Ah, fear and greed: Those two mighty emotional engines of stock market angst. Each of us must, as did Ulysses, steer our ship on that finest of courses, ever fearful of the multi-headed hydra Scylla snapping off our heads but equally fearful of being sucked into Charybdis, that whirlpool of greed. Once you feel the first tugging of her powerful current, how easy it is to think, "I'll just sail a little closer", rather than pull away before you are sucked into that vortex of greed wherein lies ruination.
And all on display every day here on Hot Copper!
As FAR runs up to the much-anticipated Capital Markets Day and beyond, each of us must decide the course we will steer. Some have already bailed out, happy with their profit. Others have not yet even entered the fray, calm in the belief a big price shift is yet a long way off. Many are content to hold firm on the tiller to allow the currents and winds to carry them where they may. There is only one certainty shared by these strategies - each of the skippers is nervous about their choice.
If the past few months have taught us anything, it's that FAR's ultimate destination is out of our hands. Powerful interests are at work, some of whom might yet be unknown to the main players in this evolving and fascinating drama. Nor, it seems to me, will our fate necessarily be logical. For example, our tumble from 16 cents all the way back to six was at the time largely (and logically) attributed to the plummeting oil price, yet now that has recovered by 25 per cent and seems on an upward path, where is the corresponding reaction from our share price? (Yes, I know it ran from six back up to 10, but there it has stalled despite the continuing surge in oil prices.) So those looking at logic and fundamentals to help decide their course should be cautious, for vested interests do not necessarily follow logic.
Orthodoxy has it that our SP will run up a little pre-CMD, will then spike (modestly, most predict), then settle into a long and languid decline ahead of appraisals, whereupon it will again resume an upward trend before finally exploding when it's announced FAR has several hundred million barrels as its share of the world's biggest new oil field. Lovely. Oh that the path between Scylla and Charybdis was so clearly defined.
It seems to me to be fraught with danger to make those assumptions, or to take precedent as a certain predictor of events yet to unfold. Yes, in similar scenarios as ours the share prices of FAR equivalents responded only on the declaration of the confirmed resources ... but are those circumstances exactly mirrored today? Is the oil world - or indeed the geopolitical world - as benign? The collapse in the oil price is only just six months old and the chain reaction it set off has barely begun. Projects have been abandoned, budgets slashed and oil economics hastily redrawn. How might all of that play out? Phillip321 - who works in the business of raising capital - has postulated that the second half of calendar 2015 is likely to see a flurry of M&A activity in the industry. He boldly went as far as to predict a "liquidity event" for FAR in that time frame. Most here seem to have assumed that means a capital raise, and that could very well be right: Phillip has said Cath 'will need to drink'. A liquidity event could also be a number of other things, but I am not convinced one can rule out a takeover, a serious attempt at one, or the entry of one or more big equity partners. If any of those things happen - and yes, it's a big if for all the reasons Whisky has so persuasively outlined - then the effect on the share price will be sudden, unexpected and certainly dramatic in the event either of the first two scenarios eventuate. Overnight, fear of missing out would suddenly assume centre stage and there would be a massive scramble for stock. You would not want to be on the sidelines if that happens.
Please note I am not advocating any particular course of action: Each skipper must chart his or her own course. What I am saying, though, is that none of them - no matter how definitive their declarations on this site - have a clue whether they will end up in Scylla's jaws, sucked into Charybdis' vortex or sailing blithely between the pair (only to be lashed to the mast lest they be lured to their deaths by the sweet-singing sirens!).
Chart your own course, by all means, but please don't pretend you know where it's taking you.
OOO
FAR Price at posting:
10.0¢ Sentiment: Buy Disclosure: Held
(20min delay)