Posted by Davy Bui on July 17th, 2008 in Market Commentary
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I invest in equities instead of the commodity itself to gain leverage on the price and true to form, the commodity-related stocks are dropping further than the underlying commodity.  Some of these stocks are trading at levels below the time of triple-digit oil and double-digit nat. gas (actually that time was earlier this year).

To give you some idea of my thinking on this correction, while I’m a little irritated with the drubbing my portfolio is taking at the moment, I am unconcerned about the investments.  On the other hand, I am spending hours data-entering American Capital’s (ACAS) complete portfolio into an Excel spreadsheet for further examination.

The market is behaving as if its calling yesterday’s CPI number as a peak in the cycle.  I firmly disagree and believe that our energy/metal plays will deliver big returns over the intermediate-long term.  Absolutely nothing has changed to alter the supply outlook for many natural resources. As such, I am ignoring the short-term noise (as best I can) and continue to invest guided by the longer-term theme of resource scarcity and its related implications.  I also continue to hold large amounts of cash (over 35%) as I am skeptical of the current market rally.

As always, be careful out there.