The following is a case presented to support why we should continue to see an upward investment trend in commodities and how this positive long-term trend is due largely to the supply and demand imbalances that persist in industries that produce commodities.

In addition, the market turmoil of the past two years caused new financings of commodity exploration and development projects to become next to non-existent, so these imbalances have been exacerbated.

In spite of the many articles published here at Dividend Money and the powerful rally that took place over the summer across global equity markets, some investors are still not ready to plunge back into equities.

However, long-term Investors who choose to sit in perceived ‘safe’ investment like savings accounts, CDs and money market funds should realize that the historically low yields are likely going to leave their portfolio returns flat for some time.

As we head into the fall and we look forward toward next year, it is important to take a look at the general econimc landscape, assess the data that we have access to, and develop our views on the performance of our investments going forward.

The following are three high-level economic data points that we can use, along with our other tools, to further assist us determining our views on equity market investments.

Just a few days into August and markets seem to have picked up where they left off in July.

Here’s a summary of market action and key developments from last month, including monthly benchmarks.

If you’re still standing on the sidelines in cash at the moment, here are three good reasons that you should be invested in stocks right now.

1. An investor’s choice of asset allocation is the single largest factor that will influence the probability of long-term success. Historical evidence suggests that cash investments return the least amount over the long run.
2. There is significant upside potential in equities for long-term investors right now. Stock valuations are, despite Q2’s rebound, well below their highs and have a long way to go to be back in line with what we consider to be fair value.
3. Sustained low interest rates and dramatic increases in money supply combined with increased deficits have many fearful of the inflationary impact once economic recovery takes hold. Money market investments, non-market linked CD’s and high interest savings accounts offer little protection against the wealth eroding effect of inflation.

That is not to say that there is no downside. In fact, there is an inherent risk when investing in equities. However, I beleiive the risk vs. reward payoff still favors the equity investor at this time.

With the end of June comes the start of summer: warm air, hot beaches and, sometimes, choppy waters. The following is a recap of last month’s market action and key developments from “30,000 feet” .

The month of June saw North American stocks end up in slightly positive territory. On a total return basis, the S&P/TSX Composite Index gained 0.3% and the S&P 500 Index was up just 0.2% .

Since the credit crisis began in August 2007, experts have agreed that there is no magic bullet solution. The general view is that world economies will eventually recover but the healing process will take time. Along those lines, here is REAL data that represents REAL steps in the right direction.

Here are two recent examples:

In a downturn of this magnitude, before things start to look ‘good’ we first look for them to be ‘less bad’ than they have been over a broad number of indicators. Although not necessarily over a broad range of indicators, the ‘less bad’ theme is becoming more evident as we move into the second quarter of 2009.

Below are a few summary points including a couple of references to the ‘less bad’ concept.

Yes, we all know that past performance is not an indication of future returns. However, the only information that we have to make decisions on investing is from the past. Therefore, this information is better than no information at all.

Some Important Stats on Stocks

Here are some current relevant statistics for those who want to know if they should be investing in stocks right now:

In yet another sign of the times, the three Atlantic City casinos once run by Donald Trump filed for bankruptcy protection Tuesday. Although Trump maintains that he has little to do with the businesses other than having his name on the buildings, it does reflect the fact that things are pretty tough out there for everyone - even “The Donald”.

Trump Is Not Alone

Of course, Trump Casinos are not alone. Businesses the world over are feeling the pinch of a global economic downturn. And in recent days, word that Japan’s economy contracted at its fastest pace in over three decades in the final quarter of 2008, disappointing corporate earnings, renewed talk of bankruptcy in the U.S. auto sector and continuing skepticism over the $790 billion dollar fiscal stimulus package proposed by the Obama administration once again have investors fretting over the future. This concern has weighed on stock markets in recent days. The MSCI World index has closed down for six straight sessions and in North America, while the S&P 500 declined 4.6% to it’s lowest level since November.

Over the past few months many investors have been questioning their methods of building wealth for the future. With the markets being more volatile than at any time in history, there is no doubt that many people simply feel like running for the exits.

With that in mind, here are three questions that many investors are asking along with answers based on historical statistical evidence.

We’ve recently come to recognize the herd mentality that’s been corralling the minds of retail investors and how this has led to a ‘bubble’ in U.S. Treasuries. This phenomenon reflects the extreme risk aversion that’s moving the markets these days and how people are more focused on return of investment than return on investment.

Even though the yield on Treasuries is at historically low levels, investors are willing to sacrifice the returns they need for the sense of security they want. Unfortunately, this fixation with ‘safe’ assets doesn’t make much sense within the context of long-term goals.

Saving money around the holiday season is a very common theme this year and retailers are doing their best to entice consumers to open their wallets with sales and discounts that many thought we would never see.

Many, if not all, online stores are offering free shipping and the savings on non-essential items like video games and electronics are virtually unheard of.

As an investor, you come up with an overall approach to meet your objectives and then bring in the stocks, bond, real estate etc. to your portfolio to execute the plan. Of course you expect that there will be frustrations along the way - just like we can’t control the weather, we can’t control the markets. But, if you are willing to put up with the frustrations, by the end of your investment time horizon, you should be able to enjoy the retirement you’ve always dreamed of.

Historical Statistics

Anyone investing for a long time should expect markets to go down sooner or later, but the long-term trend has always been up. In 183 years of equity markets in the U.S. performance was positive 70% of the time and negative only 30% of the time. Years like the one 2008 is shaping up to be are extremely rare. In fact, the only complete calendar year that lost over 40% was 1931. Conversely, the market improved by more than 40% ten times.

As I came into the office Tuesday, I was reminded of what time of year it is. Every year a very large tree is set up and decorated in the lobby of the building. Years ago it was a Christmas tree but as times changed it became known as a holiday tree. This year, in order to spare the slaughter of an innocent tree, it’s a 10 foot steel cone covered in green, prickly plastic. So, as I walked past the holiday cone I was reminded about what’s coming later this week in the U.S. - Black Friday.

Black Friday

Black Friday is so named because it’s the day that retailers finally move into “the black” for the year and it’s the day that marks the unofficial beginning of Holiday shopping. It’s also the busiest day of the year for most retailers in the U.S. and a day that many items go on sale as businesses compete for those gift shopping dollars. Seasoned shoppers will do their research by scouring through local papers then line-up early in order to get the best deals - after all, if you can get the same item at a lower price, why wouldn’t you?

The markets took another beating Thursday with the S&P/TSX plunging 756 points to fall below the 8,000 mark for the first time since 2003, closing at 7,735 and the DJIA fell 360 points to close at 7,637. The events of this week are sure to keep investors questioning their actions or inactions with respect to their investments and whether or not they should ‘do something’.

The well-studied principles of investor behavior are a large part of what moves our markets both up and down. Investing strictly on facts and discipline is difficult - after all, we are humans processing information with all the emotions, biases and shortcuts that get in the way.

A few weeks ago I wrote an article titled Panic or Profit and many folks thought I was just spouting theory.  While that may be, the recent evidence of my “theory” has been proven at least half true thus far.

According to the Globe and Mail, panic stricken investors in Canada pulled a record $8.45-billion from the mutual fund market in a stampede for the exits. It was the worst month for net outflows since the Investment Funds Institute of Canada (IFIC) began collecting data in 1990, and nearly doubled the previous record posted in September, which saw net outflows of $4.5-billion.

October has often been referred to as the most horrible month for stocks, and this past October was no different.  We saw tremendous losses across all global markets; not to mention gut wrenching volatility that made even the most seasoned investors uneasy.   This extreme volatility was the aspect of the past month that was most interesting to me and it was interesting to learn that there have been previous instances of volatility that were just as extreme.

Historically speaking, the volatility we’ve witnessed has not been normal. And after almost five years of below-average volatility levels, the past few weeks have felt even worse. Recently a closer look at volatility in U.S. equity markets was studied within a historical context.

As we saw on Friday, the current financial crisis has investors all over the world living in fear now. And this time, it’s the government who is helping businesses to bring down what is crippling markets - the credit crunch precipitated by the U.S. housing collapse.

Governments in North America, Europe and Asia have provided bailouts to troubled financial institutions, liquidity to money markets and guarantees to banking systems. And all of this is in addition to drastic interest rate cuts. Fortunately, there are some very encouraging signs that these initiatives finally are starting to work.

Is it just me, or does it seem like the media is playing a large part in the widespread financial panic that has consumed the globe?

I know the media is in the business of selling “papers” but still, I wonder why they always seem to play up the negative. This only serves to feed the panic and thus make an already irrational market further disconnect from the fundamentals.