I am going to cut more Mosaic here @ $140, and Potash @ $212. Granted, every sale the past 2 weeks has been a "mistake", but it's just way too bullish around here, and while I expect a blowout number from Potash on its earning reports, so does everyone else - and the natural inclination is a sell off sooner rather than later. I'll look to rebuy both lower - Potash maybe in $180s and Mosaic maybe $120s. I'm taking both positions sub 1%. (gasp)
I am that antsy about the bullishness, than even in my personal account where I've held Mosaic for a long time I am taking it down to "miniscule" level. ;) As I do with every sale of these names, I want to reiterate my long term bullishness. But this is getting ridiculous; the risk/reward is now firmly in the "risk" camp.
EDIT (Noon): Due to the voracious commentary and defense of the fertilizer stocks and why anyone would be so nutty to sell them, I am adding even more to Ultrashort Basic Materials (SMN) which is a bet against this space - I am also long in my personal account. I am a contrarian at heart and when everyone is on 1 side of the trade I just can't help but to be on the other side. So far I have gotten my socks knocked off in a bad way with this trade but with so much fervor I am getting more bullish by the minute to bet against the fever! :)
Long Mosaic, Potash in fund; long Mosaic in personal account
14 comments:
What are your thoughts on Nat Gas? I've got quite a bit of CHK, and it's just shooting up. There's some good insider buying as well recently. i'm surprised you still haven't pulled the trigger. Are you waiting for a pullback?
Natural-gas prices have trailed oil-price increases, but they are moving in the same direction -- up -- as energy-hungry economies in Europe and Asia bid for limited supplies. And CHK will score big from these price increases. The company has spent $11 billion over the past five years to acquire new oil and natural-gas reserves. And because Chesapeake owns its own drilling rigs -- that's extremely unusual in an industry that usually hires its rigs from drill operators -- the company has been able to move full speed ahead on increasing production without a big jump in drilling costs. Oil and natural-gas production climbed 34% in the fourth quarter of 2007, and Wall Street has increased its estimates of production growth for 2008 to 20% from the earlier 10%.
I'm with you on this. I sold my MOS ~$139. I really like this stock and sector long term, but it eventually has to come up for air. Now, hopefully it doesn't run to 160 before pulling back ;)
Michael, it is never bad to take profits
Trust me, people buying POT @ $210 and MOS @ $140 will be cursing at some point in next few weeks and calling them dog stocks. At that point I'll be buying them back.
And yes it is not fun to watch them keep going when you sell but the important thing is to keep booking profits so you have more money to invest in my mutual fund! ;)
Sheng, I have 2 nat gas plays EOG and COG. I consider the coal and nat gas to be complements... my belief is that nat gas is rising because more coal is being diverted overseas since coal is much easier to transport. So I'm playing the trend in another way. I've followed CHK for many years and Aubrey their CEO buys every year, even years the stock never moves. So I would not call it any sort of indicator even though Mr Najarian seems to think so. He was buying all thru 2007 when the stock did not move, all thru 2006, all thru 2005 etc.
I am not putting any new money into play here in any of these extended sectors. That is pure momentum trading which is not my thing. But I understand it works for others. I'd rather be a seller into momentum and a buyer on pullbacks.
I did see a neat story on how people in PA are now getting rich due to Marcellus shale. The nat gas companies are paying $1500 per acre plus 15% of annuity on any nat gas found there so suddenly you are seeing multi millionaires throughout parts of PA. Talk about dumb luck! But at least globalization is helping someone ;)
You remind me of when I saw JDSU in 1997 at a 30 forward PE ratio. It cant go any higher can it?
Quadrupled.
that one did not end too well ;)
I think almost every person in America owned JDSU at the time. Talk about a poster child for an era.
Last I saw they did like a 10;1 reverse split hah.
Look, I've been in fertilizers for a year+ now. They have moves like this from time to time. I sell piece meal into them, and then within weeks something happens and people panic. I buy back. I keep repeating. I always keep a core position. Not a month ago people were putting comments on blog, why was I buying fertilizer when commodities were selling off (Barrons)
Funny how the attitude switches 180 degrees. Human psychology is the most fascinating thing... the switch from fear to greed, almost instantaneous.
I will be selling the coal stocks the same way a year from now when everyone jumps on the coal bandwagon.
why not use a stop loss? and move it up or use a trailing stop loss? I've thought the agg space has been oversold for sometime now but I'm still in because my stop hasn't been hit... i want to hear you thoughts on this. thx
**I think almost every person in America owned JDSU at the time. Talk about a poster child for an era.**
There will come a day when all the money currently in 2% treasuries will wake up and flow into POT, BHP and FCX.
We'll see much much higher P/Es on commodity stocks then. I dont know when the day comes, but the real risk is missing it when it comes.
PS: Yea OK, I confess, I took some profits on fertilizer too. Bought Cattle and Hogs Dec'08 futures with the proceeds though.
Just a personal preference. I try to catch the middle of the move - not nail the exact bottom nor top. Further, market makers have a nasty habit of always taking out my stop losses and then running a stock up immediately after.
Shax, for all you or I know POT is $300 in a week. I wouldn't bet with the outlier condition. Even the best stories have rest stops. Where were all these buyers in POT in the $150s and $160s? The story was no different. It's just momentum. Same story. Stocks are the 1 thing in America people love to buy higher, not lower. Sort of funny.
There is always risk of missing the next big up, or being in during the next big down. But like the old saying goes...the bears make money, the bulls makes money, and well the pigs... you know the rest.
**Where were all these buyers in POT in the $150s and $160s? The story was no different**
In February I read at least 2 respected Ag analysts swearing the chinese would never accept a potash contract over $300/tonne because their current inventories are more than sufficient to meet the spring planting season.
So the story IS different. The $500+ settles have been a shock to the farming world.
Anyway I hope you are right about the coming selloff, got a few spare bucks to spend.
Yes Michael
And generally the same pigs who would not POT in $150s or MOS in $100 range are the same one piling in the past few days ;)
It looks like a herding of lemmings into a corral. Will be fun to watch the fallout. I was a few weeks early when I said the same exact mania was happening in solar in the fall. After my post the stocks went up for a few more weeks and tacked on another 20-30%. And then the lemmings were slaughtered. Again, ag is a lot more solid than solar, but its the same herd behavior.
Anyhow, got the easy money and now can sit and observe the rest of the move. I'm actually conservative by nature in investing after living through 2000-2002. I am sure many of the same folk jumping into solar all fall are the same people jumping into fertilizer now. At some point they will learn the lesson :)
Just like when I buy these shares on the way down and people say why are you buying, it could still go down - the exact same comments on the way up - why are you selling - it could still go up. Yes, it could. But if you consistently get the middle of the move and are in the correct stocks you will do fine over time. Now my profits are safe in cash and I'll let the risk takers and adrenaline junkies take the risk at this point.
shax, stop listening to analysts
I said $500 was my hope for China.
If you listened to analysts you would of never been in this story because it all looked so overpriced - that was about 100% of return ago.
I wrote about this last Oct
http://tinyurl.com/5ywofj
**Now my profits are safe in cash**
Ah well, if your profits are now safely in US Dollars, then there is nothing to worry about ;o) there is no way you could possibly lose money by holding dollars with the full faith and credit of US government behind you!!
Good point
"Now my profits are safe in Yuan/Rupees"
There, I feel better now.
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