ValueInvestor

Aluminum's Future: A Mixed Bag

I'm surprised you weren't all over aluminum in February when it was at an ALL-TIME REAL LOW. That was the easiest money you'll ever make in your life.

As a commodities trader I can tell you, whenever a commodity hits an all-time real low it has nowhere to go but up. Sure it can go lower in the short term, but it can't go much lower for very long. The economic forces at those prices would put every single producer on the planet out of business if nothing changes, but it will, so it naturally the price willl go higher. Buying long term calls would pay off handsomely.

Remember, a commodity isn't a stock, it can't go to zero. Also, investing in the commodity instead of a company means you don't have to worry about poor hedging techniques, management errors, strikes in foreign countries, credit problems etc.

New Stock Valuation Method: Price to Book to Price to Tangible Book

There are many ways company's can inflate their balance sheet and Book Value. Everyone should do a year by year comparison for the last 10 years of any company listing their goodwill, and depreciation. Any significant changes signal possible shady accounting.