Is the Commodities Bull Really Over? 13 comments
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The face of today’s mainstream financial media has gone from meaningful analysis and commentary to constant tub-thumping between undisciplined Main Streeters, overambitious Wall Streeters, and ignorant bureaucrats. It has turned into a showcase of the blame game, everyone looking for a scapegoat to shoulder the iniquities of the masses.
Though the recent financial-market shenanigans are of historic proportions and have scared stiff nearly every investor on the planet, folks seem to be growing complacent. And it has been easy to fall into this trap and lose sight of investment strategy considering the indiscriminate selloff of virtually every asset class. Everything has been hit so hard that even the anti-commodity CNBC commentators have toned down their bubble-bursting rhetoric.
But now more than ever investors need to step back and revisit their strategies. The markets have changed, and for better or worse we need to know if what has worked in the past will continue to work going forward. And what has worked in the past is commodities.
Hands down, commodities have been the top-performing asset class of the 21st century. This powerful commodities bull was driven by strong global fundamentals that saw skyrocketing demand far outpace supply. Based on simple economic principles this imbalance prompted commodities prices to launch stratospherically.
Regardless of the mainstream financial media’s continual disdain for this commodities bull, which has run parallel with a secular bear for their precious stock markets, legendary gains were won for those prudent investors and speculators who saw the writing on the wall.
Now there is certainly a valid argument to be made that exuberant speculators caused many commodities prices to reach overbought territories and perhaps even launch into bubble-type parabolas. But there is no denying that it was the fundamentals that provided a solid foundation for the run on commodities.
Well, with the crumbling financial markets taking their toll on the global economy and launching what is expected to be a recession of historic proportions, is the commodities bull over? Over the course of the last several years the financial media has proclaimed the end of the commodities bull on countless occasions. And much to their chagrin they have been wrong every time.
But is it different this time? Is the commodities bull really over? In the past it has been easy to defend this bull market using anecdotal evidence of real-time hunger for scarce raw materials. But this time there seems to be little defense for commodities. And over the last several months there has been a massive selloff in the commodities realm. Nothing has been immune to the carnage.
While the dust may not have fully settled yet, fundamental changes in the global marketplace are already beginning to unfold. And I believe it is prudent to catch our breath and see if and how these interim fundamentals are changing the secular nature of the commodities bull. But first we need to assess the damage. To place the commodities bull in strategic context, I put together a table that captures its essence.
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This article has 13 comments:
People's memories are short so the seed of greed and next bubble are sown in the the soild of fear and bust.
For example, folk that say things like "There will be bounces, but the bull is dead."
Since you give no explanation for your opinion and no facts at all, and since we have no idea how skilled an investor you are, no sane person anywhere cares what you say.
My gut feeling is that the guy is dead on. I might explain that by, for example, noting that oil probably will go up over the long run because changing to "alternative" energy would l cost trillions upon trillions--for example, to use wind power effectively we would need a vastly superior energy grid to transmit power from where the wind blows to where it isn't blowing and usually doesn't blow.
But why should I bother citing facts when everyone else commenting to statements on this web site never cites facts. Based on the quality of the audience, I would never blog here on a lot of other blogs. What a waste of their time.
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"As for calling a bottom my inner contrarian tells me it is here now. I believe commodities and commodities stocks are vastly oversold and represent incredible bargains."
if you want to read about how mr. wright pumps the weak minded, and what he really thinks - go to www.gold-eagle.com/gol...
Reality check....when the World is producing enough resources to outstrip demand .... when everybody wants in on the never ending Commodities bull market...when CNBC has a guest on everyday talking about the next way to profit from the Commodities boom....it will be over then.
We have a ways to go yet.
Nothing has FUNDAMENTALLY changed..if anything, the recent implosion has taken product of all kinds out of the pipeline and when this tidal wave of liquidity hits the real world where is all the STUFF going to come from?
As for "the hands" weak and simpering post...the bottom is here..only he won't know it until mom lets him up from the basement and he sees the light of day.
is stuff happens like it should, treasury rates ought to go to 0.
we ought to take out large loans in foreign companies treasury bonds.
buy up all the gold market
reinvest in the foreign countries equities/stock market.
wait tell their dollar strengthens.
sell back their gold.
and reap our rewards with the capital appreciation and then sales on the capital appreciation or long term dividend gains
to buy back more of their products for free.
but...
we could just play nice like for a little tell the world recovers or else well be *'ed big time for next 7-10 years while we wait for things to recover.
why don't we take a long term view of things. a bigger picture.
and see if maybe we can use our US dollars to invest in quality equities here, and maybe some quality long term value in a foreign country.
its more work then option and leverage trading, in the short run. but your long term profits to work put in... lot higher lot safer. thats why buffet does it that way.