Thursday, April 21, 2011

Commodity Bubble almost as big as NASDAQ 2000

The US$ has already crashed. Commodities are in a bubble.

That doesn't mean that the US$ can't go lower against the other major currencies... nor does it mean commodities cannot go higher... Some things take longer to pan out than we'd like to think, but this has gone on far longer than many though possible... and we have the added impetus of the end of QE2.

I like to buy things after they have been mushed, and I like to short things that have gone ballistic but are currently falling (there is an old saying on Wall Street "buy green, sell red" that my desk partner from my  Bear Stearns days reminded me of last week when I complained about losing money shorting something that was still going up... NEVER call a top or a bottom... never grab a falling knife or step in front of a freight train).

We are in the 8th or 9th inning for commodities. Oil might be different (MENA and Saudi Arabia will have their say), as might Ag commodities (it is impossible to call the weather)... but that's my story and I am sticking to it.

Good luck.

5 comments:

ronnie said...

Hey,
Thanks for writing your blog. My neighbor ask me to look into some kind of internet stock during that dot.com thing. Everybody walking the streets were calculating what the value per square foot their home would bring and what they should buy next. That's gone now. My mom gave her 5 kids 20 ounces of silver for Christmas this past December. My sister the math professor sold hers January 3rd smart with numbers bad with money. I can drive almost any street here in Atlanta and see a place to sell my gold. When those places start closing because people think that gold and silver are a good investment I'll sell the barbarous relic.

www.johncall.com said...
This comment has been removed by the author.
westexas said...

http://www.cnbc.com/id/42704213
Killer Combo of High Gas, Food Prices at Key Tipping Point

Johnson estimates that food and energy eat up about 15 percent of consumer spending at today's prices, compared with about 12.7 percent two years ago.

Of course, at lower income levels, these percentages are much higher. One sign of the stress some consumers are already feeling is that some AAA offices have already seen an increase in out-of-gas service calls, as motorists try to put off filling their tanks or drive around trying to seek out the gas station with the least expensive price.

westexas said...
This comment has been removed by the author.
westexas said...

And my advice from exactly four years ago:

http://graphoilogy.blogspot.com/2007/04/elp-plan-economize-localize-produce.html
The ELP Plan: Economize; Localize & Produce (April, 2007)

Excerpt:

In this article I will further expound on my reasoning behind the ELP plan, otherwise known as “Cut thy spending and get thee to the non-discretionary side of the economy.”

I have been advising for anyone who would listen to voluntarily cut back on their consumption, based on the premise that we were probably headed, in a post-Peak Oil environment, for a prolonged period of deflation in the auto/housing/finance sectors and inflation in food and energy prices.