We’re talking a fraction of a percent of assets here.  Which at these levels, could add 2-3% to my performance if we get a sizable sell off.

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Alright, I’ve been pretty much completely still for a few months now. However, I incrementally added to my ERY position today.

I’m being as conservative with my cash as I can be. I got stuck in the mother of all rallies with a ton of short oil and energy exposure, and you can count on the fact that I don’t appreciate it.

But I am patient. So patient…

I have a small, ample cash position that will keep me away from the margin fairy (that devious bitch).

Don’t worry; I’m not insane. I really hate being in this position. It would have been infinitely more fun to have covered my hedges back in September. But I never, in my wildest dreams, believed oil and gasoline could recover as they have; massively and on steadily collapsing demand.

So today, I added a few percent of my portfolio to shorting ERY. No big deal. I’ll look to add another couple if we’re still running in April.

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This morning I’m enjoying a bagel covered in cheese, accompanied by a parfait and some fresh juice, while working through my morning stack of papers.

Just moments ago, I sold out of my entire position in BG, for any price. I’m taking a massive loss on this position; my original purchase was over $70 a share, and I’ve been adding in increments the whole way lower.

I should say that I love the company; they have been expanding aggressively, taking on strategic supply agreements in Brazil for sugar to be made into ethanol, purchasing grain ports in Ukraine and elevators in the Midwest United States. They’ve been running products to places like China that are willing to pay top dollar. And generally, I like their strategy of handling risk in grain and edible oil prices by managing their vast operations rather than trying to treat each segment like an individual entity.

I would definitely consider buying back my position, in the future.

But for right now, the tentative nature of this balance we find ourselves in makes the risks to the company too extreme to justify holding any longer.

When I began betting against oil and energy, now almost seven months ago, I didn’t think I’d be banking on the collapse of entire swaths of the global economy. I thought oil would trade and sustain lower prices, and then the rest of the world would take a little hit but recover because of lower input costs from the lower oil and energy.

Then I started digging into the numbers.

This Europe issue is too serious to be hanging out in multinational granary operations. If Europe goes into a serious recession (which it appears they definitely are) then you are going to see economies in emerging markets across the planet (like Brazil or the Ukraine) fold up in droves.

Look at the riots and shortages hitting Greece. Ask yourselves, do you think a company like BG is going to have any say in a place like Argentina, if times get that hard?

With the exception of their domestic U.S. operations, and a few key locations, I could see their entire operation getting confiscated.

Remember, the rights of the farmer are always second to the rights of the hungry masses.

I’ve seen people living on the streets who are as pleasant as any others. I know guys without a bit of property to their names who are nothing short of perfect gentlemen. I’ve met men and women who have every reason to be upset, because of various hardships and what-have-you, but refrain from descending to that primal level.

But the guy who’s hungry is never thoughtful. In fact, he’s usually pretty mean.

I’m not going to get stuck holding a grain operation if things turn sour before April comes. You can’t avoid the sort of hits BG could suffer, if they’re thrown right. A bad outcome in Europe could lead to their biofuel segment in Brazil getting hazed, their grain port in the Ukraine being shut down, their crops in South America and Europe being taken possession of, and leave them holding a fraction of what they now possess.

If everything turns around, I’ll consider buying back in come autumn.

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