Since the last posting, there have been significant gains in most of the holdings.  Some "old favourites" have rebounded nicely while newer positions have realized substantial gains well in excess of market indices.

Entity	Initial Price/ Purchase Date	Price 2013-11-01	Gain/Loss year to date %	Gain/Loss Since Purchase %
Central Fund of Canada (CEF.A)	9.77 2007-09-04	15.35	-26.6	57.1
Silver Wheaton (SLW)	12.37 2007-09-04	22.96	-35.1	85.6
Polaris Minerals (PLS)	10.70 2007-06-01	1.69	69	-84.2
Cenovus (CVE)	32.39 2010-07-27	30.54	-6.1	-5.7
Canadian National Railway (CN)	48.88 2009-04-14	115.86	29.8	140.1
North West Company (NWF)	16.23 2009-05-07	25.5	19.2	57.1
Powell Industries (POWL)	36.75 2009-11-12	62.13	49.6	69.1
Waterfurnace Renewable Energy (WFI)	28.62 2010-04-12	22.99	65.9	-19.7
ABB (ABB-N)	20.18 2012-12-13	25.21	29	24.9
Oceaneering International (OII-N)	52.95 2012-12-13	86.14	64.1	62.7
Deere & Company (DE)	88.07 2013-01-03	81.64	-5.6	-7.3
Rocky Mountain Dealerships (RME)	11.89 2013-01-03	11.83	2	-0.5
HollyFrontier (HFC)	47.95 2013-01-28	46.54	2.2	-2.9
Titan Logix (TLA)	1.25 2013-09-11	1.2	-3.8	-0.04
Kelso Technologies Inc. (KLS)	2.20 2013-09-11	2.59	17.7	17.7
U.S. Silica Holdings (SLCA)	25.15 2013-09-11	34.51	37.2	37.2

* Note that the performance of WFI and PLS reflects action on the original purchase. As noted in an earlier edition, I almost doubled my position in these companies when the share price neared its bottom, figuring that the companies were even more compelling investments. As a result, I have almost broken even in PLS and done well with WFI, especially considering the added boost provided by more dividend income in the case of WFI. 

Precious Metals

I have reduced positions in SLW and the Central Fund of Canada, continuing a trend over the past three years during which I have taken profits in several junior/intermediate producers of gold and silver.  Given depressed prices, it is very difficult for companies to secure financing at reasonable rates (if even lenders are inclined to provide terms).  Exploration has been curtailed drastically in light of this.  Adding further to the woes of some major companies is political risk - especially in South America where local populations are restive and governments are cash-strapped.  

As a result, I have maintained a small position in bullion and in SLW, a company which has been prudent in restricting its investments mostly to stable  countries and in using financial instruments where operational risks are borne by producers.  

In a few years, I will again focus on explorers and junior companies as the "mining cycle" repeats itself once again.  I will speak to this in a future entry. 

Railway Holdings

CN continues to power ahead and the outlook for a new union agreement looks positive.  There are concerns that regulatory agencies will impose stricter rules governing the movement of petroleum products and that costs will rise.  However, in today's environment, it is likely that increased costs can be passed on to customers, thereby minimizing negative impacts on CN's bottom line.  

In anticipation of the demand for new tanker cars, I purchased Trinity Industries (not in the Log Book) about 18 months ago and have done well.  

The Association of American Railroads has recently cleared the Kelso Klincher® Manway (KKM) for unrestricted commercial use and this has been reflected in the recent uptick in Kelso Technologies' share price.  The new manway is faster to use and more secure in the event of a tanker roll-over caused by a derailment than older model manways.  (Protruding manways and the propensity of older model tanker cars to rupture during derailments have received greater attention from regulators in the aftermath of several highly publicized derailments over the past several months.)  As noted in previous postings, Kelso has deep connections with some of the major tanker car manufacturers.

Petroleum

Services companies such as Oceaneering have been on a roll.  Ditto for U.S. Silica Holdings which provides sand for fracking operations.  I figure that Oceaneering International has some room yet to grow due to superior technology and the inexorable trend for oil companies to operate in deep water environments for a variety of reasons including the paucity of opportunities for land-based operations as various countries assert their resource sovereignty.  (Sadly, Canada has squandered some great opportunities for resource revenue and the cultivation of technology and talent as a result of its past and present resource policies .... but mine is a minority opinion among investors.)

The oil sands remains as a very attractive investment for major oil companies and sovereign wealth funds.  Within reason, costs are known.  Canada is politically stable and supports policies which are "friendly" to investment.  It has a good infrastructure for supporting field operations and the transportation network will eventually be improved with the result that producer revenues will increase.  These factors have been reflected in a new wave of investment in the area - this despite rising costs for labour and materials.  

While there is a need to improve the transportation network to move bitumen to refineries, I do not support a pipeline to the west coast.  The risks are too high, especially in light of a looming "Big Quake" which could devastate coastal areas and where it would be impossible to implement pollution control measures in the chaos of the aftermath.  As one who has sailed those coastal waters for five weeks, I have an appreciation of the complexity of this sensitive marine environment and the operational difficulties that would be incurred in the event of a spill.  Even if substantial resources were developed and positioned for pollution spill control along the coast, it is very likely that they would be severely impaired in the event of a tsunami or liquefaction events in valleys and coastal areas.  A look at various seismic maps will cause concern on the part of any thoughtful person.  

While this map provides a geographic portrayal of the distribution of risk, it is well worth reading about the implications of a major quake.  You can start your reading by visiting the following sites:

http://commons.bcit.ca/civil/students/earthquakes/unit1_02.htm

http://www.scq.ubc.ca/the-big-one-understanding-why-the-big-earthquake-is-predicted-for-vancouver/

http://www.vancouversun.com/news/Monster+earthquake+threat+looms+over+coastal+communities/6279087/story.html

Rushed "environmental assessments" will simply not "do the job" in light of the severity of the threat posed by seismic activity along the BC coast.  As the Vancouver Sun article suggests, Canadians have not invested equivalent resources in understanding the nature of the threat as have our American cousins.  And in light of the continued cut-backs in funding for scientific inventories and basic research on the part of the federal government, one must reach the conclusion that Canada is simply not positioned to undertake a prudent assessment of the risk posed by shipments of oil to and along coastal reaches in BC.  It will take decades to assemble data bases and gain a more robust scientific understanding of the risks.  It will not be in our national interest to rush pell mell into building more pipelines to the coast.  Thankfully, we have several First Nations in BC with a long experience of living in this environment and the constitutional power to insist that a more prudent course is taken.  

Agricultural Holdings

They say "nothing runs like a Deere".  If you are in the race for the "latest and fastest moving hot stock" you will not invest in this company.  However, if you are of the mindset that you are willing to invest in a company with the following attributes and the following strategic assessment of agriculture, then you will hold the company dear to your heart:

• leading edge innovator
• well developed distribution system with a tradition of customer loyalty
• continued trend to the use of machinery in a more intensive way to save on labour and maximize yields through the implementation of new techniques
• a continued increase in the need for food
• my contention that climate change will be disproportionately less severe in Deere's key market areas and further, that those countries will have the resources, infrastructure and trained people to adjust to the impact of change (as opposed to impoverished small holders in countries such as India and much of Asia and Africa)

I purchased Rocky Mountain primarily for its dividend.  I like its business model and the company management.  It is a long-term holding.  While farm gate prices will fluctuate from year to year and be reflected in sales by dealerships, I figure that the company will be in my portfolios for many years.  I do have a concern about the difficulty of recruitment of staff in a highly competitive job market in the Canadian west and will investigate this further.  It may not always be easy for the company to pass on increased costs to farmers in all years, so it is reasonable to expect that there will be variation in yearly profits.  However, the financial condition of the company is such that dividends should be maintained and, hopefully, increased over time. 

A Note About Adding to Positions When Stocks are Down

Conventional wisdom has it that one should never invest in a "falling knife".  An unquestioned adherence to this dictum would have left me deeply in the hole with my investments in Waterfurnace and Polaris Minerals.  

I first established positions in these companies with the belief that they were undervalued: Polaris in the sense that it had significant reserves of high quality aggregate which could be moved cheaply to coastal markets in vibrant areas along the west coast; Waterfurnace in the sense that it had great management, a good balance sheet, good and improving technology and that it was well positioned to deliver energy efficient heating/cooling to residential and commercial markets.  My opinion did not change when share prices collapsed.  

Instead, I invested more, to the point where I doubled my original $ position with Polaris.  The results have been gratifying, especially as the add-on investment was made near the bottom of the price chart.  In a sense, I got lucky ... but as they say, "luck accrues to those who are prepared".  

Other than speculative activity (which I indulge in from time to time), investing is a long-term activity.  It literally pays to have patience.  I try to keep this in mind when looking at the performance of my portfolios.  Also ... to remember to take the time to do my due diligence before I enter into a "investment marriage contract" with potential members of my financial harem.  The "love 'em and leave 'em" philosophy yields only grief in most aspects of life. I much prefer to "run like a Deere".