Monday, April 27, 2020

All the markets are in the sky

According to an stock market analyst, “12 months from now, no one will regret buying stocks,” which are “now at the lowest levels since 2016.” I agree that stocks are extremely oversold despite their sharp rebound in the last few days.

However, I am not so sure that stocks will be higher in twelve months. Nobody regretted not buying the Nikkei Average after the initial 30% decline in 1990 because the Japanese market continued the downtrend for much longer – admittedly with intermediate powerful bear market rallies. It finally bottomed out in 2008.

Tuesday, September 10, 2019

Investing in agriculture and commodities is not necessarily easy

We have to distinguish between commodities.Some commodities like copper, nickel, zinc, aluminium, steel depend on the economy of China to a large extent. On the other hand, gold is not an industrial commodity and it does not depend on the demand from China. It depends on investor sentiment towards gold and it depends on essentially central banks’ monetary policies. If they print money, then it is likely that gold will go up in the long run. In the short run, it does not have much of a correlation and that commodities are going to go up this year. Some have actually bottomed out. The agricultural commodities like soybeans, corn, wheat and coffee are attractive, but if you invest in these commodities, timing is very important because the rollover of futures in very expensive and if you buy an ETF, the rollover for futures every month is incredibly expensive. So, for an individual to play the commodity markets is not so simple, the best is probably to buy plantation stocks. 

Monday, May 27, 2019

China recession is overdue

"When I wrote Tomorrow’s Gold, geopolitical tensions were not as big a factor as they are today. At the time, China was not yet a dominant economy. Today, China is a dominant economy. In the larger scheme of things, China is still in the early stage of development."