Posted by: graemebird | June 25, 2009

Thoughts On The Precipitous Dive In Central Petroleums Share Price/Further Notes On Capital Markets Theory/ASX:CTP

In New Zealand companies are allowed to buy back their own shares. This is really a very good thing, as is insider-trading. Although insider trading would mean we might have to be very stern about a company misleading its current share-holders. And the public as a secondary thought.

But you see company buy-backs and insider-trading would lead to better share pricing. And the better the share pricing the more effective is societies capital allocation a priori. Before I go on let me say something about shorting shares. Shorting, even by insiders, would theoretically also help for better share pricing and therefore better capital allocation. I think most people agree with this THEORETICAL consideration. But even in theory it would have to be the case that it only helped pricing by a pretty meagre amount. Not nearly as well as insider-trading, greater societal and business honesty, and allowing company buy-back of shares…… not nearly as much as these other improvements would help pricing.

And you see its only a theoretical consideration. Since there is no indication whatsoever that in the real world shorting doesn’t bring with it share-pyramiding. That is to say the dreaded naked-short-selling. The wrecker of capital markets. Second only to fractional reserve, and taxes on retained earnings, as destroyers of resource-allocation.

Fractional reserve is bank-cash-pyramiding. Naked-short-selling is share-security-pyramiding. Both are forms of pyramiding unreal entities, on top of more tangible property-titles. In both cases the pyramided titles are ponzied up goodies for sale or loan (here I mean for sale as in currency-trading. Which goes some ways to explaining currency instability). Both these practices are wreckers of the price system in its most crucial manifestation (that is to say pricing in capital and investment markets as opposed to merely consumer markets). And since we cannot at this time guarantee that SHORTING doesn’t mean PYRAMIDING, then we ought to ban shorting outright, and give notice that it will be unbanned when the various bourses are able to electronically tag each individual share and pretty much trade on a real-time basis. Since shorting is a lucrative part of their business it would in practice amount to a ban of some months. Perhaps a year or two at most.

We must remember that these bourses are not perfect creations evolved under conditions of an idyllic version of anarcho-capitalism, and honed from alloys of righteousness, in some decades-long-process of benevolent nurturing, buttressed by some sort of legal context with unerring fidelity to natural law.

There is the possibility for corrupted and crony-socialist altered bourses, even if the share-market itself is the ultimate symbol of capitalism and sign of the potential for freedom within a country.


Bear in mind that I am trying to trade my way out of debt. And not just in mockery of the usurper-Presidents “audacity of hope” line of bullshitartistry. Now while I say that me as a patriot would want tax-deductible buy-back legalisation in this country, putting on my new-share-trader hat thats not what I would want if share-trader/debtor amounted to the whole of my person.

This is the problem that Cambria is having I think. He’s been a trader so long he’s forgotten how to look at matters like a patriot. You see if the market is consistently pricing shares correctly, then there is less money for Cambria to take off the table. Less money for ME to take off the table for that matter.

I just couldn’t believe my luck when Central Petroleum dived to 9.4c cents. And then when it dived further to 7.7c I was besides myself with a sort of drooling greed. But these attacks on our share price are hampering the development of my second favourite company (as a patriot) and my first favourite company (as an investor), and when taken altogether this bad share pricing, brought about by a number of factors, is hampering our economy.

A word of caution. I learnt a lesson on holidays. Don’t trade shares on holiday unless you have mobile-internet or something. Like the new i-Phone or something. Because while I was ecstatic to be able to pounce on these cheap shares the fact is I could have picked them up even cheaper if I had been constantly monitoring the situation and had sussed out what was going on a little bit better. Obviously I’m not saying that I could have got them all at the absolute bottom. But still I could probably have gotten them at about halfway between where I bought some of them and the absolute bottom with a better ability to monitor things.

Anyway the price dropped right down and I pounced on them like some mad rapist, and they dropped some more and I made some consultations and pounced on them again.

But why did they drop so badly? Why more than the general share-market? And why particularly more then other shares that I’m interested in which were scarcely affected at all?

I think its because most investors don’t really do their homework. And they may have misunderstood an announcement recently made.

But using much extrapolation I’ll try and astral travel into their board meetings and tell you what I see. As far as I can suss these guys out they face a unique set of problems. Its a little bit like that fellow in “The Good, The Bad, And The Ugly” wherein Clint leaves him alive and with half the loot but no means of him getting himself and the gold out to civilisation.

You see Central Petroleum have found enough energy resources to put the Middle East to shame. And so all the investors are kind of on tenterhooks, hoping to see them find a way for some of this gear to produce a serious cash-flow. So thats the investor point of view but how do things look from the management side of things?

Well what I reckon is this: They are an exploration company. They have no expertise in producing synthetic diesel, setting up factories, building towns in the wilderness and laying down miles of train-tracks and so forth. They find stuff. Thats what the staff are trained in. And they are presumably brilliant at it. So to exploit all this great, marvelous gear, they would probably need a series of three-way relationships. Better still a white night that only wants to wet his beak. Or the Packer boy getting things right for a change.

They need three-way deals between the guys with the technology and the people with the finance. Or at least three-way-deals would be one way of overcoming their basic dilemma. Money is still a little tight and financiers are hard to find. Relying too much on share issues would be irresponsible since it would be swapping massively UNDER-valued shares for relatively less valuable cash. And when it comes to negotiating with the people who have the proven technology they face the fact that 1. There are only a few of these entities around (Carbon Energy Australia, Linc Energy, Cougar Energy, Maybe Sassol, A couple of outfits in America). 2. All of these guys are super-busy on their own projects. 3. This being the case they would tend to drive a very hard bargain.


So in my view the idea for the board of directors is just to be patient with negotiations. Which is precisely what I suspect they are being. They have to be patient and negotiate good deals with both financiers and the joint venture partners with the requisite technology. If they aren’t patient and don’t negotiate hard with all potential partners, it will be the outsiders taking most of the inherent value, and not the Central Petroleum staff and shareholders.

((((((They’ve got so much gear to exploit they could even consider franchise arrangements. How cool would it be to have a syngas franchise in some sort of reclaimed nirvana in the middle of woop woop? Too good! The Sheilas in New Zealand say to you “Have an awesome day”. I thought it was just this one maori chick. It turned out to be all of them at the retail end. “Hev en AWWWsum day.” But every day could be AWWWsum when you own a really cool franchise.))))))

But it will take time to put together the best combination of financing and technology, in keeping with the companies long-term interests.

Now look at it from the investors point of view. And consider this in light of a recent announcement that these guys had raised 35 million, not to put a synthetic-diesel-factory in Central Australia, but rather to DO MORE EXPLORING???????!!!!!!!!!!!!

It makes perfect sense if you look at the companies point of view and consider where their expertise currently lies, and the likely protracted nature of the multi-faceted negotiations they will need to plough on with before they can stick holes in the ground for coal gassification rather than for exploration purposes.

Now they made 9 million in losses last year I think (I’ll check this later). And they don’t have a real steady cash flow. All investors wanted (I imagine) was a bit of light at the end of the tunnel. An announcement that contractors were putting together a plant construction schedule. An announcement about cash-flows from ammonia, synthetic-diesel and electricity-generation being less than 36 months away. And what they got was a promise to lose more money finding more stuff when they already own enough gear to keep Australia awash in hydrocarbon liquids for 1000 years.

Of course all this is in the wider context of the leftist filth trying to close down the most benevolent practice of all……. the gift to nature of filling the air with CO2. So naturally this scandal of un-science, motivated globalism, and purely fascistic evil, that the global warming racket represents, is also depressing the CTP share price. Probably by an order of magnitude. I’m not kidding. Which means of course if we could defeat these environmentalist bastards outright the shares would just oscillate upwards to stall at a much higher level on that basis alone.

On the one hand I could say “I don’t care. I don’t care a rats bum-de-bum-bum. I don’t give a fat rats lower intestine that our share pricing is totally up the crap. The more the tarnished market screws it up the more money is left for me. The cheaper I can buy these shares the sooner I will pay off my debts…….”

I can talk like this and there would be a scintilla of truth in it. But the problem is I DO CARE. And we have to make whatever changes we need to have a better share market pricing system. That means no shorting until each individual share is electronically tagged and cannot be pyramided. That means the war to phase out fractional reserve and fiat currency must continue with even greater vitriol. That means that until the fascist wing of environmentalism is destroyed we have to walk under, over, around, or through the environmentalists and subject them to seige warfare, like they were some moated and walled enemy citadel, to get done what needs to get done, always promising to SACK them just as soon as we can.

That means that we have to continue with the education, education, education when it comes to telling everyone about the wickedness and stupidity of taxing retained earnings. Its not just thieving. Its STUPID thieving. That means everyone has to know about the importance of effective share pricing and therefore the good that share buybacks and the right kind of insider-trading can achieve.


And buy CTP shares if you can afford to hold them long enough to make an absolute killing.* And buy MST shares if you can afford even to lose a little bit of money to keep this lethal technology in-country and their staff ready to pin their ears back to help us in an emergency.

Access to Energy. Muscular Independence. Peace through superior firepower.

((((Full disclosure. Sadly I cannot hold shares for long myself. My debts and paltry resources mean I’ll be trading in and out of my favourite shares whether they are going up or down in the medium-term. Sometimes getting locked out until the price recovers. I’m not recommending this behaviour unless you can monitor things the whole time. Always bid lower then the going price if you have to walk away from the market. That can be hard but not if you have fallen for a basket of different shares. I say “fallen for” because you ought not buy shares that you are a stranger to unless you are some full-time trader with faster feet then anyone else. Whenever I sell these shares its like Homer Simpson hearing that his aunty has died and left him all this wealth. Its like he’s crying “Poor aunt such and such” and then in between sobs he’s also saying “Whoopee”. Its just terrible to have to sell out for $400 here, $95 there, $732 over there. Terrible but kind of neat as well.))))



  1. In your own secret shares blog you ought to keep various links. One would be a google link to any news on your relatively few shares, that has occurred in the last 24 hours, or the last week.

    A non-full-timer has to follow enough shares that you can find out everything possible about the company, its industry, and the context in which this industry exists.

    You don’t need to diversify all that much. And you won’t be able to anyway, and still learn all there is to know about your companies. Plus if you diversify a great deal, and you have a lot of shares in play, you will be making bids in the low thousands and you get eaten alive by commissions. I recommend goldnerds since they do all the hard yards for you. Though I don’t currently own any of the shares they have researched they allow me to see a potential pool of good prospects. Because the usurper-President is guaranteeing the better gold producers via his efforts to destroy the USD. So what goldnerds did for me is allowed me to open up my trading, since once I had them I had a pool of shares which I knew for a fact were going up. So I could be happy that it was an appropriate time to buy at least one out of this pool and then decide which one I thought that share was. Totally changed everything. Even though I’ve traded in and out of their shares maybe three or four times only, the fact is that they filled out my pool of undervalued prospects.

    You need to have a pool of potentials big enough such that you can exploit action in at least one of them at any time. Also big enough that you are cool with putting in low-ball bids knowing that not all of them will hit. If you fall in love with only one or two shares, you might tend to buy them at an inappropriate time. Playing hard to get with one pretty young thing is easier if you are servicing three others.

    So you know. You put “Central Petroleum” in the inverted commas. You might suss out an advanced search. So that you have both the 24 hour news on the company and the one week news on the company. You can only exploit that daily news if you understand company/industry/context better than the market.

    So I know more about the climate racket, energy economics, coal liquification, the local industry in coal gassification, and so forth, with a good enough margin than the market does. Hence if I were to get some news I could likely take advantage of things.

    This time I didn’t get any news. Saw the share price dropping, thought “WHOOPEE, I’ve only got a few minutes in the internet cafe. Better buy them.”

    It wasn’t a mistake exactly. But if I’d have been abreast of it I could have got them 5% cheaper.

    The verdict on the American market comes in before our market opens. That ought to influence you as to how low-ball your bidding is. I think all your bids ought to be lower than the going price. With the dow closing down mayhaps you take your bid a notch downward. I haven’t really tested this supposition and have only just thought about it watching cable TV in various holiday Inns.

    You would think it was too my interest to tell you all to buy at whatever price. Get ’em now before its too late. Don’t do that. I’ve done that and I’ve never lost money yet but still you get locked out for too long. Better to put in four low-ball bids if you know that you can cancel the other three when one hits. Like if girls never talked to eachother so you could exploit the situation mercilessly. Which is of course why women evolved to always talk to eachother. And a secret is still a secret when all the girls know. But once its talked about out of the context of two girls talking only…. ONLY THEN is it no longer a secret. Such is evolution.

    No its not in my interests at all that you get excited. Or if it is I don’t care. But the thing is I’ve seen two or three massive buildups in interest in this stock just for example. And they’ve all been satiated by mid-morning and an overbought situation has developed. Further it sets up a series of resistant ceilings. Because those blokes who bought shitloads at 14.5 to 13.5 cents awhile back will all want to sell at 15 cents. And its in the way of things that this will cause things to drift down again and slow down progress for this beautiful wench of an investment.

    So just put in a low-ball bid. Only as much as you can afford to lose. And use the waiting time researching other shares. Goldnerds is great because it sheds light on the sort of hard yards you really need to be doing to get this deal right.

  2. Your comment is awaiting moderation.
    “Cheers, big ears!

    Obama had no preconditions. That was his solemn promise. ‘You say you wanna exterminate the Jews? No worries. But let’s talk – over a delicious hotdog!”

    What is depressing about this is how plausible this idiot Barry comes across on the TV. All the stupid moments edited out. Bush always seem stuck and it reminded me of how people can get in court when their mind is racing through all the things they CANNOT say, making it hard to think of what ought to be said.

    But Barry, “not being hassled, not being hussled” comes across as pretty relaxed and plausible though he’s an idiot.

    These meetings with representatives of adversarial governments. These are not schmooze-fests. These are business summary meetings. You have to know exactly what you want beforehand and you have to have the tools to get it. And if you send the head guy and supposing he screws up and loses his (ie the nations) shirt? Well then who is to overide him to get it back and regain strategic ground?

    In international relations the request to talk always comes at a price. And here he is openly making that request. And he’s the powerful one. Yet he doesn’t claw back some of what he lost by making that request. Since he says no pre-conditions.

    Now it might be that many Americans want their country to pull back from the world. Not antagonise anyone. Let other nations play a leading role in regards to many matters not central to American interests. Go some ways down the Ron Paul road. Well fair enough. But that road leads to disaster if the President justifies his reticence and forbearance by legitimizing the adversarial regime. And this is the case if he intends to legitimize them or if he legitimizes them somewhat merely through ignorance and carelessness.

    In this position, with the right speech-writers, I could easily run these people down and still maintain a laconic stance, without losing strategic ground, since I consider all governments as only provisionally legitimate at best. But how can Obama do this?

    Probably the person who had the temperament to pull a policy of muscular independence off like this would have been Pat Buchanan. He would have been undermining these ass-clown clerics all the way to the negotiating table. But his main gig was to bring the soldiers home.

    In the end Obama looks to be so bad he may even wind up being good. Trashing the dollar which would be so bad that the Americans must run trade surpluses and will be quits with their debts… So bad he’s good.

    So bad on international policy that the Europeans and others realise they are on their own and maybe get their acts together finally……. So bad he’s good.

    Well thats a possibility anyhow. One must not despair.

    Logged moderated posts:

    25 Jun 09 at 6:16 am
    Your comment is awaiting moderation.
    “Why not use all the revenue raised to lift the tax-free threshold?”

    A dozen words. A single sentence. Backing down to the left on two principles at once. And bad economics to boot.

  3. Graeme Bird says:
    Your comment is awaiting moderation.
    June 26, 2009 at 3:20 am
    John Humphreys. On what basis are you claiming that Gerry Jackson is unqualified? Thats ludicrous! Its not just a claim its an outright confession of ignorance on your part.

    Sorry Prodos. But though this would appear to be outside of your high blog standards there is just no other way to express this. I have a formal qualification in economics as well. I got it when Humphreys was a kid and before Sinclair Davidson ever was qualified in anything. And I’ve read a lot before and since. And if one is well-read enough one is going to realise it when someone is vastly better abreast of the subject then oneself. One will immediately “prick up ones ears” as it were.

    This is what happened with your magnificent series on labour-economics that you did with Gerry. Its like immediately ones attention is grabbed. Like in the Colour Of Money when Fast Eddie Feldman hears the sound of this kid whacking pool-balls around and suddenly nothing else is important.

    The thing about Humphreys is that he’s so ignorant that he’s too ignorant to realise how ignorant he is. Or to recognise who he ought to be listening too. It sounds like I’m insulting him but I cannot see how else I can make what is after all a technical point.

    I just want to find out on what basis he reckons Gerry is not qualified? Its a mystery to me and yet Humphreys has made this claim a number of times. Its an incredibly defamatory claim and manifestly not backed up by the facts.

  4. Your comment is awaiting moderation.
    “I’m inclined to agree with entrophy here – assuming this is what you want to do, the CPRS is a very complicated approach. The problem presumbably is that consumers consume too much carbon because it is under-priced. Okay. The ‘externality’is generated by consumers so why not target them directly?”

    What the hell are you talking about Sinclair YOU BLOCKHEAD!!!!!!!!!

    Let me spell it out to you dummy because you are just not that bright.


    Got it you two-faced moron?

    You ought not have taken up economics if you lacked the basic brainpower for the job.

    Now you tell me what your problem is with CO2 or just resign you dog.

  5. The above is finance professor Murray Sabrin, laying down some home truthz about the ultimate scam of central banking. A worse scam than taxation since it is more purely parasitical. After all some fraction of taxation is spent well and for good purpose. If you find what fraction that is do let me know. However you could postulate the situation of taxation well-spent and for necessary purpose. Whereas no economic or social excuse can be found for central banks.

  6. Before you get excited about buying without putting in a low bid check out some comments from someone who takes a more malign view of the management:

    “saddlebrook, this is turning into an absolute disaster for the retail investor, and is now in the hands of the bigger players exploiting the shortfall, these market sharks know JH is now just an extra to the main game, I have mentioned this before, JH’s time is up, he didn’t even suscribe to the issue, the market knows it–big bunfight is about to commence–JH is history already–good riddance, his years of big wages and nothing to show for it are over, how much has he earned??–2 or 3 million personally, the market has had enough of this clown, give it another few weeks, Albers will replace him with one of his nominees I reckon. ”

    “Yes yes and cant happen quick enough, exciting times ahead and i couldnt resist buying at 7.7c again What a score! All from the comfort of my couch! Its the time of financial enlightenment!OMMM$$$OMMM”

    “yes it wasn’t too hard to work out the buyin Once i saw on my account where the value of the oppies/shares net contra went “negative” then i knew the selling would stop. Not saying that them sellers won’t push sp down to 7.6c again and squueze out some more $$$, as were dealing in desperate times and cash is king, but notwithstanding o/s markets tumbling down we should see sp inch its way to 11-14c until the T3 traders push up sp as we run into drill season ”

    “It is nothing but a disgrace how easily these larger players can now manipulate the expanded base shareprice, and with the complete co-operation of the underwriters who are dumping millions (forget JH’s twittering nonsense), this was evident today, this bunfight will take no prisoners, the retail shareholder base is being destroyed by these sharks, and JH knows it, I bet he won’t be in charge of another disastrous drill campaign (no surprise there)–the new majors are making sure of that presently–come to think of it, I wouldn’t mind betting he gets the DCM when these people gain the numbers they need, JH just isn’t even in the ballpark now, he’s just a minor bystander now, and should have been sacked long ago.”

    This is a problem we are getting with financiers these days. They often use their position to short and dump the stock so they can cause grave damage and buy it back off an injured and panicked public. In so doing they are committing treason on their business partners who they arranged for the financing with. A whole jackal-pack will get wind of whats going on and they will be shorting and dumping it to the max and then they’ll appear out of nowhere trying to soak up more stock at cheap prices. Without a solid cash-flow and the ability to buyback the management is defenseless against these traitors who are acting in direct contradiction to the interests of the people that hired them. They think its all a big fucking joke to break the back of the shares, get all these margin-calls happening, support eachother against the interests of the company, and basically screw everything up. Which is why Cambria was so vitriolically in favour of naked short selling and why he constantly muddies the water between the theoretical issue of short-selling and the naked shorts.

    Its alright for me. I can take advantage of the temporarily lower prices. But what about your average Joe who cannot bring himself to believe the nastiness of the pump-and-dump merchants? And what about the management of humble exploration artists who get conned by the financial dogs that they thought they had an arrangement with?

    Truly these people are filth. You don’t bugger your partners like that. And when partnerships do fall apart for normal human beings this is a traumatic thing. But these dogs are dumping on the people that hired them just like that.


  8. Είναι δύσκολο να καθοριστεί το differenec μεταξύ Bird’ σκέψεις του s και οι δυνατές εκρήξεις που προέρχονται από την πίσω πλευρά του.

  9. Mr Tillman
    Kindly cease and desist from polluting Mr Bird’s blog with this dago script.

  10. Anarchism is not a whore to be bought and sold, Mr Bird. Nor is liberty. These are left-wing entities, and don’t think you can sully them by your reactionary hogwash.

    • What are you on about dopey? Explain yourself. I cannot imagine any scenario where you might buy-Anarchy. Then have a rather good time with her, then sell her in a slightly despoiled condition to the next bloke.

      Since I cannot even imagine this scenario obviously I didn’t make that claim. I feel its up to you to explain yourself. You sound like a real dummy to me.

  11. You shouldn’t be sullying anarching with the copula of ‘capitalism’. That’s my point. You seem unable to grasp the notions of metaphor and analogy.



  12. Your comment is awaiting moderation.
    Even when Hans was talking, average top executive pay, at least before tax, was probably a great deal higher than it would have been under capitalism (properly considered). I say this for many reasons only 1 of which I’ll mention here. The average SIZE of corporations was much larger than it ought to have been due to the company tax, currency debasement, governmental barriers to entry, governmental pre-emption of undertakings naturally suited to low-cost-start-ups, direct and indirect subsidies to bigshots, and a myriad of other reasons.

    The above by no means implies that all multimillionaires were compensated enough!!!!!! Even today. Steve Jobs should probably be richer. T. Boone Pickens may well have made his first 100 million by the age of 40 under capitalism (properly considered) instead of making his first billion in his 70’s.

    Certainly a lot of people who went from lower-middle-class to upper-middle-class have been badly gypped. And might have been expected, under capitalism (properly considered) to have become minor magnates.

    Furthermore a lot of oddballs, fallen into a life of failure and frustration might now be bigshots, since true liberty would give a person a chance to minimise the consequences of his weaknesses and accentuate his strengths….. But more importantly capitalism (properly considered) gives people the chance to accumulate capital. And compete with other individuals, and entities, who already have it

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