I am lost for words after checking the market this morning to see how much stocks have given back,
I have been very busy since mid May and as such have not been trading/investing/watching the markets, I knew a correction was due, I took some profits off the table and said I'll buy back once I finish my exams (last one next week), but my gosh how quickly sentiment can change,
Before I left (ie mid May) everyone I knew was buying any old resource stock regardless of its fundamentals and now through this correction most I know have been selling any old resource stock regardless of its fundamentals,
I suppose I really underestimated how emotional this market would get, I mean it makes sense if people can buy up in a hype (ie see any Uranium company especially the floats, TOE, ENR, UXA, also see charts TZN, FXR etc)
then it only makes sense that they can sell up in a hype too,
I couldn't believe that BMO fell to 24c the other day, nor could I believe that CBH fell to as low as 30c, I applied for more loans secured against my properties, so by Tuesday hopefully, I will have another $100k to buy up more of these oversold stocks, just hope they don't recover too much,
But what I can't get over is the effect interest rates have had on the markets, yes I do agree if interest rates get high enough we will see a reduction in consumption, but how high would they have to get to see a noticeable effect?
At least 10% IMO and they won't get there, not unless the US and AUS wish to see one of the biggest collapses in property and investments in history,
People talk about interest rates slwoing world demnad etc, I could care less, I'm bullish on 4 commodities in the following order,
1. Uranium, anyone notice over the past 2 weeks during this so called doom and gloom period uranium has risen by $2/lb ? ? ?
2. Oil, anyone notice that Oil has held firm around the $68-$70 mark????
3. Zinc, anyone notice the liner declines in Zinc stock levels, and the spot price holding around $3,000t (most produces have cash costs of $1000 t )
4. Iron Ore, anyone else see the 19% price rise, ie at the extreme upper level of price expectations?
Oh but wait feds have raised interest rates, yep thats right, the industrilisation of 2 billion + people of India and China thats no force to reckon with a .25,
Let me give you some figures and we'll see which one scares you more,
1. The US have kept raising interest rates 16 times in a row, from 1% to now 5% and may continue to do so a few more times (yet this has not stopped world economies from powering ahead)
2. In India car owenr ship is 8 out of every 1000 people own cars, thats right 0.8%, analysts predict that over the next few years you will see this figure at closer to 2%
So honestly which set of figures alarms you more, personally its the thought of demand fror commdities and oil that another 10-15million cars will creat in India alone,
Why do you think that India and China are going crazy trying to get their nuclear energy programs off the ground? Because they don't want to waste their valuable oil on pwer generation,
Also regarding Oil what scares you more
1. The fact that the oil price has tripple in the last 2-3yeasrs and maybe over done, ie should fall back to $50 us/bbl because there's plenty of supplies etc and we're no where near peak oil,
2. The fact that we are @ peak oil, global oil supply/demand has started a downward spiral, due to supply constraints and mamoth demand from the emerging Indian and Chinese economies, added to the fact that alot of the worlds oil reserves and production comes from the middle east, south america and africa, some of the worlds most unstable locations,
I mean all it will take as Iran to cut supplies (reduce them) to the west in protest of its Uranium ambitions being stiffled with, or more hurricanes in the GOM and we'll be begging to see oil below $70 a bbl,
Look the correction was overdue and by all means short term trade it, I mean the trend is your friend, but don't lose sight of the big picture,
1. The world doesn't have enought Oil to meet everyones demand,
2. Most basemetals are in very tight demand/supply conditions, with very low and falling stock levels,
3. The worlds hunger for yellow cake has only just started, as more reactors get closer to completion, the demand shall become more frenzied,
Just my opinion but I'd strongly believe,
Use this time to pick up bargains!