Bankers, but now the easy money has probably been made

BANKERS PETROLEUM

(T-BNK)

$3.77 +0.02

PAINTED PONY PETROLEUM

(V-PPY.A)

$3.69 +0.09

Sometimes you take a trip and it makes a difference and

the one trip we’ve made in the last year or so that has made

a huge difference to us, was our trip to Albania. We had an

incredibly gracious host in Abby Badwi as we went to see

their Patos Marinza project in southern Albania. Along for

the trip was Bryan Slusarchuk, the President of Tirex Re-

sources, the mining company with assets in northern Albania

and Bryan was also a Bankers shareholder.

To see the country once so poor, now catching up and

embracing a new economy was heart-warming. To see no

McDonalds, KFC or anything the west takes for granted was

also a taste of their future to come. To see the amazing

beaches yet to be developed and to see the three quarters of

a million bomb shelters Hoxha had built and wasted the

countries resources on, showed some of their disappointing

past.

But to see first-hand the thousands of old Chinese and

Russian relics of rigs on Bankers property that just went on

and on and on, suggested that Bankers was onto something

that could be big. Very big.

We’ve written about it several times over the last while,

but the story really got going—and we have to credit Kevin

Shaw of Wellington West, when he wrote a 32-page report on

Bankers published on July 9th that made Bay Street realize

that Bankers was more about a reserve play than cash flow

and production.

The stock has more than doubled since Kevin’s report

went out and I think he gained a lot of fans because of the

reports importance and significance. We’ve enjoyed the run

on Bankers, but now the easy money has probably been

made and now it will take real production and cash flow in-

crease with the new technology to justify higher prices.

Given time, we expect that it will happen and sometime,

like Rally Energy, Badwi will sell the company to somebody

really big.

In the meantime, we were wondering what Kevin Shaw’s

next report would be on, while he is currently in Albania

touring Bankers property. His newest report just out fea-

tures Painted Pony. We thought we would be looking for

something splashy and pizzazzy with huge upside, not a

mere 40% return on a stock that was big on natural gas at a

time the world is lousy with gas and it has already been writ-

ten up by people like Keith Schaefer of Oil and Gas Invest-

ments.

Disappointing…? Hoping for something more? Well,

probably, but the point should be made that is there is going

to more consolidation in the Bakken, Painted Pony is one of

the few players left with a huge land holding in that area and

yes, a take over on Painted Pony is rumoured by some.

The Gartman Letter Interesting Read

Dennis Gartman publishes his 10 Rules of Trading.

I thought the best use of your time today would be to share some of his rules with you. In Gartman’s own words…

1. Never, ever, ever add to a losing position: To do so will eventually and absolutely lead to ruin. Remember Long Term Capital Management and its legion of Nobel laureates who broke this rule repeatedly and went into forced liquidation. Learn this lesson well and early!

2. Capital comes in two varieties: Mental capital, and that which is in your account: Of the two, mental capital is the more important. Holding losing positions costs measurable sums of actual capital, but it costs immeasurable sums of mental capital.

3. The objective is not to buy low and sell high, but to buy high and to sell higher: We can never know what price is “low.” Nor can we know what price is “high.” Always remember that Nortel fell from $85/share to $2 and seemed “cheap” all times along the way.

4. “Markets can remain illogical longer than you or I can remain solvent,” is a brilliant statement from our good friend, Dr. A. Gary Shilling. Illogic often reigns and markets are inefficient despite what the academics try to tell us.

5. Sell that which shows the greatest weakness, and buy that which shows the greatest strength: Metaphorically, when bearish, throw rocks into the wettest paper sack, for they break most readily. In bull markets, ride the strongest winds.

6. Think like a fundamentalist; trade like a technician: It is imperative that we understand the fundamentals driving a trade, and that we understand the market’s technicals also. When we do, then, and only then, should we trade.

7. Understanding psychology is usually more important than understanding economics: Markets are driven by human beings making human errors and also making super-human insights.

8. Be patient with winning trades; be enormously impatient with losing trades: Remember, it is quite possible to make large sums trading/investing if we are “right” only 30% of the time, as long as our losses are small and our profits are large.

9. The Hard Trade is the Right Trade: If it is easy to sell, don’t; and if it is easy to buy, don’t. Do the trade that is hard to do and that which the crowd finds objectionable. Peter Steidelmeyer taught us this 25 years ago and it holds truer now than then.

10. There is never one cockroach: Bad news begets bad news, which begets even worse news.