Gyroscopic Investing

MediumTex wrote:

FarmerD wrote:

MachineGhost wrote: Last I read, Iowa farmland is already overvalued, its hard to make a profit.

MG

Corn prices have tripled since 2005 from $2/bu to $6/bu.  One could argue the higher land prices were in direct response to the steep rise in commodities.  Farmers are making money hand over fist right now.  

How much of the rise in corn prices do you think is attributable to the crop burning program that we call ethanol?

Hard to say but I'll take a stab at it.  Over the past 20 years or so, soybean prices have averaged about $6.50/bu and corn about $2.50/bu.  In the last couple years soybeans have jumped to $13/bu and corn $6/bu.  That means soybean have increased 100% and corn 140%.  So I could make a SWAG and say ethanol might account for something like a 40% rise in corn prices.  Of course there are many other factors in grain prices other than just demand for ethanol so it's hard draw any direct correlation.  

BTW it's amazing how frequently these giant ethanol plants go bankrupt.  The multimillion dollar plant 20 miles from where I grew up goes bankrupt every two years or so since it was built 10 years ago.  That is what happens when the viability of a company is 100% dependent on the whims of government. 

moda0306 wrote: Agribusiness ETF called MOO?

You have got to be f*king kidding me.

Be sure to look at the list of stocks on the roster of any ETF or mutual fund you are considering. MOO for example has Monsanto among its companies. Many investors don't care but many others loathe that company.

moda0306 wrote: I just found out my favorite gas station has a 100% ethanol-free 91 octane gas pump... this is the first time I've been glad I have a car that sucks Premium gas.  Lest I be left with a head scratching budgetary query every time I refill gas.

I'm jealous. Driving through Oregon a couple months ago I found some ethanol-free. My gas mileage went from 24 to 30 for the next leg of the trip. I'm almost tempted to drive back to Oregon just to fill up the tank.

smurff wrote:

moda0306 wrote: Agribusiness ETF called MOO?

You have got to be f*king kidding me.

Be sure to look at the list of stocks on the roster of any ETF or mutual fund you are considering. MOO for example has Monsanto among its companies. Many investors don't care but many others loathe that company.

I noticed that, too, and I was feeling a little TripleB-ish when I saw it.

MediumTex wrote: John Deere is the most obvious play on rising food prices.

Higher food prices mean that farmers can invest in more expensive technology to increase the efficiency of their operations.

Higher food prices also mean that more people will go into farming, which also means there will be more demand for the latest farming equipment.

I would caution, though, that from a historical perspective, the factors above have always caused rising food prices to eventually lead to a market glut of the food items that were perceived to be scarce in prior seasons.

When it comes to most commodities, the market works pretty well.

Thank you, MT for this pick. I haven't been following food prices, but Deere's doing well.

Ad Orientem wrote: Commodity that everyone needs + increased demand - limited supply = Good Investment

1) Politicians
2) A consumed commodity with inelastic demand...Oil, Clean Water, and Natural Gas
3) Land
4) Energy on the grid, think selling back to your power company at retail kWh, instead wholesale...cha-ching

Bean wrote: 4) Energy on the grid, think selling back to your power company at retail kWh, instead wholesale...cha-ching

How would one do that? All the programs I know of buy at wholesale prices or worse.