Bookkeeping: Closing DB Agriculture Double Long (DAG)

As we've been saying for a few months now, it's all the same to hedge funds.... crude oil = coal = corn = potash = iron ore = global engineering firm. It's all the same. It's all "1 big trade". A reader said this a few months ago - might as well just own 1 stock/ETF, the CRB index - I scoffed. I was wrong. With the way the hedge funds move and dominate the flow of trade, there is no reason to learn or investigate or pick out one stock versus the other anymore - they are all the same stock. I guess now you just buy the ones with the highest cash flow and wait for them to defend their stock against the hedge funds.

DB Agriculture Double Long (DAG) is a double long play on crop prices. It does not have cash flow as its an ETF and hence cannot defend itself. It is no different than a coal stock, a fertilizer stock, a natural gas stock, an oil stock. Not to this market. So there is no reason to hold it anymore. It's all the same. I am closing this 1.3% stake on this rebound, for a $3500 loss.

You will recognize the chart if you've been following along - it is identical to each and every global growth/commodity stock in the universe. They are nameless beings to hedge funds - they are all the same company. So until that changes, we will treat them the same. Unfortunately that means we own about 15 stocks of the same company. Company CrudeOil-NatGas-Fertilizer-Coal-Corn-IronOre-Copper-Etal. In this new era there is no reason to do so anymore. One day that will change, I don't know when. But we'll know when each company is not treated identically with identical charts.

This is not to say I don't think this ETF can rebound but I can get the EXACT same move in countless other stocks so it's repetitive to own multiple stocks/ETFs doing the same EXACT thing. So we continue to shrink. By the way here are some facts - that have not mattered one iota to the daytrading quant funds.

• The Agriculture Department on Friday reduced its forecast for this year's corn and soybean harvests due to drier weather, potentially leading to higher commodity prices. While the predicted corn crop will be 8 percent below last year's, it would still be the second largest on record. The soybean crop would be 13 percent higher than last year's and the fourth largest ever.
• This month's report is only the second of the USDA's reports this year to include actual field visits and farmer surveys, which analysts consider more reliable.
• But the USDA said last month that "nearly ideal" growing weather has helped Midwestern farmers recover. That has helped corn prices fall about 35 percent from their highs. Corn declined almost 8 cents a bushel to $5.37 Thursday on the Chicago Board of Trade. (let's try hedge funds abandoning the trade have helped corn prices fall 35%)
  

Frankly in this market where fundamentals don't matter but sector allocation does - you can cover all your bases with 1 homebuilder stock, 1 financial, 1 retailer, 1 commodity stock, 1 healthcare stock, and 1 technology stock. That's all you need nowadays as hot money rotates on a daily basis from one to the other. It's a pathetic state of affairs and this market disgusts me as hours upon hours of research and homework mean nothing. It is much more important to have an inside man at Goldman Sachs to tell you that the government is meeting with Freddie and Fannie last Friday midday so you can profit (wow look at the stock market reverse midday - what a miracle), or that the government is engineering a Lehman sell mid day yesterday so you can profit (wow look at the stock market reverse midday - what a miracle). That's all that matters - having inside info and then joining the party on the short side with the locusts as they attack weakling financial after financial. That's what its come to. That's just my take.

I went home yesterday determined to do some homework after getting my rear end handed to me yet again this week, and find new opportunities but decided it is no longer worth it. Fundamentals mean nothing and are no longer rewarded. We now have a true casino and the "house" has the important info. So just own 6 stocks, 1 in each sector and daytrade them. That's the market now. Unless you are the house - in which case this market is so easy.

No position