I started buying Potash at $131 per share and have bought twice more, averaging down... My average share price is now $108 per share. If Potash continues to remain near or below this level, I am prepared to buy once more, in order to further lower my average purchase price.
I believe that we are heading toward a period of rebound in the general market, following an extraordinary drop. I was in the Crash of '87 and ultimately did very well, by holding my positions, over the next few months. This time around I sense that this is a "synthetic" crash and it will be followed by a "synthetic" recovery. Valuations have become very good on some excellent companies, like Potash. I wil not repeat the obvious reasons why Potash of Saskatchewan was a BUY, months ago, but the fundamental positives have not changed. In my veiw, the current price of Potash is a reflection of the general market, which I believe will start a nominal recovery, from this point forward. Potash has been a leader in the volatility over the last 30 days, dropping 50% faster than the S & P. I expect it to also be a leader to the upside, should we begin a climb, not a bounce, but a climb over the next few weeks. Again, the market action has been exacerbated by "synthetics." Negativity is way overblown and when this becomes fully apparent, stock like Potash will soar from their current levels. I don't expect a miracle, like returning to $240, or $180, but I do expect very, very good action to the upside. I believe that POT will reach my average BUY price of $108 within a matter of days... In the coming months, as fundamentals become the market compass once more, we'll bump this to $140 per share. My analysis is based partly on technical observations and the fact that Potash remains the same company, at a bargain price. It should lead the market, in any bullish recovery. I believe such a recovery may begin, even before the election, which has only a psychological effect on Potash, since the fundamental picture remains optimistic, under any administration, I believe.
Today, I caught the end of an item on the news about GM increasing the number of E-85 vehicles (ethanol). 10% of the potash used, goes to corn production.
I noticed that Potash was trading higher, at $76.00 per share, in extended hours trading.
$70.99 (10/17/08)
