TheStreet.com's Jim Cramer says the writing's on the wall, so position yourself accordingly.

If the ethanol mandate is scratched, what will that do to Potash (NYSE: POT) (Cramer's Take) and Mosaic (NYSE: MOS) (Cramer's Take) and Agrium (NYSE: AGU) (Cramer's Take)?

Here's the answer every hedge fund knows: It will not let you raise numbers in the out years.

Right now there is a tremendous struggle going on about near-term and far-term earnings growth and what we can expect to see. Everyone knows when Mosaic and Potash report next week that the numbers will be beaten and the estimates raised.

Everyone knows that the numbers will be far better than whatever drove Bank of America (NYSE: BAC) (Cramer's Take) up 80% in less than a fortnight, that doubled Wachovia (NYSE: WB) (Cramer's Take).

But so what? If you scrap the ethanol mandate or if people even think that it will be scrapped, you will see grains collapse just as quickly as oil collapsed when we found a level we didn't need it -- remember, we don't "need" ethanol, but it is mandated.

I have not decided who I am voting for yet. Or maybe it would be more accurate to say I have decided on multiple occasions only to become undecided again. While some will see me as fickle, or worse, others may be in the same boat.

I am also continuing to think about what difference any of the candidates can make on the economy, and based on these musings, where to invest. My current belief is that none of them will have a profound impact on our economy.

There are no financial wizards among them. Here is the shocker though: I like all three candidates, or at least can find some good in each of them. Each of them is a fighter, and I believe each one of them brings certain skill sets to the job. There are also things about each candidate that are inescapably negative. Clinton has so much baggage, Zsa Zsa Gabor would be jealous. Obama does not have the experience and he has a degree of arrogance (right sweetie); McCain is an old stick-in-the-mud who, as a long-time senator, has spent more hours with lobbyists than almost anybody, though he is pretending otherwise.

Where does this leave me from an investment perspective? My first choice, for stability with moderate growth and dividends, remains the defense sector. I wrote Defense sector rolls over S&P 500 for 8th straight year a while back and I still think that it is the most secure. Here's why:

A) None of the candidates will want to appear soft on defense when we are at war, and all three have made threatening remarks in some country's direction to make sure the electorate knows that.

B) The War in Afghanistan and Iraq rages on, and even the most optimist view is that a draw-down will take years.

C) Even if all war ceased immediately, the upgrading and replenishment of the hardware will cost billions of dollars and most of the defense contractors have that in their backlogs now. Chasing Value: General Dynamics & Raytheon -- The defense does not rest

Farmers are paying more for supplies to grow their crops and they're passing those rising costs onto consumers. The Wall Street Journal reports that farmers paid 65% more for fertilizer in April 2008. Fuel, the second-fastest rising cost, is up 43%. And seed prices have risen 30%. But you can hedge your rising food costs by investing in companies that profit from rising fertilizer prices.

Farmers say too much market power is concentrated in the hands of a small group of companies in the U.S., Canada and Russia that dominate global production of potash and phosphate. Phosphate is up 174% from $365 last year to $1,000 a ton. The price of a ton of potash is up 204% from $230 to $700. Thanks to a rise in natural gas prices, the price of Urea, a nitrogen fertilizer, has doubled to $600 a ton.

Should you hedge your rising food prices by buying stock in Potash and seed suppliers? Potash Corp. (NYSE: POT) and Mosaic Corp. (NYSE: MOS) have benefited from the rising price of Potash. And Monsanto Co. (NYSE: MON) is the biggest seed company out there. They have benefited in the past year -- with stock prices up 202%, 279%, and 103% respectively. But will they keep rising?

Potash Corp. of Saskatchewan, Inc. (NYSE: POT) shares are soaring today after competitor Mosaic Co. (NYSE: MOS) reported a third-quarter adjusted profit of 99 cents per share, beating analysts' expectations of 95 cents per share. MOS benefited from a global boom in the agricultural sector, which should certainly also be good news for POT. If you think that the stock won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on POT.

After hitting a one-year low of $54.93 last March, the stock has hit a new one-year high today. POT opened this morning at $173.01. So far today the stock has hit a low of $171.11 and a high of $175.46. As of 12:20, POT is trading at $173.90, up $6.23 (3.7%). The chart for POT bullish but deteriorating.

For a bullish hedged play on this stock, I would consider a May bull-put credit spread below the $130 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make a 6.4% return in just six weeks as long as POT is above $130 at May expiration. POT would have to fall by more than 25% before we would start to lose money. Learn more about this type of trade here.

POT hasn't been below $130 since January and has shown support around $154 recently. This trade could be risky if the company's earnings (due out on 4/24) disappoint, but even if that happens, that position could be protected by support the stock might find around $150 from it's 50-day moving average.

Brent Archer is an options analyst and writer at Investors Observer.

DISCLOSURE: Mr. Archer owns and/or controls diversified portfolios of long and short stock and option positions that may include holdings in companies he writes about. At publication time, Brent neither owns nor controls positions in POT or MOS.

MOST NOTEWORTHY: Hansen Natural (HANS), CVS Corp (CVS) and Career Education (CECO) top today's extensive list of downgrades.

• Hansen Natural Corp. (NASDAQ:HANS) was removed from Goldman Sachs Conviction Buy List due to the lack of near-term catalysts.
• CVS Corp (NYSE:CVS) was removed from the Focus List at Merrill Lynch.
• Career Education Corp. (NASDAQ:CECO) was downgraded to Hold from Strong Buy at Matrix USA due to the declining environment that is leading to slower sales growth.

OTHER DOWNGRADES:

• A.G. Edwards downgraded Westwood One, Inc (NYSE:WON) to Sell from Hold as fundamentals are not stabilizing. Deutsche Bank also downgraded the media programmer to Hold from Buy.
• Avaya, Inc. (NYSE:AV) was downgraded to Market Perform from Outperform at Morgan Keegan.
• Finally, Potash Corporation of Saskatchewan, Inc. (NYSE:POT) was downgraded to Neutral from Buy at UBS on valuation.

Analyst summaries provided by TheFlyOnTheWall.com (subscription required).