Steel can’t go up forever, can it?
>Time to short X? Probably not. Shorting things on huge runs doesn’t seem smart to me. >Steel can’t go up forever, can it? Maybe it can for awhile. At least they have a real product. On the other hand, steel on a tear and a recession just don’t mix well in my book.
True, but I’m shorting at $180 and will cover at $171 for a short term probable gain…
Good luck.
I’m a firm believer in relative strength–winners continue to winners and losers continue to lose! JoeyDVivre–on stocks like this, how much is the positive money flow from fundamental investors, rather than positive money flow from technical analysts?
High risk trade for a 5% expected return (+/- financing)… i dont know, i dont know anything about X, but 5% isnt enough to me to risk anything.
soxboys21 Wrote: ------------------------------------------------------- > I’m a firm believer in relative strength–winners > continue to winners and losers continue to lose! > > JoeyDVivre–on stocks like this, how much is the > positive money flow from fundamental investors, > rather than positive money flow from technical > analysts? Too hard for me… I’ve never been into investing in US steel because it seems difficult to believe that long-term a US steel company can compete with subsidized foreign steel.
JoeyDVivre–not necessarily on steel stocks, but any stock that has exhibited a nice move. How much is the positive money flow from fundamental investors, rather than positive money flow from technical analysts? Any thoughts from others?
Brazilian steel might be good, but US steel seems to be in long term decline. China probably has steel companies, though I keep remember reading about backyard blast furnaces in the Great Leap Forward.
bchadwick Wrote: ------------------------------------------------------- > Brazilian steel might be good, but US steel seems > to be in long term decline. China probably has > steel companies, though I keep remember reading > about backyard blast furnaces in the Great Leap > Forward. Theres a few of em that are state companies created after the great leap forward, baosteel is one of them, i think their the fifth or sixth largest producer in the world. I think mittal has a few steel plants running in china too.
JoeyDVivre Wrote: ------------------------------------------------------- > I’ve never been into investing in US steel because > it seems difficult to believe that long-term a US > steel company can compete with subsidized foreign > steel. Subsidised *foreign* steel??? Didn’t the EU have to take the US to the WTO over steel import quotas?
I’m not necessarily supporting the steel “safeguards” (It is a Bush administration policy and I’m uniformly against those). The US theoretically imposed those to protect steel instead of subsidizing it. The deal with steel is that most of the world thinks that endogenous steel is a national security issue so they fund it up. I guess nobody thinks that a steel embargo against the US would work or maybe we have enough old cars on cinder blocks in Appalachia that we have secure strategic reserves. Anyway, back when the Bushites imposed those steel safeguards there was all this hand-waving about strong dollar causing de facto dumping. Is X just doing well because the dollar is so weak? I have no idea.
Thats where we need good old ICAPM. Too bad I forgot how to write it after L2.
on another note, i think its important to consider the impacts the run up in steel price can have on other industries. I worked as a cost estimator for a construction company back in 2003 when the first run up in steel price happened in january to march. we were working on a very large reinforced concrete containment unit for the local sewage utility and the steel price doubled in about three months. we had a fixed price contract and the job immediately became a major drain on our cash flow. now its a regular practice to stockpile steel or engage in futures contracts inorder to secure your supply but for long term projects thats often not practical. Now we have a second round of incredible price run ups and i know of developers that are walking away from projects because they cant secure financing and this is going to affect industries from shipbuilding, mining, developers and even oil companies developing the athabaska tar sands… its pretty crazy to witness how inflationary effects on inputs can make projects unprofitible even in light rising prices for the end product.
Ive been long NUE (similar to X) for months now and have no plans on selling… Ken Heebner’s focus fund (CGMFX) is long X and NUE and added to both positions in his recent 13F. There is a few very interesting articles where he talks about how he thinks steel will go up to 2000. He says all the pieces are in place. Usually I wouldnt care what some random fund manager says - but I wouldnt bet against Heebner and his 75% return last year. Not a guy who shorted tech stocks at the bubble, bought homebuilders in 03-05, shorted countrywide in early 07, and bought Potash and Monsato in early 07. The guy is a genius, and there is worse things to do than follow his picks…
“futures contracts”
JoeyDVivre Wrote: ------------------------------------------------------- > “futures contracts” on steel anywhere I’m aware of. steel suppliers would allow use to purchase steel at current market value but they had yet to receive the steel as most of it was sourced from china. Its not on a market but in a sense its a futures contract, eeerr i mean forward. they dont do it too much anymore because there not sure of the supply, alot of the steel mills around beijing are going to shut down for a few months for the olympics and thats a tremendous amount of supply.
> True, but I’m shorting at $180 and will cover at $171 for a short term probable gain… Cool! Yes, it did hit today and I’m out +5% ($9k) in a week. It’s ok to brag when you win sometimes…Keep in mind, though, that I tried this last year when it was at $70 thinking that $70 was outrageous for X, and did lose some dough as it kept on going up. Also, keep in mind this is pure speculative trading based on technical evaluation ($171 was the support I was going to get out at, see any X chart). I would short again, at $175.
JoeyDVivre Wrote: ------------------------------------------------------- > “futures contracts” on steel anywhere I’m aware of. The LME has a steel contract now but there is no volume in it.
How about that…It does. Good catch.