Trader’s Narrative

Way back at the end of April 2008 I mentioned that I was skeptical about the ability of Canadian fertilizer giant, Potash (POT) to be able to continue the heady pace it had kept for the past few years. I compared the stock rise of Potash to Nortel during the tech bubble and said:

The problem is that right now it is priced for utter perfection. And if the world is one thing, it is imperfect. For one, there is no reasonable logic to its valuation.

I also brought up several key metrics which made the valuation of Potash simply unsustainable. Of course this was only a small part of the much larger commodity bull run which has since, also imploded along with the equity markets. At the start of June 2008, just before oil ramped up to $145, I pointed out that the chart for crude oil had all the markings of a bubble. Now oil is trading at ~$78 a barrel - down 46%.

Nevertheless, when I wrote my thoughts on Potash, I received insulting comments - which always confirms my position. If someone has to rely on emotional outbursts to defend their trade position, there is something obviously wrong. Here is what happened:

The other fertilizer companies which I mentioned have fallen even more than Potash. Agrium (AGU) -55% and Mosaic (MOS) -70%.