with oil and inflation surging to new levels, is there any use investing in stocks ?
with oil and inflation surging to new levels, is there any use investing in stocks ?
Answers
951 points
Grudun answered one year ago …
Definately, where else are you going to invest your money and get a return that will exceed inflation. A savings or money market account(or CD) is not paying enough interest to keep up with inflation. Real estate investment might work if you are in it for the long term(5 years or more) and requires a lot of capital(both time and money) or an extreme amount of risk. Carefully chosen stocks have the best potential to yeild more than the rate of inflation and allow you to be agile(get in and out quickly) and respond to the very dynamic market conditions.
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546 points
warren answered one year ago …
Yes, in commodities, precious metals, and the related stocks.
There are many ways to beat infaltion and make money, not every day, but over the longer term.
Warren
www.preciousmetalstockreview.com
139 points
mugsy answered one year ago …
Varuna, I agree with Grudin and Warren. Also good to note that that the TSX (Toronto Stock Exchange) is 51% laden with commodities then 27% financials and the rest in other. With the high percentage in commodities, have a look at the strong rally it just had since the recent world market meltdown. The TSX just broke through all time highs and is starting to pull back now. Oil is the biggest driver. Gold will do extremely well also and the price of gold per ounce will surge much higher over the next few years. The world is finally decoupling from the US Dollar. The Canadian dollar will continue to strengthen over the years simply for the fact that when other countries purchase commodities they will need to exchange their currency to the currency of that country (Buying and thus Strenghtening that currency). In troubling times the Swiss Franc is a safe haven. Gold stocks do not always follow along with the price of gold. That is another matter of discussion. Other factors are interest rates and also from the USA fed reports, non farm payroll (job numbers), ect. Australia laden heavy in commodities as well. The world is expanding and supply cannot keep up with demand, alot from China, also BRIC (Brazil, Russia, India and China). Regarding oil, third world countries are producing more automobiles now. The commodities have had about six years into their bull run. I think that is only a smaller portion of a Supercycle that will last another twelve or 14 years. Of course at that time I would review what is in demand at the time. Nuclear power still in early stages also. There are some very intelligent investors and traders from this site. I do not always agree with every opinion, but that is what makes a market.
I also encourage you to scoll to the top right of this page and type in commodities for the search. You will see a recent question "Is it too late to get into commodities" Look at Jester's answer. I totally agree with 100% of what he said. I have a lot of leveraged money into gold and oil right now and plan to hold for a couple more years before taking profit when I see a topping pattern. Then I would wait for a strong pullback before re-entering with perhaps an even higher amount of leveraged money. I expect that very shortly there will be a pullback in the markets of fair significance. That would be your best bet, in my opinion to enter into this market. I don't like ethenal for investing. I am sure money can be made there, but it hardens fuel lines, hard on engines, cost more to produce then what it is worth, uses corn, so is helping drive food prices higher so to a bit of an extent is more of a Politicians vote gathering game!
Being in the right sector is important. I think oil especially and gold will continue their multi year Bull Runs. I also beleive that the volatility will increase over the years. With that in mind, I would take profits every two or three years for example when markets appear slugglish, rolling over, over-extented after very strong runs. Listen to the tycoon advisors when they say it is time to take out leveraged money, when all is going fantastically great, that is your best time to take out your profits, then wait very patiently for the next real opportunity to re-enter into the right sector. If you are disciplined with that, it should serve you well in the long run. Having a couple of leveraged accounts or funds in world markets may work well, taking profits and entering and exiting at stagered times depending on markets. Swing trading can work well if you have a good idea where you should be and when are uptrends starting, ect. I would say, wait for the next pullback and go for it!!! Good luck and happy trading, John
3930 points
MNSL answered one year ago …
As Grudan said definitely we should invest in the stock market to exceed inflation.
During inflationary environment intelligent investors will:
Invest in best managed and profitable companies with great potential (Especially under the present high cost situation)
Invest in recession proof stocks such as food related stocks
Look for hidden gems and neglected stocks
Look for companies targeted for acquition
Look for insider trading and dealings of main shareholders.
Invest in companies with effective cost control system
Invest in turnaround companies with good potential and growth.
Look for extremely undervalued and discounted stocks
Look for investment opportunities globally
If you can do little bit of research you can find out companies with above characteristics world wide.
According the type of investor you can apply short term, medium term and long term investment strategy.
I think all investors will not benefit by using same strategy. One particular strategy will make great profit for one investor in the expense of other investors. Some top investors have their own investment strategy and we have to be very careful when we invest in any asset. So we should learn and find out most suitable strategy to stay in the market long run. One thing you must remember you must never over pay for any asset.
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