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Paragon Investments' Futures File: Stocks, Hogs & Gasoline

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Stock Crash of 1987: 30 Years Later, Record Highs

On October 19, 1987, the Dow Jones had its biggest crash, losing 508 points (23%), finishing that dreadful day near 1,739 points. 30 years later, the market has gone up more than tenfold, reaching a new record high on Friday over 23,200.

For many investors, October is an ominous month, as other major stock collapses took place during the month, including the Crash of 1929 that started the Great Depression and the worst stock market losses of the 2008 financial crisis.

However, October has shaped up to be a great month so far, with gains of over 4% for the Dow as investors stay hopeful about low interest rates and the potential for tax reform to help bolster the economy.

Still, others are concerned that the multiyear bull market could be coming to an end soon and are beginning to take defensive measures. Rather than outright selling their carefully crafted portfolios, investors can hedge their stock holdings by selling short stock index futures contracts or buying put options, which act as a form of price insurance against a falling stock market.

Premium Pork Prices

Hog futures reached an eight-week high on Friday at 64.75 cents per pound.

Prices are rallying as meatpacker demand is climbing after the recent addition of new slaughterhouses. This short-term demand for hogs will ultimately boost meat supplies; if consumer pork demand doesnt keep up, prices for pork could end up falling back down to clear out bloated inventories.

Gasoline Market Turbocharged

Gasoline prices are revving to a one-month high, a move that could drive consumers mad. Prices have risen by 13 cents per gallon over the last 10 days amidst concerns about instability in the Middle East.

This week, Iraqi forces retook the city of Kirkuk from American-allied Kurdish forces that had held the city, which is in the middle of a major oil-producing region. The Kurds recently voted in favor of independence from Iraq, which prompted the military response and could threaten oil production from that region.

There was also talk in Washington of increased oil sanctions against Iran, which could restrict global petroleum supplies further.

These fears shot oil prices higher and carried gasoline with it. However, U.S. gas prices are climbing despite rising gasoline inventories and falling demand, which could make the market especially prone to a selloff if international concerns cool down.

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About the author

With a degree in Grain Science / Management from Kansas State University, Mr. Haverkamp has worked directly with and for several corporations in research, logistics, and origination of commodity products. Among these are Continental Grain, Kansas Wheat Commission, National Livestock Association, Kice Industries, and Land 'O Lakes. Mr. Haverkamp is a regular guest analyst on both radio and television programs throughout the Midwest and also provides fundamental and technical research for Bloomberg, DTN, Dow Jones, The Wall St. Journal, CNN and CNBC as well as several other local and regional news syndicates. Mr. Haverkamp sat on the board of directors for the NIBA (National Introducing Brokers Association) in Chicago for five years and on the National Futures Association's nominating committee for one year. Mr. Haverkamp began trading in 1987 and founded Paragon Investments in 1996. 

  Mr. Haverkamp continues to provide consulting services for individual investors, livestock operations, grain processors, and individual producers as well as holding the title of CEO for Paragon.

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