Milk the Farmer

Back in the old days, I used to “milk the farmer” in a different way, by tapping into his profit stream, via seed and fertilizer plays. However, as of right now, I am looking to vanquish him, profit from his demise.

The price of corn has been spiraling lower and this presents a unique opportunity for companies with high corn input costs. Naturally, this isn’t a new trade and the stocks I am about to mention have already moved higher. But that doesn’t mean they are done. I am talking about beef, chicken, ethanol and possibly whiskey.

As you know, in this retarded nation, we feed our cows corn, for reasons unbeknownst to me. Perhaps we enjoy afflicting our citizenry with ecoli. Nevertheless, with corn lower, this means protein plays like HRL, TSN, PPC and SAFM pay less to feed their animals. On the restaurant side, stocks like RUTH, BLMN and DFRG might do better. Let’s not forget about the major chicken plays too, like CMG, YUM and BWLD.

On the ethanols side, PEIX, GPRE and BIOF might benefit.

Lastly, MGPI provides food grade alcohol to most of the bourbon manufacturers in this steakified nation of ours, also another play off of corns demise.

Interestingly enough, this reduction in corn hasn’t resulted in higher margins at the grocery chains, yet. Stocks like FWM, NGVC, TFM and WFM have been in the penalty box the whole time. Which leads me to my next conclusion: perhaps it’s time to look the other way. I am not buying the inflation trade and Americans are a gluttonous people. I don’t like chasing stocks like PPC, which I was buying below $5 a few years ago. However, I do like the idea that the grocery chains might soon see an uptick in margins, thanks to commodity prices coming back down.

It’s a contrarian play and you might have to wait a few quarters for them to work. Come thanksgiving, something tells me you’ll rejoice buying WFM, TFM and NGVC when no one else wanted to.

Gold and silver are weak. However, the rest of the market participants will be popping champagne corks in each other’s faces in about an hour. The reason for the melt up: an acute desire for gluttonous gains.

DEVELOPING…

Each and every day I go to work hoping for the best. My dreams and nightmares are filled with fictional dialogue pertaining to the stock market: a hostile takeover here, an unsolicited bid there. As managers of other people’s money, it’s imperative that we prepare for all possible outcomes.

Ladies and gentlemen, I insist that you prepare for gluttonous stock market returns.

This post is underwritten by all that is good and plenty (extra candy shoppe) in this world. As tax paying citizens, members of society, it’s our duty to fight terrorism, both domestic and abroad. There are enemies amongst us, gentlemen. These creatures move in silence. They harbor enemies of the state and are intent on destroying all that is worthy with modern civilization. These blackguards are barbarous, throw-backs to an era when people milked goats in the backyard and stored gold coins under their pigsty: a pre-banking era, a time when women were made to be unequal, children worked as slaves inside of factories, people of color were traded like currency, and weak men were made to be catamites.

As founding partner of iBankcoin, I take a stand against these ideologues, these rapscallions, and would like to encourage all of you to do the same, through the explicit purchase of securities (market orders only). We will take out their offers until their heads explode and all that is just, democratic, and good in this world prevails.

The oversold signal of The PPT wins again.

Chinese burrito style, I bought JMEI.

I started a position in AG.

This is precisely what one should expect when positioning for a move to the upside. First you get some carnage, especially in growth names. Then you stabilize for a day or two, then BOOM: explosion to the upside to new highs. This market has never been in jeopardy. Plenty of people just got a little spooked seeing stocks like WDAY and YELP get worked again, after witnessing the spectacle during April and May.

Having said that, I am still reluctant to ride these stocks into earnings.

It appears the CYNK saga is coming to an end, sadly enough. I was looking forward to that stock going to $100, becoming one of the most valuable companies in the world, yet not having an office or underlying business. The fact that this happened is a stain on the OTC, a place where degenerates partake in scams and gambles. The over the counter market is a mockery of human existence and it should be eradicated. If given the chance, I’d close the entire marketplace down today, tell everyone who owns OTC stocks to “fuck themselves” and then go for a steak lunch.

This sell off is 100% bogus. But that doesn’t mean we can’t trade lower from here. We’re at an interesting juncture in the market where just about everyone, including the bears, believe we will bounce. This has been reticent about committing the bulk of my cash into equities. Just today we’ve witnessed a massive turn in the major indices, from overly bearish to mild. Bonds have retraced earlier gains and for the most part, gold and silver stocks have completely reversed and have gone lower.

Big cap tech, and old school low PE names, are ripping.

In short, I like TSL into a market turn because it’s liquid, undervalued, and solar correlates well with the NASDAQ. Other than that, I did a small average down in RUBI, which has become a major dog for me. I will be happy when I see some green on my screen. Until then, Señor Tropicana is keeping the faith, fully confident in anonymous bidders showing up to bid again. But this drama, frankly speaking, it’s too much for me to bear. I must be leaving now.

Ciao.

I started a new position in TSL, after having sold it higher. And, I added to my RUBI position, which is an average down.

Bubble stocks are leading the way lower. This time the rest of the market, sans REITS, select mega cap staples, and utilities, are going down with them. Forget about the inflation story, as corn, oil and the rest of the commodity sector continue to swan dive lower. It seems the only place of respite is in fixed income/dividend plays. You find a stock that is yielding more than 3% with a solid credit rating and you will also find a stock in demand.

Do we ignore what is in front of our faces and simply buy the blood? Or, will this market rout grow legs and become the monster it was during April and May? You know I believe this sell off will be shallow, but I am open to suggestion. As of now, I am still sitting in a 30% cash position–stuck in positions plunging lower. I am tempted to average down in a few, but that’s what got me into trouble in April, so I am refraining.

But, I must admit to you, based upon the laws of science and mathematics, this market is going to bounce soon and hard. It might trade lower, materially, over the next month or so. But over the next 10 days or so, a bounce is what you should be looking for, not despair.