Take Profits Off the Wood Trade?

Earlier this month, I gave you a very clear signal coming out of the PMI reports.

A signal that drove me directly into two wood product stocks:

Despite a lot of negative comments on social media, saying I was going to be completely wrong because of the housing slowdown, and leading my followers into areas that have nothing to do with AI…

Those comments suddenly stopped as we gained a combined 11% return on both of these positions.

All during a month when AI names lost more than 10%, effectively doubling the performance of the most popular assets in today’s market.

Then earnings came out last week.

And now we finally get to answer the one question that matters:

The answer is not that simple.

Because earnings revealed something much more important than just “price went up, so we must be right.”

Weyerhaeuser made $248 million in EBITDA.
West Fraser? $38 million.

Same commodity cycle, same products.

Completely different economics.

Understanding these economics, and how they fit into the broader factor and AI rotation, will determine what we choose to do with these positions.

And there is one more complication…

On Monday, we get the next Manufacturing PMI report.

That matters because our quant models show PMI breakouts pay in the month they are released.

But,

End up giving all gains back in the following month (unless a continued breakout is present.)

The question now becomes:

“How much of the upside has already been paid, and which position still deserves our capital?”

I have a different answer for each company.

Let’s get into it,

Take profits on the wood trade?