July-26 Commodity

I think it is pretty much necessary to write something about commodities at this moment. It has been always a funny thing that people ask on the mailing list how they can do with their stocks under water, but no people ask me whether they should sell stocks when they are high, such as when RIO hit $45.

Stock market is always a cyclic business which means a single stocks never goes up in a mono tune without major correction. This principle also holds on the downside. Commodities have this correction led by OIL, now we have two different situations.

• The first one is, this financial crisis is completely over and the housing price is steady, Then the commodity price may go even a bit lower, then the another bull market begins.
• The second one is: we are heading more financial bail outs and more troubles on mortgate with housing price going down. Then the dollar may still go down, commodities will go up.

Please think about and look around by yourself, which one would be more likely to happen?