Is it too late to get into commodities?
Some people say to short it, some say it's good for general long term. what do you think?
Best Answer
3680 points
MNSL answered one year ago …
It is not too late to buy commodity provided you buy them for correct value and you see that this bull market is going to stay for a longer period. History has proved that almost all the bull market ended up with bear market. So there are no exceptions for current bull market as well.
We had a great commodity bull market for the last 06 years and I think we are in the final stage of this bull market. On top of that by nature commodity is cyclical. In some period it goes up and in some period it goes down. Speculation also has gone to the roof.
It is true now some investors and funds are trying to short commodity market. I think these complex investors including speculators always try to take profit in both bull and bear market. I think now they are preparing for commodity bear market. You know how investors bet real estates slum last year and made profits in billion or trillion. So this is the period that we should watch carefully.
I personally think we have gone too far in the commodity market in current bull market. Therefore, we must be very careful in investing commodity now. However in the long run there will be demand for some commodity due to invention of alternative energy. Bio-fuel is just a speculative idea. Most analysts believe bio-fuel is not viable.
Finally do you like to invest at the early stage of bull market or final stage of this bull market? I will select former. We can think about investing commodity when we see meaningful correction and when we see there will be real demand.
I think it is better to concentrate on next alternative investments with potential to grow rapidly in next 10 years.
Answers
260 points
Hillcat88 answered one year ago …
Not all the commodities move at the same time. Just like Gold might move along with Oil, but that doesn't mean that Cotton or Tin would move at the same time. Strong dollar and strong US economy might (I say might) be bad for Gold but probably good for Copper. So it's never to late to look at the commodities as a whole and find the one just going to cross the wall of worry. I think copper is going to do great this year.
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411 points
jester112358 answered one year ago …
There's only one way to think about this question. Is there an imbalance in supply and demand in a commodity? Not enough supply and too much demand (think huge population increases reduced arable farmland) and prices have to go up. Money is a "commodity" too. If you print too much of it then real assets with limited supply like food crops, gold, oil, silver, copper will hold their value much better than paper. In extreme inflation as in post WWI germany, paper currency had no tradeable value, but food and fuel always will. That said, people who know commodities best, for example, Jim Rodgers, have almost all their capital in commodities and currencies like the Swiss franc and Singapore dollar. We are in a commodies boom of a lifetime in my opinion based upon Rodgers book. And I've backed that opinion with my capital. I wouldn't own anything other than Swiss francs, gold, oil and oil services companies, Ag and mining companies. In times of inflation such as now with real inflation running 7-8%, (or even stagflation like the 70s) commodities rule. You're not too late. Get in and preserve your capital from inflation by owning real assets!
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