|Home||About Us||Resources||Archive||Free Reports||Market Window|
Thursday, April 30, 2015
Commodity prices are down 60% from their 2008 peak... and they've lost a quarter of their value in the past year alone.
When will the bad times in commodities end?
They could already be over, actually...
After nearly seven years of terrible times in commodity prices, I now see a glimmer of hope...
The Bloomberg Commodity Index hit bottom last month (March 2015)... and has been quietly heading higher. You can see it in the bottom right of this chart.
Hey, I realize it's a small move higher... But that moment in March – in hindsight – could turn out to be the bottom in commodity prices...
You see, investor sentiment in commodities hit an extreme low last month (according to www.SentimenTrader.com). Commodities haven't been this hated since late 2001 and late 2008.
This is big news to me. Late 2001 and late 2008 both would have been great moments to buy commodities and hold them for the next year.
Assets typically don't bottom in price until investor sentiment is terrible. So we've finally checked that box in commodities. Now, we have a glimmer of an uptrend that has been in place for more than a month, as well. That gets me interested as well.
Importantly, this move up in commodities is not ALL about oil either... The Bloomberg Commodity Index is reasonably diversified. Take a look at its most-recently-published index weights:
Stocks and real estate have soared in recent years. Meanwhile, commodity prices are sitting at lows not seen since 2002. It's easy to make an argument that there's upside potential here.
Commodities hit a hated extreme in March. Now they're showing a glimmer of an uptrend. This is the kind of trade "setup" that I like to see...
I prefer a trade where my downside risk is small and limited, but where my upside potential is quite large. I could be early here... but I think we're close to that point in commodities today.
You could buy a commodity exchange-traded fund (ETF) and set your stop loss at new lows in that ETF. That would limit your downside risk – but your upside potential could be dramatic.
After the last two times investor sentiment bottomed in commodities, commodity prices soared over the next two years.
I'm not in the trade yet... But I'm definitely interested...
Put commodities on your investing radar now. At some point, I will pull the trigger here...
Here are a few more of Steve's latest recommendations:
Up 450% in Health Care Stocks – More Gains to Come
Subscribers are up 450% on one of Steve's recommendations... Would it be greedy to ask for more profits? Steve doesn't think so...
Why You Could Make ANOTHER 100% in China Starting Now
This market is up more than 100% in the past year... And as one legendary investor says, it could either double from here or fall in half...
One Investment Where You Haven't Missed It – Yet
U.S. stocks are up big over the last four years... but this index of stocks is down nearly 80%.
A BIG WIN FOR 'SELLING THE BASICS'
Today's chart drives home one of our favorite investment ideas. It proves once again that selling the basics isn't exciting... it just works.
Longtime readers know we're fans of simple businesses. Contrary to popular belief, you don't need to invest in complicated businesses to make money. Companies that "sell the basics" are often great long-term investments.
A great example is Helen of Troy Limited (HELE). Most folks have never heard of Helen of Troy. But you're likely very familiar with their brand names, including Revlon, Vicks, Vidal Sassoon, and Dr. Scholl's.
As you can see below, selling the basics is working well for HELE. Just yesterday, the company announced earnings that beat analyst estimates. Shares rose more than 10% on the news. In all, shares are up more than 100% in the past two years... and now sit at an all-time high. It's the latest proof of what we've been saying for years: Selling the basics isn't exciting... it just works.