This January 8 blog entry by Stephen Pizzo reviews the situation country by country – Kurdistan and Turkey, too – and concludes:

[E]veryone seems to be talking about how Iraq will be George W. Bush’s legacy, and that’s just plain wrong. Iraq will be part of George W. Bush’s legacy, but only part. The rest of his legacy will play out in the years and decades after Bush leaves office. Because, when he invaded Iraq he didn’t free the Iraqi people, as he likes to now claim. He freed a thousand years of ethnic/religious/tribal demons. And while these demons may not be the Horsemen of the Apocalypse, it’ll sure feel like they are.

One hopes it is wildly too pessimistic. But I’m not selling my North American energy stocks.


GLDD (formerly ALBA) closed at $7.18 last night and the warrants at $2.06. It’s tempting to take the triple (or quintuple if you got in when they touched 38 cents), but what’s the rush to incur a taxable short-term capital gain? Or to part with a bargain-priced warrant?

The warrants were actually selling below their intrinsic value most of the day yesterday. (A warrant that gives you the right to buy a $7.18 stock for $5, as this one does, has an intrinsic value of $2.18. Yet this one was selling for $2.06.)

Logic would suggest they should sell for a premium. That’s because, with 25 months to run until they expire, you get two advantages.

Either way, you get whatever gains the stock makes – if the stock goes up $3, so will the intrinsic value of the warrant. But with the warrant:

  • You only have to put up about $2 instead of $7 to be in line for that possible $3 profit. That leaves $5 you can keep in the bank earning interest (or somewhere you think will provide an even greater return). Figuring conservatively that, after tax, you can earn 3% a year – a total of 6% over two years – that works out to 30 cents on the $5 you didn’t have to put up to buy the stock directly. So it would be rational to pay a 30-cent premium for the warrants. Then again, there’s no law that requires people to be rational.
  • And with the warrant, at today’s price, all you can lose is $2.06, whereas if you had paid $7.18 for the stock, you could, at least in theory, lose as much as $7.18. GLDD is not likely to drop precipitously, so I wouldn’t assign a very high value to this advantage – but surely a nickel? A dime?

So you could make the case that, with 25 months to run until they expire, the warrants should sell at a 35- or 40-cent premium to the stock – more, if you expect more than 3% a year after tax on your money – not at a discount. The fact that they don’t makes them cheap, at least relative to the stock itself.

The final reason I wouldn’t sell – even at $2.55 – is that I think there’s a reasonable chance GLDD could pick up another few points in the next couple of years. It absolutely may not. Indeed, it could fall back below $5, wiping out the intrinsic value in the warrants. So you must ONLY make this investment with money you can afford to lose. But if the stock hit $11 in a couple of years, the warrants would be worth $6.


Marie Coffin: ‘Part of the problem between you and the Hertz Lady may be your method of address: she has a name, for goodness’ sake! I have it on good authority that her name is ‘Betty.’ For some reason, this always makes me think of ‘You Can Call Me Al.”

☞ If Paul Simon rents from Hertz, that’s probably what they call each other.

Cole Lannum: ‘The Hertz Lady’s name is ‘Gloria.’ I know because my wife has named her following many human-like experiences. Still, she has never (yet) tried to kill us. You must have really made her mad.

☞ Cole goes on to say that ‘with the home version of the Hertz Neverlost system, StreetPilot, you can change to a male voice (his name is Jim). He has neither the panache nor the attitude that Gloria has, so we avoid him.’

Larry Trachtenberg: ‘A couple of months ago, I took a Northeast college tour with my daughter, Sarah, and Zelda the Hertz Lady. I found her much more helpful than the GPS system in my Acura. Now, you ask, why ‘Zelda’? Well, the Acura lady is named ‘Leslie’ after my ex-wife. This is because she’s always telling me what to do and where to go, but she always gets me lost. Sarah doesn’t know this fact, so when I rented the car from Hertz I had to choose a different name. The Hertz Lady obviously liked the name Zelda and consequently did not try to kill me. For crying out loud, treat Zelda with some respect! Call her by her name, thank her once in a while and she won’t try to kill you.’

☞ Good advice. I also got a Mio Digiwalker for Christmas, and – oh my, oh Mio – can’t wait to set it up and test out its sense of humor. (Yes, I know; I should have done this before setting out on our trip.)

Kathi Derevan: ‘I used to have a relationship with the Hertz lady, but I kicked her to the curb. Bought a Garmin 330 (now probably obsolete) which goes with me everywhere. I can program my favorite spots anywhere in the country right from my sofa, and after 50 or 60 days with no Hertz lady, it was paid for.’

Stephen Gilbert: ‘You may cook like a guy ™, but you don’t drive like one. It is a commonplace that real men don’t ask for directions.’

☞ You make a good point.


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