Monday, February 23, 2009

Bookkeeping: Small Purchases in 3/4 of my Commodities Basket

Again, the generals are now being shot - a good thing for becoming incrementally bullish. One area of strength of late were some commodity groups (ex oil), but especially agriculture. Someone messaged me that Obama said something negative in relation to farm subsidies - to which I say: hello! among the most powerful lobbying groups on Earth.

I am taking an incremental approach with the theory that the lower we go the larger and stronger the oversold rally will be. We've stayed safe this whole way down so we can take on some risk, and I don't mind losing "a bit" of money in the near term to begin scaling in on some long positions.

I've tossed some cookies to three of our four commodity names
  1. James River Coal (JRCC) down 10%
  2. Mosaic (MOS) down 10%
  3. Potash (POT) down 7%
All told, I threw only about 0.5% of portfolio into each so its a 1.5% move from cash to "long" - both the fertilizer companies are back down to support levels (50 day moving averages) so in "non panic" mode these would be excellent entries. But if we have "sloppy" selling aka "get me out at any price", technical analysis becomes moot. James River Coal's chart is a mess but most coals are taking huge hits of late.

I cut all three of these positions last week at higher prices so we're simply trading around in small fashion, scalping some money here or there. When we reverse up, I plan to make the 2 fertilizer names a nice part of the portfolio since they have shown some excellent relative strength. Again this is all "1 position" to me in terms of "global growth/commodity" exposure - a commodity basket.

p.s. It's funny how the Baltic Dry Index strength "thesis" matters... until it doesn't. Not a peep of late of how fantastic of a rebound we are seeing there. Just another hedge fund thesis to create beta. (return)

Let me be clear here that for a tradeable countertrend rally I'm growing increasingly constructive. We will soon approach very oversold levels... the market is now down 15% since Tim Geithner opened his mouth. That doesn't mean we won't have lower lows later - but nothing in a straight line.

Long all names mentioned in fund; no personal position

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