In my new article, The No-brainer Investment Strategy to Double Digit Returns, I opined that location is a 34 twelvemonth time interval in the well-worn flea market. A 17 period cows bazaar is followed by a 17 time period carnivore open market and that equities and commodities are inversely related. Based on this premise, a strategy could be devised in which equities and commodities are alternately invested with during its proper event during the cycle. I likewise expressed that the later equities cows open market from 1982-200 finished next to the explosive of the internet babble and that we are now 5 geezerhood into the trade goods up-cycle. Finally, I offered investigation to post this location and grades finished 2005. So, how is this argument playing complete the early six months of 2006?
As of 7/14/2006:
DOW 0.2%Post ads:
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S&P 500 -1.0%
SOX -14.7%Post ads:
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The CRX, which may be a new index for many an of you, is the Morgan Stanley Commodity Related Equity Index. The autograph is self-explanatory. Its grades twelvemonth to twenty-four hours piling the study that we are in a goods rhythm. Gold lends added sustain as it is up 27.7% yr to date as painted by GLD (a Gold Exchange Traded Fund - ETF).
Equities are not doing as very well. The DOW is up a specified 0.2%. The DOW is an astonishing ordered series. A few weeks ago it was inside points of its all example superior. How can an graduated table be near its all incident highs once its large components Microsoft, Intel, GM, Pfizer, Home Depot, Wal-Mart, and IBM are near multi-year lows? That's a chronicle for a not like day. The NASDAQ and SOX (Semiconductor Index) are by far perverse year to solar day.
I am not affirmation that commodities will out-perform equities or that commodities will be useful respectively yr finished the cycle, but on norm commodities should be a finer put down to create success complete the next decennium. The coming of trade goods correlative ETFs are production it easier for individuals to act in the trade goods souk. Commodity ETFs include: Gold - GLD, IAU, Silver - SLV, Oil - OIH, XLE, Diversified Commodities - DBC.
It is quality humour to tend to the familiar. This period of time the aware is rental umpteen down: Intel -28.4%, Home Depot -16.4% and Microsoft -14.8%. It is instance to maneuver out of the solace geographical region and transport a individual air at commodities.