Speculators Take the Day off in Solar, On to Dry Bulk Shipping

Well speculators apparently have run the solar stocks up to a level even they cannot believe. Time to give it a rest... at least for 12 hours. Well not for China Sunergy (CSUN), probably one of the most fundamentally challenged solar companies, but that hasn't stopped speculators from taking it on a 2 day ride from $11 to $19 (as if the people who bought it in the past 2 days care about fundamentals). After a thorough investigation, reports are emerging that the company has 2 very valuable assets which are leading to this explosion in value. The assets are: China & Sun. Both in the same corporate name. "Priceless!" Until it falls 50% like it is apt to do every 6-7 weeks.

But for today, the sexy sector of the day is dry bulk shipping, our long lost love - we haven't seen these stocks ramp for 2 months. They deserve some attention too. Solar has been getting *all* the attention and it's just not fair - the divas of dry bulk have been upset. So today they get their day in the (ahem) sun. Dryships (DRYS) +9.2%, Diana Shipping (DSX) +9.0%, Excel Maritime (EMX) +6.5%. Really - everytime the teenagers get the keys to Wallstreet they just go back to the same tired groups. (Did you notice all the chinese small caps making 25-30% moves yesterday on no other reason other than... well they're chinese stocks under $10?)

I've been debating these dry bulk shippers over the past few weeks, especially when they were washed out. At these stock prices, a far cry from where they used to be, there is actually some value. But perception is reality in the market, and the minute perception reverts back to potential slowing global economy these stocks go down, even if their pricing is near all time highs [Baltic Exchange Dry Index]. That's the problem we have with investing in these names right now. Surely they will have very severe bounces where very apt traders can make a large % in a very short time, but knowing "when" the markets "deems" the global growth story is back is just a guessing game. The irony is their business is actually booming... but they are getting discounted for potential future slowdown. This is the tricky part of the market - not only must you be right on your thesis, you must also be guessing correctly what the "crowd" is also thinking. Hence, why despite being tempted on these serious pullbacks from highs reached in the fall, I still am very wary of wading into this pool. I can play the same "global boom" trends with a lot more safety through agriculture stocks in my opinion. So that's the path I've chosen.

No positions