My father was an investor, investment advisor and publisher who purchased his first public stock in 1926. Thereafter he was hooked on investing as a profession. He studied the markets, read every book, the Wall Street Journal, went to school to study investing, and continued to invest his own money throughout the Depression and the 55 years thereafter. He bought and sold raw land, coins, precious metals, currencies, art, real estate, commodities, cars; any form of investing, he would study the markets and trade. He went on to study engineering and geology, graduating from Oklahoma State with a master’s degree in civil engineering, and then from LSU in 1940 with a PhD in geology.
He was a master investor: studious, intelligent, knowledgeable, and experienced with a vast amount of knowledge gained from first-hand investing activities over a 60-year career. From all his investing experience, his life motto became: There is no greater assets to own, in certain or uncertain economic times, than producing energy in the ground.
During World War II, my father’s contribution to the war effort was in finding oil along the Gulf Coast of Texas, Louisiana, and Mississippi. He was good at it, identifying prospects that routinely found new fields and astounding discoveries in some of the most treacherous geologic settings in the world, the highly-faulted Gulf Coast. He was a staff geologist working for a major oil company when the company was finding, on average, a salt dome oil field a week.
Unbeknownst to me, he started my investing career when I was about 13, by showing me how to contour geologic maps. Imagine a young person wanting to draw lines and pictures on a big piece of paper. Between geologic learning sessions, we read the Wall Street Journal together and discussed common stocks, bonds, commodities, and currencies, their merits and pitfalls. Together we read books and edited his publications. We purchased all forms of public instruments and private assets, traded, made money, and lost money. Throughout these decades of my financial education, we would research and invest. We would write about our experiences with these investments in my fathers’ newsletter “New Horizons for Investors.” He would write and I would read and ask him questions.
This publication was a monthly newsletter sent to 10,000 paid subscribers throughout the world. There was a section dedicated to “Hot Stocks,” including fundamental analysis and the “new fad” of technical analysis, one section dedicated to our past recommendations and our current portfolio performance, one area about commodities, one section about upcoming currency trends, and another page about private programs on which we were working. These private programs included: prospecting for oil, investing in oil and gas leases, residential and commercial real estate, mining for coal, copper, gold and silver, pipelines, natural gas/oil arbitrage, art, coins, precious metals and currencies, among others.
Today, our company motto remains “There are no greater assets to own, in certain or uncertain economic times, than producing energy in the ground.” After six decades of seeking the greatest risk-adjusted investment returns on the planet, my father continually made the above statement to me throughout our 20 years in business together.
The reasons my family has participated in the energy business since the 1930’s and that we specialize in the energy business today are numerous, but several key reasons are:
Universal: Unlike precious metals, energy is universally required by the masses. Energy is a “core” asset required for human survival. This single fact gives producing energy true intrinsic value. This is in contrast to the value of gold, which is arbitrarily assigned by human psychology and desire;
Predictable: Distinct from the value of a common or preferred stock, which is based not insignificantly on consumer confidence, once established, the value of energy is foreseeable. Therefore the profits from energy production are predictable for a short time into the future (in this context, a short time is 2 to 5 years);
Hedgeable: Unlike real estate, energy products have the ability to be hedged (the price and thus the value of the asset can be protected from decline for a predictable time into the future);