Fertilizer stocks out of favor

Quote from Landis82:

Once again you show everyone here on ET that you have no idea what you are doing . . . made even more ironic by the fact that you are arguing with a guy that actually TRADES for a living!

First off, these stocks have been in 3 year uptrends, that should tell you something. The fundamentals are there. This group's performance isn't just some "day-trading" orgy.

Secondly, the farming community is always seeking to increase yield and many of the new fertilizers are helping them do just that.

Your view on what you think is happening around the globe with the economy is a joke.
Ever notice what is going on in Brazil lately?

Hint: There is a major macro shift going on in that country with commercial farming. They are the #1 exporter of soybeans in the world!

You have no clue.
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I am not sure whether or not POT is in bubble territory, but in trying to argue whether or not it is, one cannot apply fundamental analysis as you have. There is nothing in your argument to actually justify POT/MOS's high price (why not $100 or $78?).

Bubbles are something that lie outside of the real of fundamentals, since one cannot assume that investors are actually taking them into consideration. Fundamentals are used to identify undervalued/undersold conditions. Howerver, in this case it is very possible that investors are simply stocking up on POT/MOS in anticipation of higher prices based on past gains without regard to fundamental analysis.

Secondly, the chart of POT has indeed taken on parabolic character (in fact it looks just like Cisco did around 2000, both in scale and magnitude).

Thirdly, Commodities are by their very nature cyclical... I do not see this represented in the AG stock recently.

And the last point: If the fundamentals of these companies are what is driving their stocks up, then why do POT and MOS correlate almost perfectly with one another. Fundamentals influence earning, which in turn influence stock prices. Shouldn't two different companies with different management structures, etc. at least diverge a bit from one another (even if they are in the same industry)?

Now, does that mean that one cannot make money in the long direction with these stocks? Of course, not! Trade away! But for those buy and hold investors.... not sure.

scex
 
Quote from scexglobal:

I am not sure whether or not POT is in bubble territory, but in trying to argue whether or not it is, one cannot apply fundamental analysis as you have. There is nothing in your argument to actually justify POT/MOS's high price (why not $100 or $78?).

Bubbles are something that lie outside of the real of fundamentals, since one cannot assume that investors are actually taking them into consideration. Fundamentals are used to identify undervalued/undersold conditions. Howerver, in this case it is very possible that investors are simply stocking up on POT/MOS in anticipation of higher prices based on past gains without regard to fundamental analysis.

scex
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There are people on ET such as "S2007S" that frequently explain and RATIONALIZE why they lost money shorting stocks, etf's, commodities, etc by using the concept and term "Bubble".

In this way, their inability to TRADE is quite simply explained away by the term . . . BUBBLE As in, I got caught short in a "bubble". Or I missed that move in POT because it was a "bubble".

BUBBLE becomes the catch-all phrase for not making money off of these strong advances.

They can't get themselves to play the LONG SIDE of a strong move because they miss out on the initial advance, have no clue about TRADING off of technicals, and then spend the rest of the time "questioning" how and why something like Crude, Nat-Gas, or Fertilizer stocks can continue to advance in massive multi-month or multi-year uptrends.

Remember, the people on this thread that are making money off of POT are TRADERS. Plain and simple.

This is in stark contrast to the likes of "S2007S" who by his own admission is NOT a TRADER, but who frequently posts on ET about how Crude Oil has been in a "bubble" along with all sorts of other financial and commodity "instruments".

This makes him feel better.
Plain and simple.
 
Crude oil down 16% in only 2 weeks. Still has plenty of room to fall. Did I not say the only catalyst for this market is lower oil prices. Oil and commodities are in bubble land. You can include all AG stocks in bubble land as well.
 
Quote from S2007S:

Crude oil down 16% in only 2 weeks. Still has plenty of room to fall. Did I not say the only catalyst for this market is lower oil prices. Oil and commodities are in bubble land. You can include all AG stocks in bubble land as well.
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Feel better about your losses now?
Does labeling an advance in the markets a BUBBLE make you feel better?
Does it help when you tell the wife that you lost a ton of money "averaging-down" against a BUBBLE?

It wasn't my fault . . . it was a BUBBLE!!!
:p
 
Quote from scexglobal:

And the last point: If the fundamentals of these companies are what is driving their stocks up, then why do POT and MOS correlate almost perfectly with one another. Fundamentals influence earning, which in turn influence stock prices. Shouldn't two different companies with different management structures, etc. at least diverge a bit from one another (even if they are in the same industry)?
scex
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I think CF, MOS and POT correlate with each other because they are ALL fundamentally sound and keep reporting triple play earnings quarter after quarter. CF has the lowest P/E by far and is a bit less volatile.
 
I hate the word bubble! You can never tell till after the fact.
Fertilizer stocks are and have been excellent trading stocks for quite some time but they are cyclical and potash and other feritlizers are not a scarce resources it just takes time and capital to bring the plants on line. The earnings and growth in this sector will change soon. There is a large miner(I think it is BHP but not sure) that has the resource and plans to open two new mines that will meet 15% of the worlds potash demand. Potash itself is increasing production and many others are. Soon supply will bring prices down when it overwhlems supply. The excess profits in the sector will soon be eroded.

But I will not call a top.
 
I agree that the best way to trade these stock is as an active trader. Even at these high prices they are very volitile!

I wonder, however, how much of a correction each will make before they resume on their bull run.

Btw, MON is right on the EMA 200 line, a bounce would be nice. :)
 
Quote from S2007S:
Crude oil down 16% in only 2 weeks. Still has plenty of room to fall. Did I not say the only catalyst for this market is lower oil prices. Oil and commodities are in bubble land. You can include all AG stocks in bubble land as well.
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And how much money did you make capitalizing on trading against these 'obvious bubbles'? Zero? Or below zero as in averaging into losing positions?

P.s. Please spare us the posts on how you're making money 'trading around' your losing positions. Few here are stupid enough to believe your BS.
 
Quote from NoDoji:

I think CF, MOS and POT correlate with each other because they are ALL fundamentally sound and keep reporting triple play earnings quarter after quarter. CF has the lowest P/E by far and is a bit less volatile.
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There are different valuations for sure; i find POT and MOS to be the most overvalued compared to AGU and CF. I find in this type of market the smart money likes the commodity-related stocks with the highest earnings and biggest market caps, hence these companies have the most 'oversold' conditions of the sector. I still have a long tendency on this sector as each company in the sector continues to blast through expectations during earnings season...now that doesn't mean that i think it's an indefinite trend upward, nor do I believe the supply prices of Potash will continue to shoot up from demands of China et all. And even though all my money is made from trading these in pairs (e.g. being completely dollar hedged), you still have to respect the bullishness of the sector...god i remember trading AGU and MOS when they were in their 20s!
 
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