W Graduated!
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Because of our travel plans, we needed to wrap our homeschool year up a bit
earlier than usual this season. So, the last entry before this one was the
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2 years ago
Friday, September 19, 2008
Opposite of a locavore
One of my goals in starting this blog was to talk about finance. Archers Daniels Midland (ADM), the stock I bought last week gained 10% today. ADM is one of the largest producers of grain and processed foods and is the largest producer of ethanol which is now added as a stabilizer to all gasoline as a replacement for the recently banned MTBE. I have owned ADM before. In 2006 I bought about at about $31 and sold at about $42 to help with my house down payment. So around $23, this stock is a company with strong financials and market presence selling at a huge discount. It's a conservative and somewhat contrarian stock with a P/E around 8. Obviously it's up and down a lot right now but I think it will trade in the $40s again in less than two years. As soon as I get some more dough I'm going to set a limit to buy more next time it dips to $19-$20.
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8 comments:
Your chances of it dipping soon are pretty good since we're in financial meltdown. They are talking about bailing out the financial players with 'hundreds of billions' in bailout. Probably with a financial Patriot Act that nobody in congress will really read because they want to recess quickly to campaign for reelection. Whatever the bailout number turns out to be, divide that by 310,000,000 to get the cost for every person in America. There's no getting around the insolvency. We'll all be fighting the squirrels acorns soon - then where will Archer Daniel Midlands be?
By the way, I am going to try to dehydrate some pears this week from the pear tree on the farm.
I'm not so sure it is all that good an investment. A lot of doubt has been expressed lately about biologically sourced fuels. Congress might well change policy. Instead look to LPG or electric cars.
P.S. Take a look at Goodyear Tire
PE = 4.67
Symbol GT
Much of their cost is in the price of petroleum. Petroleum goes down, stock goes up. In any case, eventually people need to buy tires at any price. I think it is a really sound investment.
The nice thing about ADM is that they are so diversified. Ethanol only accounts for 14% of their revenue plus its use is federally mandated. We all need to eat and grain is at record prices.
I don't think people are buying enough cars for goodyear to be a good bet, we seem to be getting away from that.
See the Sept. 19 posting of London banker's blog at http://londonbanker.blogspot.com/
for a good explanation of the current crises
"...After this week's secret and unaccountable and extra-legal moves by the US financial authorities, I will not be holding any assets in the United States. I do not understand the rules. I doubt any rules will be applied fairly to all the players. I cannot be sure who the umpire works for, or what principles the umpire thinks they should uphold. I will not play the game...."
I understand the crisis, but I also think it's a good opportunity to snap up companies who certainly aren't going to cease to exist anytime soon. Your cynicism amusing me. I was discussing the rally on wall street with my boss yesterday saying "The Dow isn't really up, they're just manipulating the numbers. They removed AIG and replaced it with Kraft." She said, "hmm, I'm trying to remember if I was as cynical as you are when I was your age." I replied "I can't be too cynical if I'm still buying stock."
Krugman has a good take on the latest proposed bailout http://krugman.blogs.nytimes.com/2008/09/20/no-deal/>No Deal here. I like the new blog picture of pig and chickens.
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