Seasoned investors understand that investments which are rocketing to new
highs and all over the news will eventually fall out of favor and become a
the poor performer, unwanted by market participants.
So it only makes sense that the underperforming investments will some day
come back to life and provide opportunity once again. I covered this unique
stage analysis in great detail in another report linked below.
If you want to see my forecast and charts I did on June 26th, 2013 pointing
to the key investment levels for precious metals and miners which by the way
have been dead READ
HERE.
Current Stock Market & Commodity Investment Analysis
Two of the weakest investments have been commodities and precious metals since
2011. The Canadian stock market is heavily weighted with these resource stocks
and is the reason for its under performance when compared to the SP500.
The time will come when commodities bottom and this will send the Canadian
stock market back to the 2014 highs or better.
Take a look at the chart below. You will see the SP500, gold miner index,
Canadian market, and the commodity index. What you notice see is that the US
stock market has been the hot investment of choice, while commodities and precious
metals have been falling for years.
No one is excited about investing in commodities or precious metals, and it
makes sense. Anyone holding these investments has had a terrible couple of
years and lost most of their capital. The last thing they want to do is buy
more.
The good news is that this mind set eventually creates huge opportunities
for the savvy, patient, investor like you and I. The hardest part is waiting
for the psychology of investors to be completely out of favor, and only then
can an investment bottom. This often takes years, and it has been for resources.
The 2007-2008 Resource Double Top and Drop
Bull market tops take months 6-12 months to form before price truly rolls
over and starts a bear market. Most traders and investor try to pick tops but
because this process is so painfully long, most get shaken out or give up well
before the top has completed it's topping phase.
What I am interested in is the Canadian index and resource type plays. The
US stock market looks and feels as though it's trying to form a topping phase
but it is at best 6-12 months away from being a confirmed bear market.
Until then, I feel the US stock market will struggle and the focus should
be put on investments that come to life during this stage of the stock market
and economic life cycle.
The Dead Always Come Back To Life for One More Rally
In short, I feel resources and the Canadian stock market will become strong
areas of the market going forward several months. There are a few ways to play
this, and timing will be crucial.
