2003 recap and 2004 predictions

[selkirk]

time to look back at the predictions of last year before the foolish predictions of 2004 are posted. The predictions have been an ongoing concern since 1998. my comments are in brackets, overall a good year for most of them.....




2003 predictions

1. inflation stays below 3%. should be safe.
(correct, but inflation will come back)

2. No deflation. when the media is talking about it, the threat is over for now, inflation should run 1-3%.
(there was no deflation, when you see dozens of articles and a book or two the threat no longer exists.)

3. Oil goes below $30, actually should be below $28 ($24-$28), good to own some seniors and junior oil/gas plays. At these levels some of the oil/gas companies are printing cash.

(wrong: oil is over $32 and climbing, was not bearish on the oil sector, as I own many oil/gas stocks just thought the price would come down to the $24-$28 range. strong worldwide demand due to an economic upturn is one reason.)

4. China is also a superpower, military, also the economy is growing 5-8% this year, automobile sales are going to explode in this country in the next 3 years.

(well maybe 5 years but car sales will increase every year for the next 5 years, to early to see the winners....the country has to improve the infastruture this will put presure on many resources.)

5. Avoid the 3 big car companies until they end or cut back their rebate programs and 0% finance profits will be slim.

(wrong, a good pick for 2002 and it was better since Nissans ADR had a good year, still do not like the big 3. )

6. Most over rated/under rated stories

a) there was a shoplifting case in the US, soon there will be a TV movie or a tell all book followed by interviews about the living the terrible life of making millions doing a couple of films a year. just cannot get enough.

(only hear a few stories but they are just waiting, timing....)

b) Cloneaid or idiotaid, claims to have cloned a human well now they are claiming to cloned one every three days. why not they have not produce any scientific proof but still get plenty of press. While real science gets neglected, just shows how dumb the media can be by giving this story any coverage. 99.999% it is all a fraud but the people who do their marketing are incredible.


(this was a pure scam, the sad thing is how much media coverage it received while real science stories were negelted, this was a 100% scam, cloning humans is at least 20 years away, and a good chance may never happen. By the way cloned animals live much shorter lives....ie. Dolly the sheep. Just shows the media does not require proof if you have the story they want to cover .)


- Bacteria is the most under rated story: bacteria has killed more than 40,000 americans and cost the US hospital system $5.5 billion this year. This will only get worse E. Faecium, S. aureus, S. pneumocuous. are evolving quickly and will kill more in the coming years, E. Faecium is restitant to over 100 anitibotics and the list is growing. very little coverage, especially when compared to that all important shoplifing case.

( a Cdn. study by Queens University estimated that 10,000 cdn.s die every year from bacteria, other studies in the US now put the US death toll at over 100,000 cases and costs to the hospital system of 8 billion. still there is very little research when compared to other illnesses. Last report I heard was that $7.5-$10 million was spent on Bacteria research in 2002, this needs to be increased to at least $100 million, or the numbers will continue to climb. Bacteria does not have a good lobbying group. you can never cure the problem but you could reduce the number of deaths or stop the rise.)

7. Markets go up, no really after a while this one has to be correct after being off base. In 2002 have seen half a dozen people just get destoryed by the bear market, this happens near the end......sure it does.

(bingo after 3 years finally correct........ , a good rally after a brutal bear market).

8. US dollar continues to go down.
(down sharply, mentioned this in 2002, and believe in 2001. anyways down against Euro, Aus$, Cdn. $,...ect., )


9. Cdn. dollar breaks above .65 below .70, this one is the same as the market prediction will be correct one of these years. Cdn. dollars is slightly undervalued.

(50/50 broke above .65 however it also broke above .70, now around .76. dollar is up over 20% against the US $. may now go to .80)


10. Gold will keep going up. maybe it can take a run at $400, a weaker US dollar should help. by the way will not happen for a few years but silver will make a move not this year though.

(gold did break over $400, and thanks largely to the weak US dollar)

Stocks

Idiot stock pick for 2003
Russel Metals (TSX) okay yields over 4.75%, trades less than 10PE, and just below book value, good balance sheet. oh yes and no one care about this small cap, still even if it does not move 4.75% yield is much better than any T-Bill.

(the idiot stock made 75% counting the dividend. So once again the idiot stock pick comes through. 2002 idiot stock pick Nexfor which stated last year was worth holding onto is up 35%. believe both are getting fully valued good run.)

Stocks (closing prices Jan 8,2003)
2. Sunlife SLF $27.51 cdn $17.68 This insurance company should make $2.55+ a share in 2003, a good stock which should be able to grow earnings 8-10% a year. a yield of 2%, should make 10% counting yield.

+17.8 counting the dividend, has come off its high mainly to troubles with their US mutual fund company...nothing new

3. Manulife Financial $36.83cdn. $23.58US also a life insurance company, prefer Sunlife for now more of a North American play. yields 2% and is expanding into Asia. they have decided to try to takeover Canada Life which would make them the biggest insurance company in Canada ahead of Sunlife. The deal is supposed to add to earnings in year one, however do not care for it since it will lower ROE going forward over 3 years. Still like the company and their growth prospects in Asia wether the Canada Life acquisition slows this growth time will tell.

+16.1% good company and cheap, did not care for the John Hankock acquisition, maybe dead money for awhile.

3. Plum Creek Timber $23.79 This is a weak buy for me, it yields over 5.50% even after dropping the div from .57-.35 last year. The div should be safe this year, this company also owns millions of acres in land, which is probably helping along with the div to prop up the stock. they should earn $1.25-$1.30 this year. Lumber prices are weak and there is very little signs of a recovery. So buying it for the 5.5% yield and if lumber prices recover 10%+ return, if not then this will be dead money. target 5% return.


+28.7% counting dividend, good move, should have picked this one and skiped cascades the only loser in the list.

these addictions, closing prices Jan 10,2003.

4. Cascades (CAS - TSX) this stock trades in Toronto and they produce containerboard, papers. The stock is trading for $15.82 and should make $1.90+, it yields just under 1%, not exciting but cheap. Should be able to get it for $15 cdn. but will track it at $15.82. good stock, management, ROE, and for less than 10X earnings. Also like Domtar but Cascades is cheaper.


-18% dumb pick, was hurt by the US tarriffs, Canada and the US have been having this trade dispute for over 100 years off and on again. now on again. should have played the other partner in Norampac Domtar which also trades in the US. instead of losing 18% would have been dead money. Domtar is a good company may not move but well run.

5. CGI group GIB.a this trades in the US and Canda and is the fourth biggest IT consulting company, should make around .50 cents (hopefully volatile) and trades at $7.12. Like their most recent acquisition. Note BCE will probably spin not off the company, if they do the company will go down.
Own this outright and have some calls, calls on Montreal for this company are very high.

+8.1% thought the stock would have done better, winning contracts, could see this up 15% next year. like to write covered options on this play, however premiums have drop on the calls and puts sharply.

6. Aber Diamonds below (TSX) below $30cdn currently at $30.90 one of the biggest diamond mines in the world, in Canada...cashflow.....

DIAMONDS ARE WONDERFULLLLLLLL +51.3% this is just a great story, note have stops on 50% of my position at $45 cdn. currently $46.76 %. bought Harry Winston so some of your favourite movie stars will now get to wear Cdn diamonds. non blood, the politically correct choice....marketing....huge cash flow.


counting the idiot stock pick the stocks averaged 25.57%, beat the index more last year in a bear market but still a good return.
thats it for this year. good luck.

thanks
selkirk

 

[DOGS THAT BARK]

Nice job--again Kirk:toast:

 

[selkirk]

Thanks DTB, was a good year, would have been better if I included some China stocks

this year it is harder to find stocks that are cheap.

thanks
selkirk

 

[DR STRANGELOVE]

thanks for your contributions selkirk....

my dad made some $ on plum creek timber as well.

 

[selkirk]

good to hear from you DR. Strangelove should have bought more Plum Creek and dropped Cascades. Or picked up Domtar instead of Cascades.

thanks
selkirk

 

[selkirk]

Predictions 2004

Well another year of hits and misses, just like to thank everyone for the responses, the predictions have been online since 1998.

1. The economy should continue to do well, in the US economy will grow by more than 4% on average for the year, in Canada it will grow by at least 3%.

2. Oil/gas Gas will trade above $5 and may go as high as $7.50, oil will trade above $25US and probably stay above $28, on the upside may hit $35 will not stay there for long. Have heard of some ?expets? that oil will fall to $20, they are missing one point
China. China need more resources as their economy grows, if their economy grows by 8% on average in the next five years oil consumption will just continue to grow also other resources.

3.George Bush wins the next US election, thought the last time he would beat Gore, now Gore backers are pushing Dean. Will have to run a better campaign than what I have saw so far. Also the economy will be doing better which is the most important election issue.

4. Martin wins a majority in Canada. NDP make some gains and the reform/conservatives under Harper (think he will win) will fail to win but a handful of seat in Ontario and nothing in Quebec. Martin will then increase cdn. military spending and increase social spending. Will still have balanced budgets?

5. The US after the election will have to start looking at the rising debt, cut government spending or raise taxes or maybe a bit of both. Of coarse depends on the US economy how much of a problem it becomes in 2004.

6. US dollar will still fall against most of the major currencies. See 5. The dollar was overvalued and fell sharply this year, will fall though not as much. For example the cdn. dollar is up over 21% against the dollar. Cdn. dollar hits .80 and stays in the .76-.80 range for most of the year.


7. Most OVERATED STORY of 2003

The FEAR around SARS, MAD COW, and WEST NILE. Now first of all these diseases killed and ruined peoples live, but it is the fear that caused billions in health, economic tourism/business travel.

Mad Cow since 1996 has killed 133 people world wide
West Nile kills about 10-12 people a year
SARS killed 5000

The Media overhyped the risks to the public and continue to do so. Mad cow is a problem but the media should look at how to fix the food problems, like register all cattle..would only cost $10 a head and save grief when trying to track down a problem. Have this in Canada, though it came to late for the Mad cow here, was 5 years old and registration system came in 3 years ago.

The US should also adopt the sytem. We should look at what we feed the animals grain, and hay, not rudiments such as blood, and by products. Also look at the death of the Family farm.

SARS was a deadly virus but US media outlets made it sound like all of Canada was a danger, unless you spent your vaction in a Toronto hospital you had 0% chance of getting it. When the next Spanish Flu breaks out we will worse off than in 1918, a killer airbourne virus that would attack and kill 20-25% of the population of the communities it hit. SARS proved the media was good at fear but little in the way of delivering facts.

West Nile kills a dozen people we should be concerned but saw a health ad of a mosquito biting an arm, it read this could kill you. Whoever made up this add should be shot.

Here are the odds. Roughly 1% of all mosquitos carry the virus, of that 1% can infect birds, 1% of that can infect humans, 90% of the humans infected will not notice anything or else only be sick for a few days. 10% will be very sick for a month, or two. Of that 10%, 1% will die, they will have an weaken immune system.

Now all of these are serious problems but should look at the future risks and how best to combat the problems, having people scared to visit Canada for the entire summer is not one of them due to SARS.

MOST UNDERATED STORY

The following has killed thousands but gets hardly any press

Influenza kills 35,000-50,000 a year
Camphylobacter kills 3000 in North America, Mad Cow gets all the press.
Malaria, AIDS, and TB killed over 5.7 million in 2001 in third world countries.
Aids gets press the other two not very much, would take $10 billion roughly to fight the problem in third world countries currently about $2.8 billion is spent on the problem.

THE TRIAL by FRANZ KAFKA Cdn. Medical system
Is a classic about a man who is charged with a crime but he does not know the charge, or who charged him, he is in the dark. Never finds out all of the answers.. good version on book on tape and includes introduction, only read the book once?.. not an easy read LOL

Anyways my father has cancer, they found it in September now it is now life or death. The survival rate is extremely high, however the Doctor said operation (80% chance of getting all of it, if not then treatment that generally work, take a lot out of you) would be in November they were running late, should have it in October.

Well in November they told him just before Christmas, went for 3 test, on separate days, so a week after the final test and he has bought some items they phone and cancel everything. They tell him it is politics, apparently all of his docters surgeries were cancelled in favour of clearing up a backlog in other day surgeries. Well hopefully Jan, it is like The TRIAL. It will be resolved but it is incredible???..My uncle has only 10% blood circulation in his neck, still waiting after 30 days for an MRI he needs??incredible. The system worked well when I needed (two operation in one month in 97. ) However this is ridiculas, hopefully by Jan he will have the operation or maybe get him to go the states or Winnipeg. Cost or price is not the issue.

The medical system is like the Trial except this will have a happy ending.


Stocks Prices December 30,2003

1. XIU TSX $45.91 div .782 The I60 trade on Toronto and are the main cap Cdn. index.
Anyways resources should do well if the global economy continues to recover and so the Cdn. Index will also do well. Should not that the big 5 cdn. Banks make up a large percentage of the index. Still BMO, BNS, CM, TD,RY are not bad investments.

2. Alcan $60.71 .786div Alcan is a good way to play Aluminum, and has more leverage to the price than Alcoa. Alcan is well run and if the economy continues to rebound then (a theme here) Alcan should do fine. Once posted this at $42.50 as a buy and then sold at $60 cdn, most of my position. Went back to $42.50 cdn, but only adding a small amount more to the position. Hoping this stock runs to $75-$80cdn. then will probably reduce the position.

3. CLL Conacher Oil and Gas TSX $1.54 just a junior oil and gas story. Good properties out in Western Canada and higher risk properties in Argentina. Target $2cdn. A high risk pick. Hope it does well first talked about this stock at $1.14 so will continue to like it as long as it makes new highs.

4. AC Air Canada $1.20 is worth ZERO, nothing, okay maybe 5 cents. Like I stated when the stock was over $6 cdn. in 2001 the stock was going to be worthless. In 2002 they made up all these division and thought they would sell off to the public, put off the end at least for a few years. However management was not that quick, and in the end SARS and terrible management killed the company. In 1999 made 20% of the stock on the upside, their big mistake was they took over a bankrupt airline for optics. Increased their debt which killed the company. Feel sorry for the workers, Milton CEO looks to be getting over $20 million and heading up the airline once it comes out of bankruptcy. The shares will go to zero?.. very hard stock to short.

5. Believe the big 5 banks will make about 10-15% not bad, they are : CM CIBC $64.20, BMO Bank of Monteal $53.54 2.6%, BNS Bank of Scotia $65.50 3%, TD $43.50 2.9%, Royal Bank $61.99 2.9%. They are getting fully valued however these stocks have given investors over 10%+ for years/decades. Buying a good bank stock, they trade on Toronto and New York. Could also add National Bank to the list??Also CM, BNS, BMO, can be set up in a drip/SPP so small retail investors can get in them, for as little as 100 a month whenever you care to invest. Also the dividends can be reinvested for free in shares, would probably beat most cnd. (maybe US) mutual funds?..not saying much.

6. Nortel $5.45 expensive not cheap but if the markets do well and techs come back this could be a $7-$8 dollar stock, prefer it over Lucent. This is a trade, not a long term buy, and if things start going bad will sell and take a 20% hit. The QQQs are probably a safer trade.

More stocks will be added later maybe

 

[Spock]

thanx selkirk as always

Happy New Year to you . ..

Am still hanging on to Saxon Small Cap .. Saxon World Growth has also done very well .. have added Clarington Small Cap also ..

Am starting to put some money into Mawer New Canada .. what are your thoughts on them ..

no extra money to put into individual stocks but investing in RRSP still every month ..

Thanks
Spock

 

[selkirk]

best wishes to you to in the new year Spock.

you like small cap mutual funds , you are picking some good ones,

Clarington Small cap, Clarington load fund family has quite a few funds but the small cap is one of the best.

do not like the MER 2.84 but the fund has performed great over 1 year 34%, and 3 year average 28% beating out the index.

has over 48% in oil.gas/minerals, they take large bets on industries but what a great record.

Mawer New Canada is no load has a low mer 1.56% though it trailed its peer group this year 26% compared to 32%, it has beaten the average over 3 year, 5, year 10, and 15 year. easily.

a good fund lower risk than the Clarington fund.

Mawer has just over $100 million in assets and Clarington small cap has over $120 million. As these funds you should see if their performance trails off, some of the small cap cdn. stocks they buy can be hard to trade large amounts.

would not be concerned until they go over $250-$300million, at that time watch them closely, still should do well.

own the Mawer New Canada fund, wish I owned the Clarington Fund .

by the way saxon small cap had a good year as did most of the funds in the saxon family.

thanks
selkirk


thanks
selkirk

 

[selkirk]

just a note Nortel had a good week, won a Verizon contract beat out Lucent and got upgraded by some brokerages.

stock hit a high of $8.01 closed today at $7.83 cdn.

have put stops in at $7.50 50% and the other 50% at $7.
a lot of hype in the stock hopefully it can go a little further.


thanks
selkirk

 

[DR STRANGELOVE]

selkirk,

thanks for all the work you do,

wishing you and your family a prosperous and happy new year...

 

[dawgball]

As always, great write-ups. Look forward to more to come. Hopefully over the coming years, I will be able to start contributing to this forum. Since starting my own business (4 yrs), all investment (90%) has gone to it. Just now leveled off where it is self-sufficient so should be back in the market in 9-12 months.

we'll definitely be looking here first!

Thanks again!

 

[bases]

selkirk ?

selkirk ?

? i feel steel this year should be a good buy ste.a what do you think
selkirk,

thanks for all the work you do,

wishing you and your family a prosperous and happy new year...

 

[selkirk]

Dr. Strangeglove best wishes to you in 2004

Dawgball will look forward to the posts, know how time consuming a small business especially in the start up stages can be, good luck with the venture.

Bases I own Dofassco own some in a DRIP/SPP and some in a seperate account. Sold a small amount at $32.50 feeling it was fully valued now it is at $34.85 cdn. would look at buying some at $30 cdn. or below, currently would rate it a hold.

Very well run steel company with a stable dividend that yields 3.44%. and trading around 14X on 2004 earnings. hoping to buy some more at $30 and below.

As for Stelco it is more of a trade or a speculation, did not make money in 2003 and will probably lose money in 2004 (not as much) -.30 to $1 per share. Have never liked management and they have a high debt level.

Know someone who bought a large position at $1.10, now it is at $1.88, he felt that there was a better chance of doubling than going to zero. I passed on the trade, if you think the steel industry is going be a huge boom then Stelco is worth looking at, however you must be prepared that in 12-18 months the equity could be worth zero.

Dofasco for me is a safer way of playing the steels and if the sector does not have a great year, at least I get the 3.44%.



note stop loss on Nortel has been raised to $8 50% and $8.50cdn 50% from ($7 50% and $7.50 50%).

after hitting a high of $9.45 has come back to $8.87 so the run may be over for now.


thanks
selkirk

 

[Captain Crunch]

Kirk, very impressive write-ups. I noticed in your first post in this thread that you discussed the fact that bacteria kills thousands of people and that there is not much research being done on it. I own a pretty good number of shares in a company, Cytogenix (CYGX), that is presently addressing these issues. They don't have a lot of cash, but the prospects for huge future growth looks promising to me. Would like your thoughts if you don't mind. Here are some recent press releases that relate to their work on herpes, sepsis, and other ailments.

http://www.cytogenix.com/en_us/Company/pr_geneSilPatent.html

http://www.cytogenix.com/en_us/Company/pr_geneSilencing.html

http://www.cytogenix.com/en_us/Company/pr_herpesPatent.html

http://www.cytogenix.com/en_us/Company/pr_antibacAgent.html

It is currently trading in the $.80 range with a shareholders meeting on Feb. 3. Hoping for announcement of solid financing in the near future.

Thanks for your time.

 

[selkirk]

looked at the press releases Captain Crunch, interesting company. have read some more articles and bacteria is a much bigger and $$ problem than I thought. Knew the orginals numbers were low however surprised how big of a problem it is, will only increase in the future.

money is essential to a small bio-tech, know many great small jr. companies with great (potential ) but lack of funds. can slow down research and getting any future products developed.

much of the research seems to be in the early stages. will continue to watch the stock hope they get the financing.

the last two small cap biotech/health stocks I invested was gave me very different results. one lost 30% Stressgen (Toronto) still do not figure out that company.

Lorus 50% gain (Toronto) bought it because it had a lot of cash on hand. at one time traded for the cash they had, has some great early stages products for cancer. would rate it a hold.

both, like many of these companies will need to raise more money in 04/05.


note : last post mistake NT stop $7-$7.50 were raised to $8 50% and 8.50 50%.

sold half as it hit the stop of $8.50, own 50% of orginal position.
keep remaining stop at $8 cdn.

currently trading at $8.65

thanks
selkirk

 

[selkirk]

update: Stelco is seeking bankruptcy protection, they have enough money to continue to pay suppliers.

"for Stelco it is more of a trade or a speculation, did not make money in 2003 and will probably lose money in 2004 (not as much) -.30 to $1 per share. Have never liked management and they have a high debt level.

Know someone who bought a large position at $1.10, now it is at $1.88, he felt that there was a better chance of doubling than going to zero. I passed on the trade, if you think the steel industry is going be a huge boom then Stelco is worth looking at, however you must be prepared that in 12-18 months the equity could be worth zero."

well the equity may go to zero or close sooner than I thought, did not believe they would take this step until late 2004 at the earliest.

the stock fell from $1.18 cdn. to .63, I find that at the end of these processes the common shareholders will get very little. Bond holders are ahead of them and will get all they can, stock is probably worth .30 or lower.

thanks
selkirk

 

[selkirk]

just a note sold the other half of NT at $7.98 last thursday, as it broke through my stop of $8.

sold 50% at $8.50, and the other 50% at $7.98. bought the position at $5.45 cdn. a good trade.

NT stated that it will restate earnings, then on Monday notified the market that its CFO was on paid leave.

I believe this will prove to be a minor problem (minor being $100-$300 million)....still not a good sign when they cannot calculate their revenue/earnings.

the stock is fully valued, will watch it to see if it falls to around $5 cdn. currently trading over $7 cdn.


the cdn. banks are doing well, the only two picks I may regret are Alcan, and CLL. CLL had decent numbers but the market seems tired of the story.


will put this in the Mr. GIC thread but sold most of my SBC and also sold and selling most of my position in BCE.

BCE has been a stock I have bought and sold a number of times, on this board (s) talked about how BCE was undervalued in the late 90s 1998/1999.

they owned a large postion in Nortel and the stock did not reflect the full value. BCE went up and the trade worked out rather well.

kept a small position and added to it especially in the $30cdn. - $33 cdn. well now it trades at just below $28 cdn. and I am tired of waiting.

should state the yield is 4% and the div is safe so may not be the worse stock to own, especially in a bear market.

but management has done many mistakes mostly small, (well teleglobe was not small) and do not seem to want to increase the dividend. the main reason for me owning BCE was expectation of dividend increases.

will continue to own a small position in BCE and SBC (very small).


when I have time will do a company history of BCE it has missed several chances of returning value to shareholders.

the dividend is safe and they do run their telephone operations well, just in this market want more than 4%.


thanks
selkirk

 

[DOGS THAT BARK]

Thanks Kirk as always---I might add that I have had the good fortune to meet Kirk back in 1998 at the inception of his postings and I would say that on all the posting forums I have ever been affiliated with he has been my MVP poster hands down

 

[Felonious Monk]

DTB, that's interesting to know that and I didn't realize you've been here that long.

Anyways, I was reading this article about this fiber optic cable that was going to take off and I started getting interested in stock trading. My only problem is, I don't have much knowledge in the field.

Are there any past threads in here or websites that one of you could kindly direct me to so that I can get a headstart on learning this stuff? I appreciate any help guys!

 

[DOGS THAT BARK]

Whats up Monk. Was actually here at Jacks when he had only handful of members and small forum but was fortunate to meet Kirk prior to that at small forum (now gone) called Internet-Gambler. While I copied most of Kirks posts on stocks there, I wish I had copied entire archive while it was accessable. Was chocked full of some dandys.

---about fiber optics-- I am very inept in that field,as I only follow a few areas.
I bought a big gas company WMB a few years back on presumption of 2 way win scenario as they were laying fiber optics to sell in their gas lines-- I bought at 46 and now at 9, $9,000 and change loss(ouch)--so that shows you what I know.
Maybe Kirk or others will have some info for you.