The Investments Blog: PetroChina

Friday, May 1, 2009

PetroChina

Below is something I wrote back in November 2007 to take a jab at what I thought was the general overvaluation of many stocks (especially those in emerging markets). So I picked on PetroChina and its $ 1 trillion market valuation. Unlike now, it was very difficult to buy inexpensive shares of good businesses at a fair price. The following was initially posted on November 7, 2007.

This blog didn't exist yet.

Club for Growth//Blog
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What $1 Trillion Will Get You...

Posted on Nov. 7, 2007| 02:30 PM
Link to Article: http://www.clubforgrowth.org/perm/?postID=7762
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My pal Adam...just sent me and a few other guys the following email. In case you missed it, PetroChina went public on the Shanghai Exchange on Monday. The immediate valuation put the company's overall price tag at roughly $1 trillion.

I guess PetroChina is now worth $ 1 trillion. It got me to wondering. If we could pool together $ 1 trillion we could go on one hell of a shopping spree.

The combined value of all 17 of the companies listed below is less than $1 trillion so we could own all 17 of them instead of just owning PetroChina.

By the way, since we would still have $ 22 billion left over of play money we could then use that remaining dough to buy out all of Ferrari's production through 2030 or so....or just buy Ferrari the company itself. Whatever.

Of course, there may be some anti-trust issues owning the entire US Railroad Industry and both of Korea's major telecom companies. I don't think anyone will care about us owning both GM and Ford.

The number on the right is market value in billions.

Bank of America BAC 197.40

Altria MO 152.77

Verizon VZ 126.39

Pepsi PEP 117.4

American Express AXP 65.78

Home Depot HD 58.47

eBay EBAY 46.26

Lowe's LOW 36.23

Union Pacific UNP 32.86

Burlington Northern BNI 29.94

Korean Telecom SKM 20.52

Norfolk So. NSC 19.59

GM GM 19.52

CSX Corp. CSX 18.49

Ford F 17.66

KTC Corp. KTC 9.59

Expedia EXPE 9.32

TOTAL: 978.04 Billion

Permalink: http://www.clubforgrowth.org/perm/?postID=7762

My view was that many stocks were selling at crazy valuations back in November 2007. I was also concerned about excessive leverage -- much of it, because of derivatives, not transparent enough to understand -- along with some of the other prevailing, rather dangerous, practices at some of the larger financial institutions. Yet I had no idea that we were within weeks of the peak in the stock market, and at the beginning of one vicious bear market.

Adam

This site does not provide investing recommendations as that comes down to individual circumstances. Instead, it is for generalized informational, educational, and entertainment purposes. Visitors should always do their own research and consult, as needed, with a financial adviser that's familiar with the individual circumstances before making any investment decisions. Bottom line: The opinions found here should never be considered specific individualized investment advice and never a recommendation to buy or sell anything.

Origin of Newton's 4th Law?

"Long ago, Sir Isaac Newton gave us three laws of motion, which were the work of genius. But Sir Isaac's talents didn't extend to investing: He lost a bundle in the South Sea Bubble, explaining later, 'I can calculate the movement of the stars, but not the madness of men.' If he had not been traumatized by this loss, Sir Isaac might well have gone on to discover the Fourth Law of Motion: For investors as a whole, returns decrease as motion increases." - Warren Buffett

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This site is for generalized informational purposes only and the views found here should never be considered specific investment advice.

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A temperamental market pretty much assures it.

Those with a long investing horizon, it's worth noting, actually benefit from lower stock prices in the near-term (though not many market participants seem willing to put this truism to effective use). Those who attempt to profit primarily via speculating on short-term price action likely won't find this way of thinking to be of much interest.

The bottom line: This site does not provide individual investment advice of any kind and the blog posts found here are never a recommendation to buy or sell anything. Visitors should start with the assumption that the ideas found here are not good ones and do their own homework (or get individualized help from an investment professional) before taking ANY action.

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Notable Quote

"Warren and I have not made our way in life by making successful macroeconomic predictions and betting on our conclusions.

Our system is to swim as competently as we can and sometimes the tide will be with us and sometimes it will be against us. But by and large we don't much bother with trying to predict the tides because we plan to play the game for a long time.

I recommend to all of you exactly the same attitude.

It's kind of a snare and a delusion to outguess macroeconomic cycles... ...very few people do it successfully and some of them do it by accident. When the game is that tough, why not adopt the other system of swimming as competently as you can and figuring that over a long life you'll have your share of good tides and bad tides?" - Charlie Munger

The Investments Blog

Friday, May 1, 2009

PetroChina

What $1 Trillion Will Get You...

Origin of Newton's 4th Law?

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Notable Quote

Bank of America	BAC	197.40
Altria	MO	152.77
Verizon	VZ	126.39
Pepsi	PEP	117.4
American Express	AXP	65.78
Home Depot	HD	58.47
eBay	EBAY	46.26
Lowe's	LOW	36.23
Union Pacific	UNP	32.86
Burlington Northern	BNI	29.94
Korean Telecom	SKM	20.52
Norfolk So.	NSC	19.59
GM	GM	19.52
CSX Corp.	CSX	18.49
Ford	F	17.66
KTC Corp.	KTC	9.59
Expedia	EXPE	9.32
	*TOTAL:*	*978.04 Billion*