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Readings: Wheat & Inflation, Global P/E ratios, Trading Generalizations

. . . if I had wheat sitting in bins, I would buy wheat puts to lock in a floor for the next six months until spring planting. Although puts are expensive, they offer the best of both worlds by protecting farmers from downside until expiration while still allowing full upside exposure if this wheat parabola hasn’t topped yet. Hedging via futures in a strong bull is risky as upside surprises are far more likely than downside ones and opportunity costs for being locked into a selling price quickly mount during a surge. Unlike futures, put options give farmers the option, but not the obligation, to sell at a certain price.

Global Equity Market Snapshot: Price and P/E Ratios

Yes, I know P/Es do not matter in the current mo-mo Indian market.

10) If you anticipate a broad move by equities, consider trading the most volatile indexes and the sectors with greatest relative strength. What you trade is just as important to results as the timing of trades. Go with the dominant market themes unless you have tangible evidence that those themes have changed.

 

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    3 Responses to “Readings: Wheat & Inflation, Global P/E ratios, Trading Generalizations”

    1. Dr. Dan Says:
      October 13th, 2007 at 11:20 am

      kausik,

      “Yes, I know P/Es do not matter in the current mo-mo Indian market. ”

      Wouldn’t Ben Graham castigate you if he were alive for uttering this ;-))

    2. Gambler Says:
      October 17th, 2007 at 4:05 pm

      If someone has to take a call if India is a diversified market with good depth, today’s trading shows it all. (Country Risk)

      Within 5 minutes 10% fall and Circuit Breakers in action.

      Imagine what will happen if a Global issues (like US Housing crisis) takes a nasty turn. India (Emerging Markets) will be decimated. The decoupling theory will go for a toss. Other stategies which assumes India as a diversified market will also fail like quants, Debt securitisation etc.

    3. Rushh Says:
      October 21st, 2007 at 1:38 pm

      Its just absurd, the global wheat and maize prices are on the up and our farmers are still getting 10 rupees/kg for their wheat.