Phantasmix Stock Blog

Someone over at Kiplinger agrees with me that Markel (MKL) is a little like a mutual fund, but better.

You can think of Berkshire, Markel and Alleghany as a little like well run mutual funds. But for people who invest in taxable accounts, these diversified financial companies offer a big advantage over funds.

Funds must distribute net realized taxable gains to shareholders. They will be distributing billions of dollars in these gains to millions of shareholders come December. Structured as holding companies, corporations like Berkshire Hathaway and Alleghany are not required to distribute capital gains.

Source: http://www.kiplinger.com/columns/picks/archive/2007/pick1120.htm

So, this type of companies is perfect for buy-and-holding in taxable accounts. I also like that they don’t pay any dividends. Dealing with American div’s is such a pain: there’s usually not much of them but they still still have to be declared; plus a portion is withdrawn before payout in favor of Uncle Sam.

I’m going to predict that we’re going up from here. Check out the insider buying vs. selling. It’s at the highest – most bullish – level this year.

Also found some interesting info on market seasonality which reinforces my belief that the market is going up, and will continue going up until at least April. Yes, despite all the negative sentiment.

And, I happen to know that at least one of the big Canadian banks will soon probably, possibly, … start promoting the natural resources (aluminum, nickel, oil, zinc, nat. gas and more). Theoretically this should be very good for those invested in mining companies. If a lot of new retail investors become interested, we may get some “fresh blood”, which is very needed at this point. Everyone has been focused on staples stocks in case of recession, and on the banks due to all the problems. Natural resources sort of lost their momentum with prices going down across the board on LME. Only oil, gold and silver are at the forefront.

I’m digesting everything I read about market seasonality and will post about it this week.

Another 2 shares, for a total of 4. Average cost $492.71 which is about 1.9 times Markel’s book value.

I’ve heard many times thoughout the year that the market is bound to go down in 2007, “because it always goes down in the years ending in 7″. Nobody knows why or how, but it just happens, deal with it. Just for the fun of it and in part to calm my own fears, I thought I’d check if it’s true. Here’s a chart of Dow Jones Industrial Average (DJIA) annual closing values, courtesy of StockCharts.com. The red lines are my doing – they highlight each year ending in 7.

Click to enlarge

If any conclusions can be drawn it would be that 1) the market (as represented by DJIA at least) does not go down every year ending in 7; 2) true, it did go down in the years ending in 8 a few times; so it’s possible this is what we’re building toward this time as well.

Wouldn’t it be easier to just have the market correct, shake it off and have it over with? Most recoveries have been pretty swift, none taking more than 5 years to get to pre-crash levels.

Chart source: http://stockcharts.com/charts/historical/Print/djia1900print.html

From Infomine.com:

The prices of metals in the currencies of countries that mine the commodities can vary considerably from prices commonly quoted in the press, most of which are denominated in US dollars. Ultimately, it’s the price of the metal in the domestic currency that’s of importance to the metal miner. As such, the dollar exchange rate is a crucial aspect in determining the profitability of a mining company that sells a product internationally.

Metal prices have been going down almost across the board, coupled with the currency rates where they are, this once again reminds me of the 1970′s. Was this year a very bad time to get into (and stay in) the mining stocks?