| What's your take on unfashionable investments? | | | | Question Of Growing Demand & Falling Supply. |
| Investments and markets that are so hated that | | | | The sophisticated investor understands one thing - |
| they are rarely talked about - that have little or no | | | | whatever the current price of a product, it's price will |
| mention in the financial media and near the bottom of | | | | ultimately correct to reflect the basic demand versus |
| their trend graphs...? | | | | supply equation. Yes, we get bubbles - anyone that |
| I like them...sometimes. They are the ones with ten | | | | invested money in "Useless Dot Com PLC" around |
| bagger potential - gains of 1000% and more within a | | | | 2000 at a PE of about 967 will vouch for that. But |
| reasonable space of time. I say "sometimes" because | | | | ultimately, the market corrects itself - overvalued |
| all too often, investments are hated due to good | | | | markets and companies come crashing down with an |
| reason - there's a lot of wisdom in the price of any | | | | almighty thud. And undervalued markets and |
| given market. | | | | companies get re-rated. |
| But the market does get it wrong sometimes. At | | | | Why do they get re-rated? Because the market |
| any given time there are investments that should be | | | | understands that there is an imbalance. In the case |
| far higher than their market price - a correction will | | | | of Useless Dot Com PLC the market realized that |
| happen at some time and that's why I love looking at | | | | the company (which by the way is fictitious) was |
| hated investments. Listing them. Waiting for the tide | | | | just sitting on some cash with some far fetched |
| to turn. And getting in well before the crowd when | | | | business model with no underlying demand for it's |
| the indicators are right. | | | | core business activity or product. The result is that |
| That's exactly why the commodities market has | | | | the market valuation for Useless Dot Com PLC was |
| been on my radar for some time now - here's a | | | | trashed. |
| terrible performer that has performed sickly over the | | | | In the case of commodities, the market has no |
| past two decades - adjusted for inflation the value | | | | choice but to re-rate the market upwards because |
| of commodities investments during this period has | | | | (as we'll see) there is a significant imbalance in the |
| declined significantly. And let me ask you something - | | | | demand versus supply equation. Global demand is far |
| aside from small pockets (such as gold & oil) how | | | | higher than global supply - and ultimately this will push |
| much attention do you see general commodities | | | | prices up and up. |
| getting? Do you see books about them when you | | | | Why There Is Increasing Global Demand For Many |
| peruse the investment section at your local | | | | Commodities, And Dwindling Supply. |
| bookshop? Do you hear your friends boasting about | | | | The two rising super-powers - China and India are |
| their most recent commodities investment? No - | | | | developing rapidly at the moment and consequently |
| because at the moment, despite the fact that prices | | | | are consuming more and more commodities to fuel |
| are now moving north with some conviction, | | | | this stunning growth. China (and it's relatively youthful |
| commodities are still unloved...and if as I believe they | | | | population) is already among the biggest global |
| will continue to rise, this could be the start of a | | | | consumer for commodities including platinum, steel, |
| longer term commodities bull run and a very good | | | | copper, iron and several other metals. The country is |
| time to invest. | | | | experiencing a construction boom and this has |
| Did you know that commodities prices have been | | | | resulted in an incredible thirst for raw and processed |
| heading upwards, almost un-noticed for some time | | | | metals. India imports more gold and silver than any |
| now? Coffee, copper, wood and sugar are just a | | | | other nation, is investing heavily into it's infrastructure |
| handful of the commodities that have enjoyed | | | | and is the fourth largest global consumer of crude oil |
| between 40% to 80% price growth per year in | | | | in the world. |
| recent times. The exciting thing is that this could be | | | | Both India and China are developing into global |
| just the start of a long commodities bull run - and | | | | super-powers - and in order to do this, their level of |
| when you think that the majority of the investment | | | | consumption of commodities will be fierce and almost |
| world still avoids commodities like the plague, there | | | | unsustainable over the next two decades. |
| could be exciting times when the world finally wakes | | | | Now is the right time to get involved with the |
| up to smell the coffee...quite literally. | | | | commodities boom. |
| The Case For Commodities Investment - A simple | | | | |