Two More Homebuilders Go Bust
Michael Shedlock submits:
The Wall Street Journal is reporting (more…)
Archive for June 18th, 2008
A Missed Opportunity in Canadian Solar
Trader Mark submits:
Rarely do I try to let emotion get involved (that will kill you as
an investor or trader), but I am ultimately frustrated with the solar
sector right now. After the Trina Solar (TSL)
debacle my next two candidates to add/replace the position I had sold
down in Trina so as to keep the sector weighting consistent were Canadian Solar (CSIQ) and Solarfun Power (SOLF).
Canadian Solar was the 2nd cheapest stock in the space after Trina (so
it still appeals to my growth at a reasonable price tendency), and
Solarfun is essentially the people’s champ (where traders flock to
everytime the sector gets hot) And unlike Trina, both are trading above
both key moving averages (50 and 200 day) - hence the reallocation of
money I wanted to do into either (or both) of these names.
Complete Story »
As Intel Joins the Solar Sector, Is There Room for Everyone?
Trader Mark submits:
Ignore the bashers who say solar power is hype - they, much like the
Federal Reserve and our government leaders still live in the
1970s/1980s. [Jun 7: As Energy Costs Soar, US Looks to Solar]
With or without government, pure economics is going to drag the United
States of Subprime into the new era, right about the same time China
jumps in full scale… (note if oil falls to $40 by Halloween this post
will be deleted and I’ll disavow any knowledge of solar)
Granted, it
would be healthier for us all if the government actually helped instead
of hindered, but that’s asking too much - you’ll have to move to a
socialist European country for such crazy ideas.
That said, as
I’ve warned multiple times - while the trend is clear for the industry,
ultimate winners and the marketplace holds many uncertainties [Jan 3: The Long Term in Solar] I wrote
Let
me preface this post by saying I am a long term bull on solar, and in
fact was an ‘early adopter’ among the investor class, that is I was
invested over a year ago in my personal account. So I am not a Johnnie
Come lately to this area. With that said, I do have some serious
concerns in the ‘mid term’ (1-4 years)… my thesis is like all mfg
goods, especially now heavily based in China, we will have periods of
time over the next decade where capacity does not match demand, and
even if this holds for a 4-6 quarter period, serious price wars can
develop. I outlined this theory in detail in November in [Interesting Survey from Chinese Solar Companies - Price Concerns Already an Issue] In fact Jeffries analyst even thinks this is going to start happening next year [More Concerns about Solar ASP Pricing].
It is not a matter of if, it’s just a matter of when … but “when” is
the key to investing in this space. (one can make a lot of money,
before having to face the music)We will have some great shakeouts and many of these no name companies rising 400% I expect to be delisted, acquired
for pennies on the dollar in half a decade or just be gone. This will
shake out much like the semiconductor industry and in the long run I
believe there will be 5-7 major giants who will be quite profitable
companies. But where does that leave the other 50-70-90 (and more
coming each quarter online?)
The announcement by Intel (INTC) highlights these “long term” risks - as did the foray by Applied Materials (AMAT).
Solar dreamers will tell you there is room for many many winners
because the opportunity is so huge. I do agree the opportunity is huge,
but I’ve never seen any business sector where there are 30 or 40
winners. In the end, this will be a high volume, low margin business -
almost equivalent to the semiconductor business unless/until a
different technology breakthrough comes down the road.
Complete Story »
Going Double Long on Agriculture with DAG
Trader Mark submits:
I’ve decided to go with what is essentially an Ultra long in the agriculture commodities - Powershares DB Agriculture Double Long (DAG). This is essentially the same index as Powershares DB Agriculture ( DBA), but twice the return. (either up or down)
Since
I will have a lot more volatility with this investment vehicle, since it
will exaggerate the moves of DBA by a factor of two, I have not bought
as much of it since I get the same movement for half the exposure. [Apr 17: Four New Agriculture ETNs]
So I completely sold my 3.2% stake
in DBA and am replacing it with a about 60% the exposure in DAG (about
a 1.8% stake). I’d like to buy more on dips since its had a huge run of
late, but we’ll see how deep the dips are.
Folks, everyone is
talking about crude oil - I do believe demand destruction from the
developed countries and eventually developing countries as they cut
back subsidies will help alleviate that problem into the 2nd half of 2008. A
slowing globe will also do the trick. I do however now believe the food
crisis which a few of us have been talking about for many many months
will be the story of the 2nd half of the year - recent weather in the
Midwest took a very bad situation and took it to critical.
I don’t
think Wall Street understands that yet. So replace “food” with “oil”
and keep the same hysteria you are hearing everyday on TV and in the
news going for another year. And realize people can demand destruct
energy much easier than food.
I’ll write more on this subject
later. There was also a
story in the Wall Street Journal Monday, and as we all know, until The
Wall Street Journal puts information in front of the traders they are
usually oblivious to it. So I think awareness of this subject will be
skyrocketing by later summer/early fall.
Last, stock up your
freezer with what you can… as I’ve been saying for many months.
You’ll be paying a lot more in the future for everything. Even though
there is little inflation in the United States (source: government)
Here are some news reports, highlighting what appears to be a coming emergency…
Complete Story »
Expecting to Fly: First Trust Launches First Wind ETF
IndexUniverse submits:
By Heather Bell
There’s a new wind blowing in the energy sector,and First Trust Advisors is looking to get in on the action: The firm launched the first wind energy exchange-traded fund on the NYSE Arca today. The First Trust ISE Global Wind Energy Index Fund will trade under the symbol FAN and charge a net expense ratio of 0.60%.
Complete Story »
First Pure Wind ETF Blows Onto the Scene
Steve Farrington submits:
First Trust launched the first ever wind sector ETF today, ticker symbol (FAN) will track the performance of the ISE Global Wind Energy Index.
From First Trust’s website: “The index is a modified market capitalization weighted index of publicly traded companies throughout the world that are active in the wind energy industry based on analysis of the products and services offered by those companies.”
Complete Story »
Why Have Most Investment Advisers Been Slow to Adopt ETFs?
IndexUniverse submits:
By Larry Carrel
Earlier this month, State Street Global Advisors [SSgA] (STT) held a one-day conference called SPDR University, in honor of its flagship ETF product. While the conference featured sessions on the outlook for the global economy and how to help clients make better investing decisions, its main focus was to convince registered investment advisors to use exchange-traded funds.
Complete Story »
Agribusiness ETF (MOO) Stock Holdings
Hickey and Walters (Bespoke) submit:
With many agribusiness stocks continuing to soar, below we highlight the current and expected valuations of the companies that make up the Market Vectors Agribusiness ETF (MOO).
Most of the stocks that are up the most this year are the ones with the highest trailing P/E ratios. Potash (POT) is up 63% and has a P/E ratio of 54.22. Mosaic (MOS) is up 67% and has a P/E of 52. And Monsanto (MON) is up 28% with a P/E of 47.
Complete Story »
Chinese Revaluation: Be Careful What You Wish For
Sean Maher submits:
International pressure on China to revalue its currency (the Renminbi or RMB) by at least 10-15% remains intense; an incoming US administration led by either candidate is likely to adopt a much tougher diplomatic stance. The RMB has appreciated 20% against the dollar since 2005, but then it would be hard not to given the sorry state of the greenback, although the rise has accelerated in recent months.
For a variety of domestic reasons, I believe a one-off revaluation is now very much on the agenda in Beijing, and may be the key macroeconomic event later this year or early next. Chinese authorities are struggling to control both rising inflation (a generalised emerging market issue) and a wave of speculative liquidity flooding through their current account to circumvent official capital controls.
Complete Story »
RBS Predicts Global Market Crash: What’s In It for Them?
Grace Cheng submits:
According to the UK daily newspaper Telegraph, a research team from Royal Bank of Scotland (RBS) is warning investors to get ready for a “full fledged crash in global stocks and credit markets over the next three months,” noting inflation will paralyze major central banks. They forecast a 300-point drop in the S&P by September to around 1050, with contagion spreading across global stock markets, and for the iTRAXX index (high grade corporate bonds) to widen to 130/150, the “Crossover index” (low grade corporate bonds) to widen to 650/700 on renewed investor panic. Their reasoning is that the temporary momentum from America’s fiscal boost may fizzle out by July on delayed impact from the oil spike.
Bob Janjuah, credit strategist at RBS, said, “A very nasty period is soon to be upon us - be prepared.”
Complete Story »
