More Fast Times at 'Fast Money' High

This blog post originally appeared on RealMoney Silver on Nov. 30 at 7:39 a.m. EST.

Melissa started by asking for my market view and then for a peek at my Surprises No. 3 and No. 4 for 2011. (Last Monday night I highlighted Surprises No. 1 and No. 2 on "Fast Money" and I will be dealing out two new Surprises on "Fast Money" every Monday night until year-end.) As to the U.S. stock market, I cited the increased visibility of an economic recovery (seen in yesterday's Dallas Federal Reserve Bank manufacturing Index and in the previously reported Richmond PMI and Philadelphia PMI (as well as other key barometers of economic health) as providing an underpinning to the U.S. stock market. Nevertheless, I still believe that the S&P will not eclipse its high of 1227 by year-end, principally as a result of problems "over there." Melissa then asked for a peek at my next two Surprises for 2011. She noted a prescient call I made in last year's Surprise List for 2010 made a year ago regarding a wide-ranging SEC investigation into insider trading, which was revealed a week ago, as well as my "generational bottom" market call in March 2009. Again, I framed the answer to her question by saying that every year I take a page out of Byron Wien's playbook. (I have been doing this for seven years, and Byron and I enjoy jousting and seeing whose list is ultimately more accurate.) The real purpose of the exercise is to position a portion of one's portfolio for some outlier events -- or "possible improbables" -- in which we might be getting long odds, in order to generate alpha, or excess returns. My first surprise discussed last night was a doozy -- move over North and South Korea, we have even larger potential problems -- I even overheard my friend/buddy/pal Tim Seymour question my sanity when we were off air before the show commenced! Surprise No. 3: Scarcity of water boosts agricultural prices and causes a military confrontation between China and India. The continued effect of global warming, the resumption of swifter worldwide economic growth in 2011, normal population increases and an accelerated industrialization in emerging markets (and the associated water contamination and pollution that follows) contribute importantly to more droughts and the growing scarcity of water, forcing a continued and almost geometric rise in the price of agricultural commodities (which becomes one of the most important economic and stock market themes in 2011). Increased scarcity of water and higher agricultural commodity prices (corn, wheat, beans, etc.) not only have broad economic consequences, but they become a destabilizing factor and serve as the basis for a developing powder keg in the relations between China and India. Add Comment Tweet 1 2 Last » Next › var OutbrainPermaLink='http://www.thestreet.com/story/10934009/kass-more-fast-times-at-fast-money-high.html'; var OB_Template = "thestreetcom"; var OB_demoMode = false; var OBITm = "1276003897985"; var OB_langJS ='http://widgets.outbrain.com/lang_en.js'; if ( typeof(OB_Script)!='undefined' ) OutbrainStart(); else { var OB_Script = true; var str = ''; document.write(str); } adsonar_placementId=1341527;adsonar_pid=879768;adsonar_ps=-1;adsonar_zw=600;adsonar_zh=280;adsonar_jv='ads.adsonar.com'; TheStreet Premium Services Compare All Services Jim Cramer's Action Alerts PLUS: Now any level of investor can trade right alongside a Wall Street pro — and enjoy 24/7 access to his portfolio! Learn More Login RealMoney Silver: Get Doug Kass's exclusive trading diary + 5 of TheStreet's top premium services including Action Alerts PLUS and RealMoney — all on one streamlined page. 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