Take physic, pomp

Of Mice and Men and Cardero Resources (CDY)

The best laid schemes o’ mice an’ men
gang aft a-gley
‘To a mouse” (Robert Burns)
Cardero (CDY) (CDU.to) today announced that their deal to sell their Pampa de Pongo iron ore project in Peru with Chinese steelpeople Nanjinzhao has hit a large bump in the road. The $10m deposit that was supposed to have been wired to CDY didn’t appear by the alloted 17th May deadline and the company reports that negotiations are ongoing about the final price, as Nanjinzhao don’t want to pay the previously mentioned $200m total ticket price for the project due to world market conditions.

Two things to say (that may seem contradictory at first) and then a conclusion

1. I can’t say I’m that surprised. Cardero is run by a bunch of promo artists and the Chinese are the only buyers out there. I thought that the Chinese would pay the $10m deposit and then stall on the final $188m settling price and not baulk at this intermediate stage, but that’s my bad call.

2. I, dumbass dude with a blog, actually believed them! After the posts written earlier in the year I was sucked in by the story, I did background checking, invested DD time liked what I saw/heard and read and even called it a buy in the newsletter (that now has to suffer a hole in its “closed positions” section of the stocks to follow table). And I’m long CDY today. Not a massive, life-changing position and knowing that the risk was always there, but it doesn’t take away the fact that I got it plain vanilla wrong.

Moral of the story: No more heeding siren songs, no more investing on the word of untrustworthy companies, no more bullshit management teams deserving of my $$. The beauty of capital markets is that you get your penance delivered in quick and undeniable form. There’s never any way round a 30% or 40% loss, no excuses or “yes, but….” will ever make it disappear. You take the loss, realize you have failed, admit it, remember the dangers of ego in this game and try to reconcile the fact that a monetary loss can turn into a longer-term profit if the lesson of the loss can be learned and incorporated.

So having started with one Scottish poet I’ll finish with another that I’ve already quoted on this blog at a time of philosophical loss-taking. Hugh MacDiarmid, take it away;

We must be humble. We are so easily baffled by appearances
And do not realise that these stones are at one with the stars.
It makes no difference to them whether they are high or low,
Mountain peak or ocean floor, palace, or pigsty.

There are plenty of ruined buildings in the world but no ruined stones

Hugh MacDiarmid, ‘On a Raised Beach’

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