Adding Nucor (NUE) & Selling Agriculture Strength
I made a few moves today. Towards the close I sold calls against some agricultural positions. Shorter term (next couple of trading sessions) I expect the agricultural stocks to come in a bit. I have been bullish on Mosaic for a 170% gain since October 3rd and have liked Terra (TRA) & Terra Nitrogen LP (TNH) for almost a year.
The infrastructure boom cannot be ignored. I am currently holding McDermott (MDR) and Vale (RIO). Today I added Nucor Steel (NUE) to the portfolio. I also considered US Steel (X), but felt that Nucor is better managed (higher operating margins and return on equity) and is also less expensive based on forward earnings estimates. US Steel is also a bit more volatile with a Beta over 2.50. Nucor reports earnings before the open tomorrow.
The infrastructure boom cannot be ignored. I am currently holding McDermott (MDR) and Vale (RIO). Today I added Nucor Steel (NUE) to the portfolio. I also considered US Steel (X), but felt that Nucor is better managed (higher operating margins and return on equity) and is also less expensive based on forward earnings estimates. US Steel is also a bit more volatile with a Beta over 2.50. Nucor reports earnings before the open tomorrow.
posted by Big Ben at Wednesday, April 16, 2008
14 Comments:
Is it a good idea to have a portfolio focused soley on commodity based stocks? Tech seems to be moving, after being beaten down.
And another thing, any kind of hedge to use, as the market still seems wobbly. Establishing long positions now, doesn't seem prudent. (or is it?)
I wouldn't recommend having a portfolio just of commodity stocks. You need to be diversified. If you held a portfolio composed only of telcom and internet stocks in 1999-2000, you would not be a happy camper in 2001. Same applies to commodity stocks in 2008.
I am not a real big fan of Tech as an industry. I like to look at businesses that are easy to analyze. The first question I ask is "how does a company make money?" I have a tough time answering that question for tech companies. Technology is constantly changing and I find it more difficult to determine where a company stands in the cycle.
As far as hedges, you can sell covered calls on your portfolio. You can also take a look at the short ETFs like (DOG). I would call your broker or advisor for advice.
From what you have posted, your portfolio seems tied wholly towards commodities. MDR the exception, but is tied to offshore oil rigs. So thats why i asked.
Any other sectors your invested in?
Hopefully the market holds up, as it seems its broken its bearish trend. Your stock picks all seem like winners. Nice blog, btw.
I like the idea of selling covered calls when stocks are high. I just sold covered calls on UNG and EBAY.
Enjoy reading your blog.
Micro
themicrokid@gmail.com
http://themicrokid.blogspot.com/
Hello,
I stumbled upon your blog through my friend over at tradinggoddess.blogspot.com, and after looking through a couple of your recent posts I've added it to my RSS reader. I couldn't find any contact information, I was wondering if you'd be interested in a link exchange with my stock blog over at wallstreetmatador.com. Thanks for your time, and keep up the great work!
Best,
Mark
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The Ag correction Big Ben predicted has arrived. Even at more attractive levels, Ag may be showing more risk/uncertainty with corn based ethanol losing considerable backing as a sub for oil.
Ethanol is/was an ill-advised replacement for oil. The costs/consequences are only now being realized.
How to select which sector to invest ?
IBD has a sector raiting system, ranking all the top performing sectors. Very good resource. Also has a top 100 momentum stocks. Try the free trial. Both are in the daily newspaper (digital or print).
I believe Ben used ibd.
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From what you have posted, your portfolio seems tied wholly towards commodities.
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