I have some trouble trying to persuade one of my research team mates to convert the rating on keppel corp to a sell. I have some trouble trying to tell people to short the whole world (the market). Lastly, I have some trouble trying to advocate my thoughts that one day, everyone will hate stocks for a long period of time.
I actually talk to Mr. X's father about the 2nd great depression thoughts and he mentions a very important word that I have always ignored - diversification. Honestly, diversification doesn't run in my blood. You can say don't put all your eggs in one basket but I will tell you to put all your eggs in one basket and watch the basket. The word never has any impact on me until I begin to face those troubles.
It is very difficult for people to take my stand of extreme bearishness to some extent. I will not be shorting and keeping the shorts forever anyway (the world is against shorters, they will think of new plans). I realise that emphasing a stock market doom is not very applicable for most people. I begin to think about the word diversification and it leads to one smart man - Jim Rogers. Needless to say, there can only be one word to relate to him and that is "Commodities"!
Another Asset Class - Commodities
Somehow, nobody likes to go into commodities because it is perceived to be risky. After all, the only way to purchase pure commodities is through futures. You can go down to some shops and buy gold bars though.
There are few reasons why I like commodities:
1. Personally, this is the main reason - money has to go somewhere. This sounds very fuzzy and lack of substance. But it makes a lot of sense isn't it. Though demand and supply should be the main way to comment on commodities, but I like to be fuzzy at times.
2. Jesse Livermore actually earns bulk of his initial fortunes with cotton.
3. As risky as it sounds, the gains are awesome. Yeah, you hear stories of people losing their shirts with futures but... ... Alright, it is risky if you don't know it well.
4. Honestly speaking, I'm super new to commodities. Humans love novelty. It is not men who love novelty only.
5. Just like Indices, I think commodities are really much simpler than stocks itself.
Why Commodities Will Be The Next Big Thing?
1. Actually it has, in history, come to spotlight many times.
2. Stock market doom... I have emphasized this enough.
3. You can see it coming isn't it? Lots of commodities funds are sprouting out. More news coverage and so on.
4. You have a very out-spoken guru that speaks the very truth and people will listen.
Like what Jim Rogers said, "Enron was a natural gas company but it went to zero. " There are also many examples that you can find in his books about lousy oil stocks during the oil spike.
The thing is this.
What's the point of worrying about whether the profit margin of a company will improve or not with higher oil prices in the future when you can simply buy oil if you see strong demand for oil in the long run.
Last Words
I urge you to be opened to a new asset class that most people tend to avoid. Now it is still not too late. Gold can go much higher, oil can go much higher. I will read up more on commodities on my part as well. Nonethless, start reading what Jim Rogers has to say about commodities. It is going to make you a better investor in the future. Thank you
You can no longer buy commodities at Merrill Lynch. My guess is many analysts and even executives are too young to know how profitable a hot commodities market can be. They will soon.
Jim Rogers
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