For fun, a few months ago (while the worst of the Bush administration Constitutional abuses were coming to light) a couple of friends and I set up gulagwealthfund.com (GWF) to track the performance of stocks that would go up in an economic environment of deprivation and loss of civil rights: a virtual medieval ETF. As it says on the home page of the site, to qualify for inclusion:
"All companies or investments listed must either be involved in prison, intelligence, surveillance, or military operations or be directly positioned to profit from tyranny and collapse in civil society. They must have oligarchic rights over essential resources/infrastructure/contracts in a sovereign nation or must receive government subsidy, guarantee or monopoly protection, thus freeing the investment from competition costs."
(note: the purpose of this exercise is to render opinions pertaining to stocks and markets and should not be construed as investment advice**).
What I can report today is that shares in GWF core holding Monsanto (MON:NYSE) have skyrocketed 100% over the past 12 months.
To get a better insight into Monsanto's business model, I screened a few companies per their price-to-earnings ratio (the current price of the stock expressed as a multiple of how much the company has earned over the past year) for comparison.
First I looked at another agricultural company, Archer Daniels Midland (ADM:NYSE) is selling at 16 x's earnings, not very exciting but that's to be expected for what is basically a commodity company.
By comparison, I looked at the P/E of Apple Computer (AAPL:NASDAQ), a high growth company with proprietary technology. It trades for 35 times earnings. This is what I would expect, as the public buys millions of high margin iPods and iPhones.
So where does Monsanto's P/E fit in? Monsanto has recently traded at 40 x's earnings.
Further screening of high P/E stocks uncovers an interesting candidate for comparative purposes - Visa (V:NYSE), with a P/E also in the 40's. But is this a good comparative stock to look at to get a better understanding of Monsanto?
Yes, if you understand the high growth potential of both eunuchs and zombies.
Eunuchs are Monsanto's business. The company is crusading to convert the globe's naturally occurring, sexually active cash crops that reproduce for free into sterile eunuch 'terminator' plants that commit suicide before siring any offspring, forcing farmers to buy stillborn seeds every year at higher prices thanks to what amounts to a price fixing scheme by Monsanto.
Monsanto and its evil twin Syngenta (SYT:NYSE) want to monopolize seeds the way OPEC monopolizes oil. Once seeds have been monetized, and turned into a fiat currency, then the price can be manipulated as easily as banks manipulate stocks, bonds, and other currencies for the benefit of the corporation and its bankers while draining wealth away from every one else.
Visa's business is zombies. They extract usurious interest and fee income that relies on millions of consumers around the world being in a lifeless state of debt. It's very difficult to know who's dead or alive in American malls these days, so why not just create a new class of consumer: zombies. I remember a couple of years ago the story of Melvin Berkowitz whose family couldn't get AOL to stop charging him for his monthly dialup even though he was dead. Zombie-nomics.
Monsanto's terminator seeds are outlawed (in Europe) for now, but we're only one or two disaster-capitalist events away from the company slipping these babies into the food chain and this is what investors who pay 40 x's earnings are banking on. Visa's earnings are going up as more people rely on borrowing money to replace earned income as jobs and wages shrink. The worse the global economy gets, the better for loan sharks and Frankenfood.
Slouching toward zombiedom and indentured servitude has been in the works in America and its colonies around the world for decades. The loss of educational standards, health standards, co-option of religion by consumer companies, mass advertising, and the glorification of debt by the current administration that likens penury to patriotism has chipped away at America's spirit of self reliance for both individuals and the country as a whole. America has consumed that which it will never pay back and accumulated debts that will live after death in a country whose every road, tunnel, bridge, port and mortgage intermediaries like Fannie Mae and Freddie Mac will probably be sold to foreign investors for pennies on the Amero.
A short video; Monsanto and Agent Orange during the Vietnam War, Bush 41 visiting a Monsanto lab and farmers talking about exorbitant cost of GM seeds.
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Max is Right On! I have been reading his column for the past few weeks and can say that "he is one of the sharpest and saviest investors out there". Max please keep giving us your critical insight into what is "really" going on in this new Financial Fuedal System in which most unsuspecting people are now debt servants. Thanks for providing the extremly honest reporting that the major news machine lack!
Big agri profits boom on back of global food crisis (which should really be called the global dollar crisis, but hey, food crisis sounds better I guess).
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Posted May 4, 2008 | 04:05 PM (EST)