the past few days, I have taken action. It might be easy to assume you can make small little changes at any time but let me tell you, it is not. I think this is going to be a hell of a plan to stick to, but I am sure that I, and you as well, can do it. Do it for the children… and the kittens, the poor little kittens.

What drove me over the edge? This website: http://www.supportmyob.com

When I saw the trailer for this video, it felt like my heart fell to the floor. I agree that environmentalists can cause devastating harm to a person’s way of life. I also agree that Greenpeace often goes over the edge.

I don’t agree that we should pillage the earth as if it is our right–it isn’t. The very people who believe that we should be allowed to build “environmentally-friendly mines” would also feel that their children should be allowed the same opportunities. Too bad we mine non-renewable resources.

The environmentalists, really, are against growth, they think that what the people need is to keep in their traditional ways of life. Maybe they should be kept as happy peasants.

This is a direct quote from the above mentioned documentary. It’s also a bad definition of what environmentalism is. The fellow who made this comment has some form of an agenda. Sustainable development is not a tough term to define. In fact it forces us to ask ourselves “do I need this?”

My Challenge

I am hereby challenging anyone who reads this post to make your own blog post about your environmentalism. Do your part to reduce greenhouse gas emissions. Document it.

Here is what I’ve done:

• Replaced all the light bulbs in my apartment with energy efficient ones. A total of 15 light bulbs with a cost to replace of $106. The amount of CO2 that would have been created if I did not switch is (150lbs x 15) 2250 pounds per year.
• Set my computer to enter standby after 30 minutes of inactivity. Monitors off after 15 minutes.
• Here’s an easy one for me, but it still counts I take public transit to work, everyday. A 25 minute ride, that spans the distance of 18 kilometers: (1lb x km x day) 9360 pounds per year.
• Today, I started to sort my garbage properly. I will rinse out anything I want to be recycled and will recycle anything that is recyclable. It is surprising how much recyclables I used to throw out.
• Three meat-free days per week. I will not eat meat on a meat-free day. A lot of energy goes into producing meat. Hopefully I can further reduce my meat consumption, but for now one step at a time. By eating 3 days with no meat: (21 kg for one day a week) 63kg of pollutants and who knows how much CO2 per year.
• Page Media will no longer be selling shirts in styles that are not produced sustainably. For now, this means my only provider is American Apparel. It also means I will have to stick to their organic cotton line. I will provide more info on this in the near future as I look to other “fair trade” options.
• Finally, I will not be purchasing any new clothes. I will purchase second hand clothes, or clothes from fair trade retailers. Guess this means Yorkdale is out of the picture for Tony. Oh yes, this means no more Harry Rosen as well

I urge every one of my friends to take action and do something. If you’d like (I know I would) then tell us about it too!

There are two reasons for this post. The first: a follow up to the overall economic ideas I wrote about last post. The second: to explore and document new strategies for the stock market.

The Housing Market & the Stock Market

I previously wrote I could foresee home prices increasing because of severe inflation. I wish to further evaluate that statement and form a long term, measurable, prediction.

First off, the S&P is a collection of equities on a combination of US stock markets that is meant to represent the US economy. This is done by averaging the biggest companies that are most watched by investors. We call the top 500 of that list the S&P 500.

A recent commentary highlights the relationship between the housing market and the S&P 500. From the article, you can see how the housing industry could be predicting a decrease of about 30% for the S&P 500 from its current standing.

I will be watching closely to see if this decrease happens. If this decrease does happen I believe the FED will believe this is a far too drastic decrease. It would also signal something the entire nation will not be complacent about—a potential stock market crash.

If investors start taking note of the current housing situation and start adjusting their portfolios we should look to traditional assets for investing safety. I specifically feel big money will end up in the large cap stocks. The current big boys include overpriced stocks like GOOG. If you don’t believe what kind of effect google has on the markets, take a look at the recent price action of EP. El Paso is going to provide solar power to google. They have a P/E of 928. In case you’re unsure what P/E means, it’s the price-to-earnings ratio. In other words, if you bought all of EP right now, it would take you 928 years to earn back what you paid (using their current income rate).

And while commodities get hammered, if we look at one of the biggest old school players, XOM, Exxon Mobil we find a P/E of 11. I can see investors fleeing while they eventually make their way into the old school and traditional companies (many of stocks that Warren Buffett has been holding for a long time). If things are quickly getting more expensive, consumers are spending less, or both, you can expect investors to buy the stocks of companies that produce the things we NEED.

Fear

We could also see a flight from anything that has shown risk, and there is a lot to fear in that arena. I’m consistently shocked that our society is acting so complacent in the face of so much fear that is being fed to us. I wonder when the markets will realize all the things that are going on in the world won’t be good for anyone.

From recent hedge fund busts (a $5 billion loss from one hedge fund in a single week) to the North Korean nuke problems, the markets seem to be acting very irrationally. When we look back in 5 years I think we’ll see a stock market that was pretending and in denial. The emperor has no clothes.

Potential Futures

Considering my thoughts from above, I think we’ll see a decrease around 30%, probably less in the US stock market. This will reverse as the USD begins to decrease by 30% and the stock markets can begin to trade sideways or increase.

This has no guaranteed influence on the price of gold for the near term. Gold could be taken lower if hedge funds and investment banks sell off their commodities. If gold is sold with the commodities the selling will have a negative effect on the spot price. If gold is not sold, or the selling has little effect, I continue to believe the fundamentals of the US economy are driving it towards extinction. That would be positive for gold. It could also end up being very negative for us.

**Brief Disclaimer:
I want to state that I will not be held responsible for any investment actions that are made as a result of anything mentioned in these posts. You are responsible for your own investment future, whether you’re investing or not.

Gold Equities

I’ve recently begun to take on a more risky investment strategy to gain a greater amount of leverage from a positive gold price. To do this I have begun investing in gold exploration companies.

My first purchase in this arena is Radius Gold. Investors were waiting for great news from this company that didn’t come. This is reflected by RDU’s stock price of late. I will hold this stock through the upcoming turbulence that will lead to gold’s resumption of a strong uptrend. When gold moves closer to being priced appropriately, I will re evaluate the holdings of this company.

My idea is to choose mining exploration companies that are cheap but not on the verge of extinction. They need money in the bank and a plan to generate excitement, be it exploration or acquisitions.

I plan to add to my holdings sometime over the next few days. I have my eye on a few more stocks priced around 1.50 as I try to look for companies that have an established track record.

Ultimately, I think history will prove that great investments aren’t that hard to find in this industry. As you would learn from my previous posts, I’m very confident that the gold price will end up a lot higher over the coming years.

That leads me to a key point I try to implement in my investment strategy: I must be selling my holdings when this market gains more investors and before it becomes over invested. This is a serious concern because the market is so small; these investments will be highly volatile as gold prices edge higher.