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Phone call from PIO today, page-124

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Basileus

3,212 Posts.

1878

11/07/16

12:46

Post #: 18240131
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Originally posted by smit2100 ↑

Firstly, I submitted another post to further elaborate on my initial post that provides a scenario analysis where taking up the CR could possibly make sense (toned down the buckshot and sarcasm). Yes there are if's involved (but needs to be considered in the context of max exposure of circa $850 plus the opportunity cost on that $850 if you fully load up on the CR as I see it. However, those if's (risks) need to be assessed / considered, in terms of potential downside / upside along with the amount being exposed and an assessment of whether the potential returns are commensurate with the level of risk. I would respectfully ask you provide some commentary to that post of mine for the benefit of other members that may be sitting on the fence in terms of the capital raising on its merits given your staunch position. (I will not respond or comment on it)

In terms of your post and a right of reply, WOW.

1) Fair call on calling me out on the public institution comment and on reflection not warranted. (I have only averaged about 1 post per annum since the time I have joined this forum over 10 plus years, but got spam boxes on my screen warning of derogitory and defaming comments can lead to a red card. Is that the equivalent of yellow card before you get the red and I need to sit out in the sin bin)

BUT,
You write, "Put simply - your background is not relevant to the issue being discussed."

So I call you out on Maths and English and you call me out on not being taught "Opportunity cost ", and allude to me not having been taught any business or investment skills in any public or private institution. You then go into your background and give an insight of your investment prowess to perhaps discredit and make reference to me as perhaps being an unintelligent unschooled emotional investor.

Happy to settle the score on background via laying our quals on the table (not withstanding they are no substitute for common sense and being street smart and don't mean much unless you can actually apply them).

To settle the score, how about I'll send you an EFT for the difference between the cost of buying $10,000 PIO shares via the CR at 0.036 and your potential buy back in price at circa 0.032, IF your public / private quals (unbiased auditable indication of business / investment learnings, readings) stack up better than mine in the areas of Opportunity cost, business, investing. No downside risk to you as I see it, risk is all with me. I'm just putting my money behind my keyboard warrioring buckshot verses your bucksot (excluding the bit where you appear to have felt the compulsion to finish off with a summary of your investment prowess via the TPM reference that I do envy given I'm handcuffed and chained to a DB plan). When required, I am a calculated risk taker (with some decent failures) and can play poker as well, but has faith in the principle don't judge a book by its cover and don't assume because you can make an ass out of yourself.

2) In terms of your "Frankly, I would rather hold the $555.00 in my hand rather than spending it on something that may not happen. Have you ever heard the term, 'opportunity cost'?"

Lets look at the application of opportunity cost.

a) In my initial post, I provided some back of an envelope calcs. What the heck is the 4.1%pa Bank West amount I applied and added to 0.02 cents cost saving per share from buying on market in those calcs. Hmmmm, An assigned risk free value for the opportunity cost perhaps. If not, please try to explain investment wise, what is that for and Why the heck did I pulled that out of my backside and include it in those back of postage stamp calcs. I acknowledge 4.1 % is no circa 800% like your TPM bagger. But if you know all about opportunity cost, why the heck did you not see it when its been applied or pick me up on 4.1% to derive a different value based o you circa 800% return you have referenced.

b) As I see it, this whole discussion on whether or not to buy in via the CR is nothing but an opportunity cost, risk and scenario analysis. Eg Accessing what is my likely value of taking the 0.02 cent share saving per share and investing that amoun elsewhere vs the value your give the options (eg could be zero, could be based on a value above exercise price, could be way above the exercise price. Who the heck knows what that will be, but doesn't mean you can't take a view and consider the risks and value it more than zero based on running some actual numbers.

Once again, I have showed and applied opportunity cost principles in my second post which I request you comment on.

c) In terms of investing principles, and the comment "Frankly, I would rather hold the $555.00 in my hand rather than spending it on something that may not happen.

I'm a bit confused. Back when your SMSF outlaid $1.48 on TPM, their was no guarantee something was going to happen in terms of TPM increasing in share price. That investment principle you have applied to the $555 sounds as though you are risk averse and cash and term deposits only apply. Seems I was ultra aggressive with using 4.1% from a term deposit rate as estimate for the opportunity cost in my calc through your eyes. Should of used 0% (eg no return on $555, won't invest in anything unless its a sure thing.

Remind me again on why are you investing in PIO given their outlaying of cash on drilling and associated testwork and studywork in the pursuit of yielding proven reserves and an executable project on any of their tenements that may lead to the generation of future cashflows may not even happen.

All I can say is I am glad you did not apply that principle to the TPM SMSF purchase. Based on my high level back of a postage stamp calc, the opportunity cost of you applying that principle back then could of been in the order of:

Indicative op cost = (11.85 - 1.48 ) x (no of smsf shares in TPM purchased) less
[1,48 x (no of smsf shares in TPM purchased)X 1.15 x (compounding effect of annualised 5% less annualised CPI) over the period of holding the shares from the 1.48 price to 11.85]

note 5% is a 10 year term deposit rate that represents a riskless investment option based on you rather hold something than spend it on something tat may not happen

Something we have common ground on. Would love to see some of your investment prowess rub off on PIO and wouldn't prices that extend beyond the option exercise price (you realise on May 12 the shares hit 6.9 cents (sentiment perhaps) and I do acknowledge past performance is no guarantee of future performance, but just highlighting circa 6cents would not be an all time high SP) Unless your nearing retirement age, trust those PIO shares are in your own name outside of the SMSF. If PIO did go bang, it would give me the irritates if I had those big balances in my SMSF and fund and couldn't get access to some of it to blow on a toy or holiday for me and the family

Just curious, what investment theory do you aspouse to when it comes to valuing the impact of sentiment on a commodity or stock and the affect it has on the impact on a share price

Expand

Wow - again!

At the outset and from what you have noted - It seems to me that you are a very emotional poster - maybe that emotion carries across to your investment decision making? And if it does - it is my view that the cost to you may be significant. No need for the EFT stuff that you noted in your post. I am not interested in those sorts of "challenges"

I was weighing up whether to reply to you or not as I think you have lost sight of what was being discussed. For example - you use the term - "settle the score" twice. Suffice to note, there is not "score to settle". I do not understand your motive here.

I think you have completely and utterly misunderstood the term "opportunity cost". As of 20 minutes ago the TPM shares are showing a profit in the order of 705.41% - I guess I could have put that money in the bank. Anyway, that is neither here nor there. No more TPM discussion.

As to having PIO in and SMSF - I am not sure where that came from - but it does allow me to higihlight a basic principle of investing. Investing is forgoing something today (present) for some more tomorrow (future). That is investing basics.

In any event - I am not going to 'invest' in PIO - at this stage. I will buy the shares and pip trade them - I have made about 8k so far. I just ride on the emotion of other buyers. You say the SP will hit 6c again - brilliant! After buying at 3 (hopefully) I will double my cash - again.

The cold hard fact is that PIO - at this stage - is nothing more than a cash burning explorer. The CR is the company merely standing on the street corner holding its hand out and asking for cash to continue exploring / drilling and paying the bills to 'keep the lights on'. Whether you accept it or not - PIO spends money and lots of it. Do you know how much drilling costs? Executive and other salaries? Rent? Utilities? And on the list goes. Guess what - no income - yet!

Put simply, PIO does not meet what most would consider basic investment metrics. However, this is the speculative end of the market so no surprises there.

I have made my points re the CR. You go ahead and buy if you want to - your choice.

http://www.investopedia.com/article...09/five-must-have-metrics-value-investors.asp

"valuing the impact of sentiment on a commodity or stock"

I wouldn't try as I think it is a complete waste of time. I think that is the major point of departure as to how I invest and you invest.

And again, "When required, I am a calculated risk taker (with some decent failures) and can play poker as well"

I have posted on other threads on HC my view that I think that the prevalence of gamblers buying shares is greater than once was the case. Many seem to chase the instant hit and even the so called "long term buyers" watch every pip movement. Hardly the behaviour of an "investor"!

In my view buying PIO is gambling. Buying in the ASX 100 is investing. My investment rules prevent me from putting more than 1% of my cash into 'specs'. Maybe 2% if it looks like a good thing. Many longer term market participants have the same rules - it's nothing innovative. Why? Because I / we know it is more gambling than investing. Knowing the difference is key.

There is one person that posts here who claims to have around 24 million shares in PIO. Do the maths.

24,000,000 x 0.034 = $816,000 - so how many people do you know who would have $816,000 in a spec stock? And even more surprising - when the price was 6.9c that figure would have risen to $1,656,000. Anything is possible - I suppose? However, my BS radar says - 'that scenario is not very likely'. There is no substantial holder evidence to support that claim. It never ceases to amaze me how people overlook the detail and fail to question that which is glaringly obvious.

That poster is either an amazingly wealthy indivdual or a high rolling gambler. In my view they are not an investor.

I will cease there - better to just agree to disagree.

Good luck to you with whatever you do.

PIO Price at posting: 3.4¢ Sentiment: None Disclosure: Not Held
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