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.

A CONFLICT OF MOTIVES WITHIN THE ONE INDIVIDUAL. THE CONFLICT BETWEEN THE PATRIOT/POLICY ANALYST AND THE SHARE-TRADER/DEBTOR.

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.

(((I SUSPECT THE BOARD IS DOING PRECISELY THE RIGHT THING AND BEING PATIENT WITH NEGOTIATIONS WITH BOTH THE FINANCIERS AND THE PEOPLE WITH THE TECHNOLOGY))))

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.

Onward.

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.))))