But I have to sell it because HAL 9000 and friends will drive it to a 5 PE? Or 3? Can this really be all this market is about? If so, I say it's all pathetic. The growth in this name even if "global demand destruction" cuts its growth in half to 2/3rd is 30%. (I didn't know food was so "elastic" in demand, but that's the current theory) Or let's get crazy and say it turns from a 100% grower to a 15% grower, I'm still paying a PEG (PE to Growth) ratio of 0.5 at 15% growth. 1 is considered "fair value". Yet I should not pay "up" at 7.5 forward earnings for that? Most banks who have terrible prospects the next 3-4 years trade at higher multiples. The ones that still have earnings to speak of.
Again, I won't lie and say this makes any sense. It makes none. But I'm going to assume the stock breaks down after this bounce and falls lower as its trailing to the 200 day moving average ($105s). I hope I'm wrong as a matter of fact. For now I'm cutting this position back from 2.7% of fund to 1.5%. Every nerve ending in my body says this is "wrong" to do because it makes zero sense. But fundamentals mean nothing. Maybe we'll be lucky and we can get a forward PE ratio similar to say Wells Fargo (WFC) - hey 10x the growth for less multiple - and the stock can rally to $125 which is the 50 day moving average before being bludgeoned.
I don't know when sense returns to the market, but until it does we're sticking with the game plan, even if it could cause us to miss out on great fundamentals. Maybe this stock formed a double bottom with its mid March low of $90 and it booms from here. Since very little makes sense I'm just going the cautious route. Frankly I'm doing things that make little sense from a fundamental point of view - this is one of them.
Long Mosaic in fund and personal account
9 comments:
sliman
sort of cute when you talk about fundamentals. As if they matter.
Fundamentals do matter, DAP and UREA prices are stable and trending higher, This is a buying opportunity not a time to sell.
So they matter at $105 but not $155, $150, $145, $140, $135, $130, $125, $120, $115, $110?
I see...
lol
it is hard not to be with the type of things we're seeing.
Sorry I'll try to behave and act rational. I'll be an outlier of course.
Right Mark - and you are hereby dubbed and shall always be known as the Knight of Irrational Non-Exuberance :)
This will make you feel better:
ACME Systematic Leveraged Macro Momentum Fund LP
You have almost become a day trader, fundamentals will win out L/T. You cannot analyze the market day to day or week to week, MOS will increase their Div., and increase earnings going forward. When the stock shot up to 163 it was too much to fast, just like GOOG it had to retest, albeit the downside has been overdone.
Bob, I saw that yesterday and email it to a few people. The funny thing is its mostly true
Yankee, I've been getting killed "holding". Just changing the focus to a more balanced approach. I hope these global growth names can bounce for a week or two but I believe technicals now rule this market and almost everything has a short half life. I'm still sticking to themes or stocks I can live with, i.e. I cannot hold an airline for a 12 month period unless someone can guarantee me oil is going to $65, but finding anything that works for more than a few days in this environment that has good fundamentals is difficult.
IMO...
The odds of the S&P breaking through a real barrier like 1320/1325 are slim.
Momentum is drying up. Volume is low. The "bear market wedge" in the SPX is clearly apparent and financials are signaling "overbought." Time to double up on the SKF...
HAL 9000 might start selling soon. :)
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