Commodities are typically extremely volatile. Not so in the last 3 years. With the exception of 2 major rallies in precious metals (as per our gold forecast and silver forecast). Commodities as an asset class are ‘in no man’s land’ for a while now. And that’s fine, investors should respect this. Remember, the market does not care about investors, so the message of the commodities chart is to give this market the time it needs to consolidate. Don’t try to outsmart but only accumulate sporadically some oversold commodities stocks of high quality companies for the long term. Nothing more, nothing less.
We are not focused on specific sectors here at InvestingHaven. And there is a very good reason for this.
Being a perma-bull in a specific sector has a price, especially during downturns and consolidations. Perma bulls tend to underestimate the bearish power of bear markets and tend to buy too fast and too high during consolidations.
It is tough to be emotionless, but is the recipe to successful investing. That’s what we wrote in detail in 10 Tips To Master Investing Without Emotions.
In that same article we shared 5 quotes from one of the top investors in history: Stan Druckenmiller. He pointed out that diversification is not going to help establish wealth in an accelerated manner:
And I strongly believe the only way to make long-term returns in our business that are superior is by being a pig. I think diversification and all the stuff they’re teaching at business school today is probably the most misguided concept everywhere. The mistake I’d say 98% of money managers and individuals make is they feel like they got to be playing in a bunch of stuff. And if you really see it, put all your eggs in one basket and then watch the basket very carefully.
That said, commodities should be given the time they need to get bullish again. This may start in 2020 or not, we don’t know for sure.
All we do know is that commodities are consolidating as long as the BCOMTR index trades below 190 points. Investors better give it the time that’s needed to build up bullish energy for the next bull market.
Until then we stay focused on other sectors. And we’ll give great investing tips for subscribers of our free newsletter. In fact for another 3 months we’ll give premium updates to all members of our free newsletter. Sign up here >>