Sunday, April 22, 2007

Some Thoughts

A lot of sectors have shown instability this year. The financials have been hurt because of sub prime mortgages, Alt-A loans, and the inverted yield curve. Home builders and construction-types have been down, and look to continue that. Tech has also been tough, particularly semiconductors. I think that we are in a commodity-driven market. Gold is on a tear, as well as all the mining and metal stocks. Copper as well. Look at the performance of Freeport-McMoran (FCX) since their merger with Phelps Dodge. Look at Southern Copper Corp (PCU). Gold is doing well because of the weaker dollar. Copper is doing well because the expansion in China has increased its demand.

My favorite commodity though, as most readers have probably picked up on, is oil. I am a believer in that so-called "peak oil" theory. There is just too much demand, and I see that continuing. It is great that we are looking for alternative energies, but lets face it, there is no viable source that will take oils place, at least for another 10 years. The oil stocks fluctuate somewhat when the price of crude drops. I don't see that as a weakness, but as a great buying opportunity. In the next few posts, I'm going to be breaking down different ways to play the oil boom, and which stocks I recommend for each area.

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