Forget about the pending doom and prospects of another great depression for a moment. Let’s imagine the world was not in a perpetual spiral down to nothing and people/businesses were still interested in partaking in commerce, instead of just giving up and closing up shop.
What stocks have been hardest hit by the unwinding/going out of business sales by money managers?
Answer: commodities.
Let’s assume that massive deflation does not grip the Unites Steaks of America. The recession will hurt; but, eventually, asset prices will rise, mainly due to the Fed throwing freshly minted money at problems.
Things looks really bad now, as they did during the lows of 2002. I remember feeling a sense of hopelessness in the markets, with no chance for equity prices to rebound back then. My colleagues and I would make fun of the Nasdaq’s crash course, by comparing the levels to actual years on the calender, and what important shit happened during those years. We’d relish at the thought of the Nasdaq going back to “Roman Times.”
I made a living on bonds, preferred stocks and select regional banks, which for some reason outperformed back then.
Then, with the help of Greenspan cutting rates to nearly nothing, coupled with some stimulative tax policy, the market turned on a fucking dime and went straight up in 2003. I made several hundred percent on my money in ’03, getting long egregious quantities of semiconductor names.
This is the point:
The low percentage bet is to position for a total bust. It is so rare; one would have to be a fucking imbecilic moron to think it’s going to happen, no offense to ordinary morons.
The Government is reflating like a motherfucker and it is not hurting the dollar. Therefore, there is a distinct possibility the markets and economy can run and run hard, in anticipation of a late 2009 rally.
Just like in ’03, the markets will go higher, far before you read positive headlines, regarding the economy. There comes a point where the bad news is shrugged off and stocks run anyway, due to an increased level in investor confidence. It feeds upon itself.
In short, you want to get long the names/sectors that have been tossed aside by failed funds and distraught investors, such as oil, ag, tech and even some biotech.
My favorites, for now, are in the commodity sector.
Here is a list of the highest rated commodity plays, courtesy of “The PPT“:
TOTAL S.A. (ADR) (TOT: 52.67 +3.80%) 3.7
Chevron Corporation (CVX: 71.50 +2.11%) 3.68
Exxon Mobil Corporation (XOM: 75.65 +1.06%) 3.47
Eni S.p.A. (ADR) (E: 42.83 +4.31%) 3.46
BP plc (ADR) (BP: 47.41 +1.91%) 3.45
ConocoPhillips (COP: 51.46 +3.56%) 3.29
Manitowoc Company, Inc. (MTW: 8.93 -15.03%) 3.59
AGCO Corporation (AG: 27.95 +4.21%) 3.45
Joy Global Inc. (JOYG: 23.98 -0.79%) 3.44
Precision Castparts Corp. (PCP: 58.82 +9.21%) 3.17
National-Oilwell Varco, Inc. (NOV: 27.34 +7.26%) 3.43
Natural Gas Services Group, Inc. (NGS: 11.89 +2.41%) 3.41
Baker Hughes Incorporated (BHI: 32.97 +5.98%) 3.24
Lufkin Industries, Inc. (LUFK: 46.38 +3.43%) 3.21
Smith International, Inc. (SII: 31.15 +4.67%) 3.17
FMC Corporation (FMC: 38.46 +8.49%) 3.36
The Dow Chemical Company (DOW: 24.94 -0.20%) 3.31
E.I. du Pont de Nemours & Company (DD: 31.02 +0.94%) 3.1
Syngenta AG (ADR) (SYT: 33.83 +2.67%) 3.25
CF Industries Holdings, Inc. (CF: 53.79 -0.68%) 3.23
Potash Corp./Saskatchewan (USA) (POT: 74.76 +7.29%) 3.23
Terra Industries Inc. (TRA: 19.33 +5.57%) 3.17
The Mosaic Company (MOS: 31.56 +5.27%) 3.07
Sterlite Industries India Limited (ADR) (SLT: 5.01 +3.30%) 3.3
EnCana Corporation (USA) (ECA: 46.24 +5.79%) 3.63
Occidental Petroleum Corporation (OXY: 50.92 +2.45%) 3.54
Cabot Oil & Gas Corporation (COG: 28.49 +3.90%) 3.4
Questar Corporation (STR: 28.77 +0.66%) 3.34
CNOOC Limited (ADR) (CEO: 65.39 +3.22%) 3.28
Devon Energy Corporation (DVN: 73.21 +4.24%) 3.11
Apache Corporation (APA: 74.28 +3.24%) 3.08
Alcoa Inc. (AA: 10.58 -1.86%) 3.34
Murphy Oil Corporation (MUR: 46.35 +3.23%) 3.32
Imperial Oil Limited (USA) (IMO: 32.17 +3.77%) 3.28
Hess Corp. (HES: 53.25 +5.42%) 3.08
Sasol Limited (ADR) (SSL: 25.71 +3.34%) 3.01
ENSCO International Incorporated (ESV: 37.99 +0.58%) 3.61
Noble Corporation (NE: 28.72 +5.12%) 3.5
StatoilHydro ASA (ADR) (STO: 18.42 +5.02%) 3.34
Diamond Offshore Drilling, Inc. (DO: 81.93 +7.44%) 3.21
Gulf Island Fabrication, Inc. (GIFI: 17.66 +0.11%) 3.15
Petroleo Brasileiro SA (ADR) (PBR: 22.80 +1.33%) 3.15
Unit Corporation (UNT: 33.00 +5.26%) 3.15
Helmerich & Payne, Inc. (HP: 29.37 +4.71%) 3.04
Pride International, Inc. (PDE: 15.58 +3.04%) 3.04
BHP Billiton Limited (ADR) (BHP: 35.50 +4.84%) 3.59
Yanzhou Coal Mining Co. (ADR) (YZC: 4.93 +0.61%) 3.33
Teck Cominco Limited (USA) (TCK: 9.80 +6.75%) 3.13
Indeed, “the Fly” is a modern-day Robin Hood.
-DT
Netsuite (N) … big commodity player!
haha, just fucking with you fly.
Thanks for the story Papaw Fly!
wow, MTW body slammed for missing earnings for .01
any opinion on ACI for the low sulfur coal???
I got goosebumps this morning, i think it might be from all the goose steps I see in my positions.
I am long ACI.
Fly,
You buying SKF today? Would you add RIG to your list?
Thanks.
FLY
One thing I mentioned in an earlier thread about the comod play and why I think it will be the next mania.
Small miners Down Under that are one product shops low on financing are fucked. This is where it gets interesting. Supplies therefore flow through the big players who are basically self financing and are spewing out oodles of cash
Stick with the big names that have little need for finance of major projects and the price could eventually skyrocket. And here’s the beauty of the play, that all you numb nut uneducated, narrow minded stock jocks always miss… the macro side. Because economies are so fucked up the central banks will not dare to raise rates when they need to allowing for the mania to go unheeded by a bunch of fuck wits that always should but don’t take the punch bowl away as this time they can’t. I’m so bulled up on commods I wanna order the gulf stream 5.5 as a preorder into 09.
Stick with the big names spewing out cash like BHP, RIO etc. Do it on the ADRS as you also end up buying Aussie dollars at cheap prices so you get the double up whammy.
fly, stocks aside, have you ever thought of what the collectable thing will be in 10 or 20 years that was around a short while ago, or around now? Ever analyzed what makes something collectable? Why is a Micky Mantle rookie card worth so much? It’s just a piece of paper with a picture on it….so whats around now that will be of value in 10 or 20 years?
What’s your take on CLNE here, load the fuck up?
Get long Pokemon cards. In Size!!!
pressure’s on the banks to lend now… remember, the government is buying stocks, they want their investments to pan out.
Pretty soon, they’ll have a law where you HAVE to spend 50% of your income on bank stocks.
Time to check on my holdings in “Garbage Pail Kids”.
lol at the fractal cauliflower.
Awesome PPT list Fly.
Don’t I still have a say in all this? Doofus hedge funds losts billons shorting VW. More margin calls. Job security. Odd, no?
You just gotta love the commies for doing the right thing when we need them to so as to stimulate demand in the commod secotor
Oct. 29 (Bloomberg) — China cut interest rates for the third time in two months to stimulate growth in the world’s fourth-largest economy after the global financial crisis curbed exports and production.
The key one-year lending rate will drop to 6.66 percent from 6.93 percent, the People’s Bank of China said on its Web site today. The deposit rate will fall to 3.60 percent from 3.87 percent. The changes are effective tomorrow.
No dice on CLNE. Too many other names to choose from.
Reits getting raped here, along with GS and MS.
SRS running.
These are today’s negatives.
zephler -you’ll enjoy tis article
http://www.counterpunch.org/roberts10212008.html
I played golf yesterday with 2 imbecilic and one ordinary moron.
What a fucking trip, man.
Look for an SPX 880-900 test in our future. That area needs to hold & if so, it need to be bought, heavily.
lmao at Pokemon cards
semi-serious answer to zephler:
1. signed art glass from high end American and British studio art glass masters
2. carved real ivory items (ivory is now banned)
3. real angelskin coral jewelry
4. original pop-culture items from the 80’s
5. any “space-age” design items from the late 50’s and early 60’s
is that good enough for a start for you? also buy a Miller’s Collectibles guide and look at the pictures.
BTW the profit margin in the right items waaay exceeds stocks. Bought one vase for $80, sold it for $4,500.
COMDX Summary of Weekly Petroleum Data for the Week Ending Oct 24
Production: U.S. crude oil refinery inputs averaged nearly 14.9 mln bpd during the week ending October 24, up 289 thousand bpd from the previous week’s avg. Refineries operated at 85.3% of their operable capacity last week. Gasoline production dropped last week, averaging 8.8 mln bpd. Distillate fuel production remained flat last week, averaging 4.4 mln bpd… Imports: U.S. crude oil imports averaged 10.3 mln bpd last week, down 63 thousand bpd from the previous week. Over the last four weeks, crude oil imports have averaged 10.3 mln bpd, 475 thousand bpd above the same four-week period last yr. Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 831 thousand bpd. Distillate fuel imports averaged 273 thousand bpd last week… Inventory: At 311.9 mln barrels, U.S. crude oil inventories are in the upper half of the avg range for this time of yr. Total motor gasoline inventories decreased by 1.5 mln barrels last week, and are near the lower boundary of the avg range. Both finished gasoline inventories and gasoline blending components inventories decreased last week. Distillate fuel inventories rose by 2.3 mln barrels, and are in the lower half of the avg range for this time of yr. Propane/propylene inventories decreased by 0.7 mln barrels last week and remain below the lower limit of the avg range. Total commercial petroleum inventories increased by 6.7 mln barrels last week, and are in the lower half of the avg range for this time of yr… Demand: Distillate fuel demand has averaged nearly 4.0 mln bpd over the last four weeks, down by 5.2% from the same period last yr. Jet fuel demand is 13.1% lower over the last four weeks compared to the same four-week period last yr.
Shakedown Street time, who’s gonna blink?.
Boca:
When you have time, write an article about this in the PG. I am interested in flipping vases for egregious profits.
Sorry for being so off-topic today.
Back to work.
HAHAHA good idea Fly.
“The low percentage bet is to position for a total bust. It is so rare; one would have to be a fucking imbecilic moron to think it’s going to happen, no offense to ordinary morons.”
Many many “internet shmucks” are betting on this scenario. Don’t doubt the financially retarded they are more stupid beyond your imagination.
I might as well buy Vanguard materials? VAW
What would be the best ETF to get long commodities?
“Never underestimate the power of stupid people, in large groups”
Why not buy commodities based country ETF’s or use them as an indicator. Gold/Silver was being bought after hrs for some time. I think it was only going down during US day trading from hedge funds forced selling. Now the hedge funds are buying back in. It is what we don’t know that could be really bad. We could see panic Gold/Silver buying after the election when the real facts are allowed to be known. Of course it will be time to sell on the news.
Buy HXU.to (On the TSX). The USD/CAD has topped out and commodities are going to rip.
“BTW the profit margin in the right items waaay exceeds stocks. Bought one vase for $80, sold it for $4,500.”
Holy crap, Boca. Congrats. A collectibles thread in the PG would be fun. I’ve got a whole storage unit full of early American pottery ware.
Don’t foget about guitars and hot rods from the 70’s. I hear they are hot, hot, hot! In fact I work at the Canadian/USA border and when we get shipments of the above come through, everyone goes out and just drools over them.
Boca:
When you have time, write an article about this in the PG. I am interested in flipping vases for egregious profits
that’s quite possibly the gayest thing you’ve said a few months , fly. In fact it’s so go it makes me wanna throw up.
DIG and UYM get the job done.
J:
If it makes you feel better, with the proceeds from 4,500 dollar vases, I will buy large quantities of mayonnaise jars, then hire homeless men to throw them at Wall Streeters.
CIT…no bread and water tonight
BTW: There will be mayonnaise in the jars. I just want to be clear.
Let’s assume that massive deflation does not grip the Unites Steaks of America.
I believe I’m on their mailing list, but have never purchased.
2.5″ ribeyes their specialty, I expect?
____________
Is a .50 cut baked in?
Time machine special:
Fed cuts by 75 basis points.
I liked Pokeman cards. I made obscene profits on KDE (For Kids Entertainment) in the late ’90s.
you could alternatively but the toronto index….2X times bull ETF is the HXU… there are also 2X oil and gas index the HEU….. the regulat ETF’s are the XIU and the XEG…..HOU gives you times the price of oil….
http://www.hbpetfs.com
Watch out VIX at 70
Jake:
It’s actually quite impossible to experience Deflation in the US as a result of fiat currency.
(Before any of you stock monkeys (not you Jake as you worked at CSFB which means you’re smart) start taking out the whips and chains to kill me: listen up)
Deflation is defined as a systematic fall in the general price level as a result of a commensurate drop in the money supply.
Got that.
Sure, you dolts, the fall in the price of real estate is falling prices. However real estate is not the ” general price” level in the economy.
Now go take a look at the wreckage the Fed has caused with it’s balance sheet over the past few months. The Fed is right at this minute the stirring the pot of the inflationary soup that we will see coming out of its loins in the not too distant future.
they will choose to fuck the creditor over the debtor.
When Helicopter Ben said that there is no way we will see wholesale deflation in the US, believe him. What he didn’t tell you is that you likely see wholesale inflation as a result.
Fly was joking, j, but now that I know it will make you vomit, I’ll have to find a good collectibles item and write a PG article on it
Good traders with lots of profits need to invest some of those profits elsewhere for diversification, right? Hmm, maybe Picasso ceramics??? I can feature a picture of mine in the article.
BTW I understand that Fly has some interesting collectibles, and Alpha collects guns (I think), and Jake loves those shiny gold coins.
Chanci, interesting …. are you looking to sell?
Ive been telling you for the past few days..I am all in on UYM… In three months it went from $140 to $14…
This one might be a keeper for the long-term.
I am still not sure about financials, but commodities/tech with their low debt/ratio is a safe play.
picasso ceramics: very nice . all marcel duchamp here.
steven cohen of sac capitol partners made more money on his art collection then any other investment over the last few years.
My husband and I bought a house down in Savannah with room for a little antique shop I wanted to open, but then the economy started to nose dive and his business started to fail. We went to several dealers around the north FLA area (St. Augustine mostly) and they told us to hold off for a couple of years. For now, I am still up north working.
So yes, sell, but from my own shop sometime in the future.
Again, check your time machine. Mine has an indicator, the BDIY http://www.bloomberg.com/apps/quote?ticker=BDIY%3AIND
and it seem like there won’t be so many commodities to ship around.
The light is red, and flashing!
This Fed waiting game sucks. Bring on the volatility
“Money is an ass” !!!
~ The Fly ~
Agreed on UYM. Solid names in their top 10 holdings
Reits getting raped here, along with GS and MS.
Got CBL at $6.80 yesterday (effective common yield of 35%+?? WTF??).
They are in the quiet period so the principles are not allowed to buy, or they’d likely be taking the company near private right now.
This is as golden a call as the RBS preferreds at 5.50 some weeks back. Jump on it before they announce earnings on Tuesday. You will not be displeased.
Their preferreds are dirt cheap too, if you want to play that angle.
_______
Big Mike,
Bought UYM Friday 16.80….thats a wild one.
A few months ago I got spooked out of Dug @ 32 SMN @ 33.. still something in me wants to flip this fucker before 1pm eastrn.
RBS
What are they yielding, Jake.
World Series Watch Party At Fly’s Tonight!
Steve is invited too. Costco snacks and meatballs ….
8:15 to 9:15
Eat It …Watch It … and Beat It.
“”””4. original pop-culture items from the 80’s””””
hence my sealed Super Mario Bros 1 NES games…..
CIT…May actually now be able to buy a bread bakery and bottled water company…developing
Ray Ray, was it you from the ibc boards that loaded up with CIT yesterday? If so, congrats!
The Fly is God.
BTW, anyone have a 1985 Topps Mark McGwire rookie card in BGS 10 Pristine condition?
LVS up 60%, oh yeah!
Nice post j.
What do you think this means for the chances of stagflation?
J;
I agree. In the depression we did everyting to decrease money supply. Don’t forget this is a world market. Everybody is printing money like its dope. I think the Fed is praying for inflation. Don’t forget he will do everything the other way from what was done in the depression. After all he is a depression expert. We all know it takes an expert to really fuck things up. I am concerned about China. Who knows what the true numbers are in China. What about Russia? If we still have a world market like today in two years we will be lucky.
j – the RBS T’s are yielding 15% at 12.00 . That was one of the dopiest trades I ever made. (I followed Jake and picked it up at 5.50) I don’t recall what the indicated yield was when I picked it up.
Contractor:
think the chances are 100%. Not just the US by the way but across the world.
forget electric guitars, prices got way too high and are in the process of crashing. i know because i am a dealer. very very high end Martin acoustics are still holding their value but, I think the valuations are absurd. I am not a buyer.
Zombie, I think i might have that one. I’ll check and if I do I’ll mail it off to you.
Thanks, RC!
Goldman and Morgan came back. I forgot who said they were buying morgan at 13, good call. Watching GS all day looking to get in some shorts, but may be a losing game if Fly’s time machine is right about the rate cut
This might be a stupid question, but what the hell is that plant at the home page?
Big Mike,
You wouldn’t understand, it’s about fractals.
Didn’t Cramer Cramer Cramer say MOS was a huge sell at 25?
FYI, if you want to see the actual vase I sold, it’s on the front cover of this book at the lower right hand corner, the shorter vase with the art nouveau “maiden” with long hair on the front:
http://www.ceramic1900.com/servlet/q.QDisplayItemDetail?in=1900
I sold the vase a few years ago to the author of the book, who specializes in Teplitz art nouveau pottery from Bohemia.
The book goes for $350. Not bad, if you can find a copy, grab it.
Vince Ferral[sic] .. I swear that old guy reminds of a 7th grade Gym teacher ..who smokes Lucky Strikes in between classes.
Listen to Fly’s Nut Sack ….PPT
Pro:
In the whole scheme of things who really gives a shit about Russia. The only thing we need to worry about is that Putin doesn’t turn the gas off in Europe if he wakes up pissed at them one morning…. and the Frogs have to worry about the Luxury goods market not being so much in demand with the Ruskies. so other than oil gas getting pumped Russia is a big fat fucking zero in the world.
China is interesting.
The fall in stocks won’t effect them all that much because basically the average Chinese is not wealth driven like westerners. He doesn’t have have any. He has income. The stock market over there is treated like a casino, so the drop is going to have zero effect on them. Their wealth is left in the banks which the government inflates away and steals it from them through inflation.
What they have is a budget surplus and a coupla trillion dollars in reserves. They will pump prime to blazes over there like there is no tomorrow. Seeing it’s still a command/control economy in lots of ways the commie fuckers who run things won’t give shit if they build a tower that remains empty for a while. So China is still going to grow even though it will be really unbalanced. Their comeuppance will come but not now.
Seeing they own 2 trillion of reserves and have no shot of getting out, they’re fucked. the US will basically inflate the value of that away from them. Don’t think they get it yet, but they soon will and once that happens the sovereign wealth fund will be looking to escape the inflation by buying US assets such as stocks like crazy. Watch.
Interestingly the others will too once they see what the Fed is up to as they are all long up the ying yang in dollars.
So I actually see the SOV’s being a big bid in US stocks starting in the next few months once they get wind of what is going on to the value of their dollar holdings. They have no choice as they can’t get out of the dollar as they’re too big and will lose a ton of value trying to get out, so the thing to do is to invest in the US. Watch them all scurry looking to buy pieces of large US firms. That’s where the bid for US stocks is going to come from pretty soon is my bet.
Thanks for the pic, Boca!
GS breaking out. I’m only holding it for a trade but keep running GS keep running!
GS no fucking way this holds. what a move
T Moe:
I agree. Just put a traling stop on but hey I’ll take this.
Boca, very interesting stuff.
Booked some profits in the gap up for commodities this AM, added to UYG and got back into INTC.
J —
RBS preferred yields.
___________
j – the RBS T’s are yielding 15% at 12.00 . That was one of the dopiest trades I ever made. (I followed Jake and picked it up at 5.50) I don’t recall what the indicated yield was when I picked it up.
Been a while since that high school math, eh Yogi? 😉
32.7% at $5.50 . Can I get a “Boo-Boo Yah!??”
______
Sorry Jake, I really was busy makin’ mo money, mo money, mo money. Thanks for the jab. I deserved it. I was too busy to sharpen the pencil or open the calculator… 😉
Armageddon is truly upon us when you fuckers are talking about vases, antiques and “collectibles”.
God help us all.
Well, “egregious” you should have been here the morning they were all talking about about kitchen renovations and marble counters. I was simply aghast they weren’t talking about stocks, dude.