Length of Cymor Blogs
Comments have been made that our blogs are a bit too long and that readers lose interest because of their length. We will attempt a shorter version for a while. We appreciate comments on this matter.
Safe Jurisdictions
One of the basic tenets of the investing policies of the CymorFund is ‘safe’ jurisdictions. The TSX Venture market is a home to juniors companies investing around the world and rarely a day passes without some opportunity to invest in a company with properties in the most remote parts of the world.
We Miss Opportunities
We are aware of companies in Russia, Africa and elsewhere that have done wonderfully in the past few months, in which we did not invest. That is not to say these are not great companies. We have watched in dismay as some of them have doubled and then doubled again in value in short order.
When this happens, we again question our policies as we have done so many times before, and as we will continue to do. Each time, we come to the conclusion that we should invest where we are familiar with the laws and the customs, where democracy rules, where stability is in evidence, and where the rule of property law is respected.
Our conclusion remains that there are so many excellent opportunities in areas that meet our criteria that we need not tread further afield.
Some Examples of Situations that Arise in Other Jurisdictions.
In today’s newspaper there was mention of Canadian lawyer Bob Amsterdam who defended Russian billionaire Mikhail Khodorkovsky in his first trial in Russia in 2005. Bob was inexplicably expelled from Russia in the middle of the night. That could not happen in Canada or in the Western World.
How would you feel if you were a shareholder in that company? The properties and assets of the company were superb. The politics destroyed your investment. A second trial guilty verdict against Khodorkovsky was handed down by a Moscow court recently. It came as no surprise to Russian newspapers, some of whose commentators were critical of the finding. Again, aren’t you glad you invested where the rule of law prevails?
Think about Ivanhoe in Mongolia. Recently it has risen dramatically in value, but there were extended periods when politicians were threatening to impose severe new taxes against foreigners and the project seemed in doubt.
In Zimbabwe there are some wonderful companies. A few years ago, almost every company was summarily nationalized. One mining company survived and today seems to be thriving.
Perhaps you are fond of China. We see wonderful companies operating in China. We usually don’t play them. Instead we look for companies in safe jurisdictions that can enormously profit from China’s expansion.
Measuring Risk
A key factor in investing is being able to measure risk. The stock market is a unfriendly place and those that take it for granted, wind up bloody.
We always hear stories of this profit or that profit. But we also hear stories of disasters, such as what happened on Black Monday, or in October 2008, or March 2009. To ignore risk is simply to be foolish.
There are many ways to measure risk. We tend to be simplistic about it, as we find simplicity easiest to understand and to implement.
Some of the Simple Factors in Measuring Risk
• Stay in jurisdictions that respect the rule of property law and the rights of individuals.
• Stay away from political risk.
• Stay in jurisdictions where you know how things operate
Another rule that we will discuss in the future, is the use of charts. Never buy a stock unless you are familiar with its chart.
Simple but essential.
