Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
4 Insurance Policies You Should Consider Buying - 6th May 21
Fed Taper Smoke and Mirrors - 5th May 21
Global Economic Recovery 2021 and the Dark Legacies of Smoot-Hawley - 5th May 21
Utility Stocks Continue To Rally – Sending A Warning Signal Yet? - 5th May 21
ROIMAX Trading Platform Review - 5th May 21
Gas and Electricity Price Trends so far in 2021 for the United Kingdom - 5th May 21
Crypto Bubble Mania Free Money GPU Mining With NiceHash Continues... - 4th May 21
Stock Market SPX Short-term Correction - 4th May 21
Gold & Silver Wait Their Turn to Ride the Inflationary Wave - 4th May 21
Gold Can’t Wait to Fall – Even Without USDX’s Help - 4th May 21
Stock Market Investor Psychology: Here are 2 Rare Traits Now on Display - 4th May 21
Sheffield Peoples Referendum May 6th Local Elections 2021 - Vote for Committee Decision's or Dictatorship - 4th May 21
AlphaLive Brings Out Latest Trading App for Android - 4th May 21
India Covid-19 Apocalypse Heralds Catastrophe for Pakistan & Bangladesh, Covid in Italy August 2019! - 3rd May 21
Why Ryzen PBO Overclock is Better than ALL Core Under Volting - 5950x, 5900x, 5800x, 5600x Despite Benchmarks - 3rd May 21
MMT: Medieval Monetary Theory - 3rd May 21
Magical Flowering Budgies Bird of Paradise Indoor Grape Vine Flying Fun in VR 3D 180 UK - 3rd May 21
Last Chance to GET FREE Money Crypto Mining with Your Desktop PC - 2nd May 21
Will Powell Lull Gold Bulls to Sweet Sleep? - 2nd May 21
Stock Market Enough Consolidation Already! - 2nd May 21
Inflation or Deflation? (Not a silly question…) - 2nd May 21
What Are The Requirements For Applying For A Payday Loan Online? - 2nd May 21
How to Invest in HIGH RISK Tech Stocks for 2021 and Beyond - Part1 - 1st May 21
INDIA COVID APOCALYPSE - 1st May 21
Are Technicals Pointing to New Gold Price Rally? - 1st May 21
US Dollar Index: Subtle Changes, Remarkable Outcomes - 1st May 21
Stock Market Correction Time Window - 30th Apr 21
Stock Market "Fastest Jump Since 2007": How Leveraged Investors are Courting "Doom" - 30th Apr 21
Three Reasons Why Waiting for "Cheaper Silver" Doesn't Make Cents - 30th Apr 21
Want To Invest In US Real Estate Market But Don’t Have The Down Payment? - 30th Apr 21
King Zuckerberg Tech Companies to Set up their own Governments! - 29th Apr 21
Silver Price Enters Acceleration Phase - 29th Apr 21
Financial Stocks Sector Appears Ready To Run Higher - 29th Apr 21
Stock Market Leverage Reaches New All-Time Highs As The Excess Phase Rally Continues - 29th Apr 21
Get Ready for the Fourth U.S. Central Bank - 29th Apr 21
Gold Mining Stock: Were Upswings Just an Exhausting Sprint? - 29th Apr 21
AI Tech Stocks Lead the Bull Market Charge - 28th Apr 21
AMD Ryzen Overclocking Guide - 5900x, 5950x, 5600x PPT, TDC, EDC, How to Best Settings Beyond PBO - 28th Apr 21
Stocks Bear Market / Crash Indicator - 28th Apr 21
No Upsetting the Apple Cart in Stocks or Gold - 28th Apr 21
Is The Covaids Insanity Actually Getting Worse? - 28th Apr 21
Dogecoin to the Moon! The Signs are Everywhere, but few will Heed them - 28th Apr 21
SPX Indicators Flashing Stock Market Caution - 28th Apr 21
Gold Prices – Don’t Get Too Excited - 28th Apr 21
6 Challenges Contract Managers Face When Handling Contractual Agreements - 28th Apr 21
Corsair H150i Pro iCUE Firmware Update Says Bye Bye - H100i, H115i, Bricked Jet Engine Fans Fix - 27th Apr 21
Bude Cliff Walk and Secluded Pebble Beach Tour in VR 360 - Cornwall UK Holidays 2021 - 27th Apr 21
The Top 3 CBD Oils with Anti-Inflammatory Properties for Stopping Pain - 27th Apr 21 -
Biden’s Green New Deal - 27th Apr 21
Gold Stocks Upleg Accelerates - 27th Apr 21
The Tax Plan to Slay the Stocks Bull Market? - 26th Apr 21
See What’s Next for European Markets - 26th Apr 21
Gold's Perfect Storm - 26th Apr 21
Biden’s ‘Green Reset’ Could Be Great for Silver - 26th Apr 21
SPX Stock Market Short Squeeze – Here Or Not? - 25th Apr 21
Fiscal Guilt: What a Shift in Monetary Policy Portends for Investors - 25th Apr 21
Gold Price Reversal? Have No Fear! - 24th Apr 21
No Fear Of Inflation; Threat Of Deflation - 24th Apr 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

How I Made Eric Bollings Agricultural Commodities Stock Market Play My Own

Commodities / Agricultural Commodities Jun 28, 2007 - 12:45 AM GMT

By: Michael_K_Dawson

Commodities

On Thursday, June 15, the Admiral, Eric Bolling, of CNBC's Fast Money, presented an update to his Agricultural Stock trade (Ag Play). To capitalize on the trend of higher commodity prices allowing farmers to spend more money on new equipment, higher yielding seeds and better fertilizers – he constructed a four stock portfolio.

The stocks are Monsanto Company (MON), a seed producer, Agrium Inc. (AGU), a fertilizer supplier, Bunge Limited (BG), a grain and seed processor and Deere (DE), a farming equipment company. I have been trading energy as well as precious and base metal stocks for a number of years. The idea of playing soft commodities via the stock market was quite appealing. I wrote about it in “Eric Bolling's Agriculture Stock Play: Is it Too Late?”


Although I loved the idea I couldn't fully commit. On Friday, I cherry picked Agrium out of the group and purchased it. However, during the entire day I was constantly asking myself why did he buy Agrium instead of Potash Corp. or some other fertilizer company? By the end of the day, I bailed out of Agrium. I have learned that it is hard for me to blindly commit to someone else's idea. My preference is to borrow ideas and as they say on American Idol “make it my own.” So, with a tweak here and there I was up and running with my own version of Bolling's Ag play on Monday. So what tweaks did I make?

First of all, I own Caterpillar in my Big Build-Out portfolio . Thus, from an overall perspective adding Deere would have been to a certain degree redundant. So, I chose not go with Deere.

Next, I took a closer look at Agrium and its competitors. I am always amazed at the Fast Money trader's depth of knowledge on such a broad spectrum of stocks, so I am certain that there is a fundamental reason why Agrium was chosen. However, as a one-person shop with limited resources and time; I choose to rely on charts more so than fundamentals. 

Agrium's chart didn't excite me. It looked like it was range bound between $42.5 and $36. At least that's the way it looked, until I purchased the other guy. The day after I implemented my version of the Ag play - Agrium popped 4.5% bursting through its channel on positive news. 

All was not lost, because some of Agrium's competitors had beautiful charts. Take a gander at Terra Nitrogen Co. (TNH).

Many would shy away for a stock that has tripled in 6 months. However, I love trending stocks making new highs. I must admit that it is really extended above its 50 day moving average, but one way to manage risk in a situation like this is to buy a smaller position than normal. (Note: The stock is up 12% since my purchase and I have moved my stop to break-even. Now it is a free trade.)

Stocks often run in packs and this has been true with the fertilizers. Therefore, I decided to double up and add another fertilizer stock to my play. There were several fertilizer stocks to choose from, but I chose Potash Corp. (POT). One of the reasons that I selected Potash, other than its chart, is that it is based in Canada (as is Agrium). The increasing value of the Canadian dollar should provide an additional kicker.

Next, I looked at Bunge Limited's chart. It wasn't very interesting, so I decided to pass.

Finally, Monsanto was a no brainer. On June 15, the company raised its profit expectations for the year due to strong corn seed and herbicide sales. Their CEO, Hugh Grant, said "We're having extraordinary performance in an extraordinary year for agriculture. The performance of our business has set us up for strong growth this year and continues to create momentum for future growth." Fundamentally the company is hitting on all cylinders and it has a nice looking chart too.

There you have it. On June 18, at the close I bought Monsanto Co., Potash Corp and Tera Nitrogen – the Mike Dawson Ag Play. So, I am sure that you are curious as to how the portfolios have performed versus each other. Obviously six days is not long enough to form any conclusions, but I am pleased to report that my play is outperforming the Bolling Play. That being said, the Bolling Play is much better diversified and definitely less volatile. So, over the long term his version might prove to be the better play. I will take another snap shot at some point down the road.

One of our advantages as individual investors is that we can tailor our plays to meet our personal needs and risk tolerances. I have reaped tremendous rewards by borrowing great ideas and “making it my own.” 

Note: The market is currently facing tremendous headwinds. This may be a very short lived trade. If I am stopped out I will look for another opportunity to reinitiate the trade in the upcoming months.

By Michael K Dawson
http://www.thetimeandmoneygroup.com/

Copyright © 2007 Michael K Dawson
Michael K Dawson founded the Time and Money Group with the aim of educating and sharing 20 years of experience on how to reach financial freedom. "Financial Freedom is freedom to focus on what is truly important to you and your family without having to trade time for a wage. It is enabled by a portfolio of income producing assets, managed by you, which generates sufficient income to cover your yearly expenses on an ongoing basis. It provides both time and money". The intent of his website is to become a repository of information to put you on the fast track to becoming financially free. For further infromation visit http://www.thetimeandmoneygroup.com/

Michael K. Dawson Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Comments

Lin
10 Nov 09, 20:48
any Agricultural Commodities penny stocks?

Hi there, thanks for all the news letters and hard work that you did. But I am looking for some Agricultural Commodities

stocks... can you talk about those stocks little bit?

Thank you so much

Lin


Post Comment

Only logged in users are allowed to post comments. Register/ Log in