Comments on Fund My Mutual Fund: Grain Boom May Spark Rural Revival

Jeff it feels identical. I remember starkly becau...

2008-03-12T17:29:00.000-04:00

Jeff it feels identical. I remember starkly because we tested a low (in this case a triple bottom), bounced - and I thought perhaps we'd break the "triple bottoms always break" curse so I dropped most short exposure and went heavily long. I went on to have the 2 worst weeks in the fund life since I had very little insurance in the face of the worst correction we've had in half a decade. (in terms of how far it fell in such a short time)

I dont consider infrastructure right now to be a leading sector - but coal is breaking down... ag and natural gas and coal and gold are really whats been leading the market. They started to break down but the "Invisible Hand" could not allow the natural order of things to play out. We only had 1 real day of selling in agriculture stocks.

Anyhow even if we are wrong and the market bounds higher, no reason to rush in... it is easy to get stuck in the day to day, but the medium term outlook is not bullish. If that means straight down or eventually, I think it makes sense to hold hedges (or at least cash) no matter what in this environment.

With that said, I've been thinking the past week this feels a lot like early January...

I hope to buy my favorite names much lower... the constant "interventions" just slow us down from getting to the ultimate destination. Anything to kick the can down the road - the government way.

The Ag, infra stocks and the momentum lot with goo...

2008-03-12T17:11:00.000-04:00

The Ag, infra stocks and the momentum lot with good fundies, dont directly benefit from the Feb moves. To me, it looks like it's playing out alot like it did in Jan, where initially the move was in financials and retail. Ag/infra lagged initially, but outperformed as the bounce in Jan leveled off. We could see a test of the highs in these sectors as the rest of the market consolidates. But I agree with Mark, that there's alot of hot money in there, and isnt worth a big bet until we see some real selling pressure.

I also remain bearish, overall.

Many of these stocks are up 50% from January lows....

2008-03-12T16:59:00.000-04:00

Many of these stocks are up 50% from January lows. It is too much to ask them to just go up every week. They are ripe for a pullback and I've cut back the past 2 weeks, anticipating one. In fact hoping for one. Mosaic is usually a 5-7% position, I now have it closer to 2%. Fertilizer as a group is usually closer to 11-14%; I have it down to about 5%. The stocks don't exist in a vacuum.

I am now positioned very similar to how I was late last week. I got lucky in that my short exposure was cut in half Monday due to the severe fall in the market, anticipating a rebound. But now I am back in the same position. If we test 1270 that will be the 3rd test, and triple bottoms almost never hold. I bet against that theory in early January and got spanked, so this time I will be positioned better, and assuming it will break. If 1270 goes, we go off the abyss - exactly where we were about to go before the Invisible Hand started it magic Friday and Tuesday.

I remain very bearish overall.

Something looks wrong with the Ag's and Infrastruc...

2008-03-12T16:49:00.000-04:00

Something looks wrong with the Ag's and Infrastructure stocks.

The momentum looks to be getting out and turning short on these groups. I am not liking the action and volume in these two favorites of mine and yours.

Seems that one by one high beta or the big winners are undergoing distribution which I think is a tell that the next leg of the bear is about to begin.

Your thoughts?