Saturday, April 4, 2009

Time to spread some more fertilizer

Wall Street just doesn't get it. But to understand the ag story, you need to understand the bears psychology.

Thursday morning, I had a piece titled "Who is selling?" and it needs to be revisited for a couple reasons.

First, you'll see how the market has popped, despite the games that Wall Street has been playing. Bear market bounce, intra-day shorting, late day games to print the S&P under 800, and the Dow under 8,000--did any of this stuff work? How about Thursday in the after-hours with the selling in the financials? Did that work? Do any of these games matter when we are in a generational low in equities-a low that won't ever be revisited? This is not a bear market bounce-By definition, we already had that, and then exceeded it. A generational low is just that!

It's not a trade, it's not a bounce, but it's the trade of the generation! And it will be entirely and clearly obvious after the fact, but it apparently isn't obvious to those that are living in it now.

But it sure is clear here!

But no-one wants to hear it! The bearish bet is unwinding right in front of your faces, and that bet is in the trillions of magnitude, and that bet is getting larger everyday. Do you think some commentary on Prudent Bear will save your position? Go find some conspiratorial bloggers looking for financial Armageddon. They are everywhere. Read them, and feel better, and then lose some more money. Armageddon, my friends, ain't happening now, and the "financial Armageddon" is what we have already had!

But let me ask the bears a question. If Armageddon is supposed to happen, why hasn't the cave sold?

Why is the psychology of the bears so lacking in discrimination, that they can't recognize the 666 bottom? Maybe they need to re-read this piece on the 666 and cure their Hexakosioihexekontahexaphobia!

But what does this have to do with ag? Well, I'm going to give you a way to make money in fertilizer, but first I need to spread some of mine. That way, when the stocks go up, and you count the money in your pocket from the trade, it will plant the first seed of doubt in your sub-conscious mind!

So let me pretend that I'm a derivative trader, and let me extrapolate the Armageddon argument to it's ultimate conclusion. How was Armageddon supposed to happen if we are all prepared for it?

And since I'm talking fertilizer, if you really want to know when sh*t happens, then you need to reread this! Someone besides Forrest Gump knows!

There already are plenty of audiences for those looking for the end of the world, and preaching doom. That cottage industry, however, just bought their new buggywhip plant, even though Ford just moved in next door! So where are the nephilim then?

So if this was the generation, that was prepared for the next great depression, but instead, it turned into the next great boom, wouldn't that mean then, that when the Cassandra's start warning us about the next great depression, no-one will listen?

After all they heard that story in 2008-2009!

After all, if Armageddon is supposed to happen, aren't people supposed to be fighting over bird sh*t to eat? Well then, wouldn't it be hard to find people fighting over bird sh*t to eat, when you are already prepared for it and your fallout shelter is already stocked with soup and spam?

Now I started this piece with who is selling, before I started my selling, but in that above piece, I said this:

So trade on it! The fertilizers were downgraded the last couple of days by a couple of firms, and it has given you great entry points in Mosaic (MOS 43.93) and Potash (POT 82.93).

Spread the fertilizer on the ground, and discard Wall Street's! The only sh*t you should listen to too, that will make you money, is that espoused from the bulls.

I gave you what I promised. More sh*t from the bulls!

So look at the fertilizer stocks, but first look at Monsanto, (MON) which has been smacked around by the analysts the last few days, but it hit 77 Friday, and then did a reversal, right in the analysts face, and closed at $81.26, down just .15 cents on the day.

Monsanto's weakness kept people off of the fertilizer plays, but MON's weakness was due to slightly lowered expectations in Round-up. (And MON couldn't juice it's earnings, because they sold their POSILAC to Lilly. That's the hormone that nobody wants to read on their milk jug-BSTE!) Monsanto's seed business was just fine, even though doubt was sowed by the analysts listening!

But the fertilizer stocks were weak because after Monsanto reported earnings Thursday, the stock traded to 85, before swooning down to it's low of 77 Friday. It was helped down by JP Morgan, which downgraded the stock. So MON kept a lid on the fertilizer stocks, of which I like.

That's Wall Street's misdirection play on fertilizer. Don't get conned, by Wall Street's mosaic! Monsanto is just being used to keep you out of the agriculture stocks!

Mosaic, which closed a bit above 45 Friday, was strong all day. This week, Mosaic was downgraded by a couple of firms, but instead of worrying about MON, I think bulls will look at Mosaic through RIMM eyes!

After all, wasn't RIMM downgraded by a couple of analysts before earnings, on all sorts of worries that proved to be non-existent? And wasn't RIMM showing some decent strength before earnings, despite the downgrades by the second-tier firms?

I think MOS can have the same reaction. Everyone knows that their earnings will be terrible, but it's the outlook that matters. RIMM popped because they felt they would soon have margin expansion, and tech stock investors needed exposure to tech. Those in the material and ag space need exposure to these stocks, especially now that they are beaten up. And I think they'll buy the better fertilizer story going forward. And the calls on this number, are the cheap way play Mosaic's earnings.

If you don't want to buy the stock, you can look at the April 50's at $1.3, or some of the cheaper options on MOS. You should get paid, after they spin their fertilizer story Wednesday morning. They report Tuesday after the close.

I think the market will find it more believable, than the stories I just spun in this piece!

And Wall Street is just like the mosaic above. It's the world famous Dionysus Mosaic, but if you didn't see Bacchus on the tiles above, you may not of known that Bacchus was just Dionysus' Roman name.

But Bacchus is not just the god of wine.

Dionysus is also the god of agriculture!

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