Three weeks ago we mentioned that Morgan Stanley announced that it will close the agriculture segment of its commodities business.
The move was just another sign of hedge funds and banks electing to shift away from soft commodities, and place greater emphasis on the oil and gas markets.
Over the last two years, a number of banks have struggled in the agricultural sector. As they continue to show impatience for the long-term, many on Wall Street have picked up the ball and gone home.
Still, from our research and conversations with investors like Jim Rogers, the agricultural sector provides one of the best investment opportunities over the long term.
With demand outpacing supply and global food stocks hovering near record lows, the fundamentals are clear. It's is why Rogers told Money Morning this year "the price of agriculture has to go up a lot, or we're not going to have any food at any price."
But there's another important investor out there who is long South American agriculture. And he's using an entirely different strategy than the big banks in New York.
The investor is George Soros, Jim Rogers' former co-founder of the Quantum Fund.
Even though many Money Morning readers might not agree with Soros' politics, there's one thing you can't deny: Like Rogers, he too is a legendary investor.
And sometimes you have to put politics aside and find the right investment. And sure enough, he's long one stock that is ripe given the need for more food development in South America.
More than One Way to Invest
Wall Street banks are pulling out of the agricultural sector for two reasons: One, the short-term focus on profitability clouds their ability to see the long-term value of agricultural holdings. Second, soft commodities are a very difficult to master.
There are many different ways to invest in agriculture, but most are subject to short-term volatility given the global supply and demand picture, and the factors impacting prices such as planting cycles, weather variations, energy and shipping costs, and political uncertainty.
While animal technology continues to be our favorite way to invest in the sector, the Soros strategy has centered on a valuable investment vehicle that remains popular with hedge funds around the world: farmland.
Farmland continues to rise in price as investors attempt to cash in on the growing need for food in a world that will have nine billion mouths to feed in 2050.
And it's a solid hedge against rising prices. Over the past 70 years, farmland real estate appreciation has easily outpaced the annual inflation rate.
But farmland isn't just spiking in price here in the United States. It's also becoming a very hot commodity down in South America and portions of Africa.
And one stock provides an opportunity to get in on the development and ownership of farmland south of the equator.
Land Opportunities Abound in South AmericaRead More...
Is George Soros About to Short the British Pound Again?
Shorting the yen has earned George Soros more than $1 billion in profits since November.
Now Soros has set his sights on the second-most-shorted currency in the world - the British pound.
And he may have company, as the Financial Times reports: Along with Soros Fund Management, Tudor Investment Corp., Caxton Associates and Moore Capital - some of the best global macro traders - "see similarities in UK's predicament to that of Japan" and are interested in shorting the pound.
This adds to worries about the pound, which has already fallen 5% this year. And with exports falling, productivity low, and gross domestic product shrinking last quarter, Britain's economic outlook is foggy at best.
"There could be a dramatic weakening of the pound this year," one of the world's top macro hedge fund managers, who declined to be named because he does not want his firm's positions becoming public, told the FT.
For Britain's sake, let's hope that weakening doesn't lead to another "Black Wednesday," Sept. 16, 1992 - the day George Soros "broke" the Bank of England.Read More...
We Beat George Soros by Eight Months on the Yen (and Made You 44%)
One of our promises here at Money Map Press is to keep you ahead of the curve - and certainly ahead of Wall Street.
Frankly, this is what you pay us for, and we take very seriously our responsibility to deliver.
Here's another example of how we have.
The Wall Street Journal reported that some of the country's biggest hedge-fund players have reaped billions in windfall profits by betting against the Japanese yen - capitalizing on the fact that the Asian heavyweight must weaken its currency to save its economy.
Billionaire investor George Soros alone has made nearly $1 billion since November on wagers against the Japanese currency, which has skidded about 20% during the last four months, the newspaper reported.
And Soros isn't alone. Investors say that David Einhorn's Greenlight Capital, Kyle Bass's Hayman Capital Management LP and Daniel Loeb's Third Point LLC have also made big money on the yen's decline.
Indeed, betting against the Japanese currency "has emerged as the hottest trade on Wall Street over the past three months," The Journal reported.
But here's the thing: Money Map Press Chief Investment Strategist Keith Fitz-Gerald was eight months ahead of the hedge-fund heavyweights in identifying this profit opportunity. In February he told Private Briefing, subscribers that the yen was headed for big fall - and he even recommended an ETF that would let them profit from his prediction.
The upshot: Keith's recommendation has so far reaped a 44% windfall - which is more than double the 20% yen decline the hedge-fund Johnny-come-latelies have been able to profit on.
And this isn't an empty claim.Read More...
Jim Rogers Says New Greece Deal Can't Save Europe
Investing legend Jim Rogers said that although the latest Eurozone deal for Greece is more generous than he expected, it's not enough to solve Europe's problems.
"Politicians have delayed addressing the problem yet again," Rogers told Investment Week. "It will come back in a few weeks or a few months and the world will still have the same problem, but this time only worse because the European Central Bank and other countries will be deeper in debt."
The deal European leaders hammered out on Thursday includes boosting the region's rescue fund to $1.4 trillion (1 trillion euros) and asking bondholders to take a voluntary 50% haircut on Greek debt.
A Potential "Big Trade" That Will Put George Soros to Shame
Many investors dream of making the "big trade."
Spurred on by stories of fabled investors who accumulated generations of wealth with just one big trade, they talk incessantly about what they could or should have done.
But actually doing something about it pays better.
Consider George Soros, who reportedly made $1.1 billion in a single trade against the Bank of England by shorting the British pound on September 16, 1992. Or Jessie Livermore, who reportedly made $100 million on October 24, 1929 - Black Thursday. Or how about Jay Gould, who tried to corner the gold market on September 24, 1869. Nobody knows exactly how much Gould made but he left his children $77 million when he died in 1892.
Well, if you have the guts, now is the time to make your move, because I think the next "big short" is already out there. In fact, judging from open interest I'm seeing on gold puts and VIX puts, I'd bet on it.
Right now there are literally tens of thousands of contracts open on both at various strike prices, so the odds are good that somebody - perhaps a group, a hedge fund, or another big money player - is placing highly leveraged bets that things will reverse.
With the proper structure, these trades could dwarf the bets made by Soros, Livermore, and Gould.
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Money Morning Mailbag: Market Volatility, BP's Blow Out, and Obama's Agenda
As the first full week of September ends and the summer draws to a close, many investors are still looking for answers to questions first asked back in May, notably:
- What's behind the recent market volatility?
- Can we put BP behind us?
- And what effect will President Obama's political agenda have on investments?
BP may be the next shoe to drop if that blowout preventer proves to be functional.
George Soros: "We Have Just Entered Act II" of the Global Financial Crisis
George Soros gained global recognition when he co-founded the Quantum Fund with Jim Rogers in 1970. That fund generated an average annual return of more than 30% while he was at the helm.
Soros hasn't quit making timely market calls since: From his $10 billion bet against the British pound sterling in 1992 to his April 2008 prediction that we had not "seen the full effect" of the recession and that the situation was "more serious than the authorities admit or recognize."
In February, Soros called the euro's viability into question, and the currency has plunged some 10% since that time.
Know When to Fold'em: When Is the Right Time to Sell a Stock?
There's one word in every stock market movie ever made that's never uttered in a normal tone of voice. Never merely said, but rather shouted.
That word is SELL!
Indeed, no other word in the financial lexicon is so often associated with market uncertainty, investor fear, or in the worst case, outright panic . Truthfully, I can't recall a single film in which the protagonist calmly decides to sell based on reasoned analysis.
Of course, that's the case in movies because it makes for stronger plots - ones propelled by high drama and intense emotions. But all too often, it's much the same in real life.
And it shouldn't be.
Playing 'Follow the Guru' Can Be Fun – and Profitable – for Investors
If you wanted to distill all the world's best investment advice into a single sentence, it would probably come down to this: Follow the leader.
We've whittled the investing wisdom of these three stalwarts - and others - into 15 rules to live by. We offered the first five rules in Part I of this story, which appeared yesterday (Wednesday). Here in today's second installment, we offer the final 10 rules.
Playing 'Follow the Guru' Can Be Fun – and Profitable
If you wanted to distill all the world's best investment advice down into a single sentence, the result would actually be fairly simple:
Plummeting British Pound Leads to Worries of Another Currency Market "Black Wednesday"
Outside of the earthquake rescue efforts in Chile and the Greek-rescue efforts in Brussels, the big news in the world economy last week occurred in currencies.
As you can see in the chart below, the plummeting British pound sterling has dropped even more than the beleaguered euro in the past month and a half, while the good old U.S. dollar has been as good as gold. (That last bit was a bit of currency irony; the dollar has actually been much better than gold, which has flat-lined in the past six weeks.)
Billonaire Investor George Soros Questions the Euro's Future
In an editorial penned for the Financial Times, billionaire investing icon George Soros said that while Greece could be salvaged by a makeshift financial-rescue package, bigger problems lie ahead for the euro.
According to weekend news reports, Germany's finance ministry has sketched out a plan under which countries using the euro currency will provide between $27 billion and $33.7 billion (20 billion and 25 billion euros) in aid for Greece, which is teetering on the brink of default.
Soros says that "a makeshift assistance should be enough for Greece," but warns that the growing threats posed by other debt-laden, euro-member countries - particularly Spain, Italy, Portugal and Ireland - could prove overwhelming.
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