Portfolio Update: May 2012

Here’s the monthly update for the BTI portfolio for May of 2012. The HELOC portfolio is basically a non-registered account with money borrowed from my home equity line of credit. I will use the bank’s ‘Performance’ tool for the monthly results when possible because it takes into account deposits and withdrawals. On to the results:

portfolio snapshot may 2012

??performance may 2012

YTD Results from January 1 2012

TSX YTD performance:??-4.97%

BTI YTD performance:??-12.30%

Monthly Review

It took exactly 1 month to go from a ROI of +11% to -12% and the culprit can be summed up in 2 stocks: Hyperion Exploration and Marquee Energy. I wish I had sold at least one of these 2 back in February and bought back at a lower price. Putting wishful thinking aside, junior oil stocks fall 3 times what the index falls so I am not really surprised and I’ve been through this same exact scenario last year.

There is absolutely no point in focusing on the fundamentals of Hyperion, Marquee or any other resource stocks in this market as they are all taking it on the chin with 2 or 3 for 1 sales. The world stands at the edge of the abyss ‘ again. This time however, my portfolio is in a much better shape; its value is lower than what it was back in Q3-11. This means there is a lot of firepower waiting to be deployed once some clarity appears regarding Europe.

For the time being, I will be staying the course with the expectation of further downside. I wont be needing this money any time soon and I am psychologically ready to deploy reserves at lower levels. My due diligence is alive as you can see from my posts as I identify prospects for my next move. I am also increasingly looking at international Canadian producers and oilfield service companies in order to capitalize on what will end up being higher Brent oil prices for a while.

Moral is high as I am not emotional with money, I enjoy buying at lower prices and each drop is actually making the market more exciting. How could it be when oil is about to drop significantly lower? If you’re a regular reader on this site, you know my opinion: any significant drop in prices will be temporary as major producers such as Saudi Arabia react swiftly by cutting production. Saudi’s social breakeven cost is $80, the Bakken breakeven cost including a 15% IRR is $68. An oil price below $60 grinds many oil sands projects to a halt not to mention ultra-deep water ones. The only unknown factor is the time it would take for prices to recover to a level where production is sustainable.??The recent slide in oil prices is actually great for the world economy and the current range would be ideal if it holds.

Finally, the $1M question is: Will European politicians stand idle watching an economy of $17 TRILLION crash and burn taking more than 332 million people with it 100 years back? Germany will be the first victim of a disintegrated Europe as its export driven economy will be shattered with the return of a high currency. While human stupidity knows no bound, part of me believes something will be done to stabilize the markets and ease the fears of a blowout. Let’s hope the troops at the ECB hold the fort (EU) long enough until countermeasures neutralize the enemy at the gates. Otherwise, the fall of the Euro Bloc would rival the fall of Constantinople in 1453.

How’s your portfolio doing? Have you bought or sold any stocks lately?