Investment Ideas (years)
Major Economic trends
The best long term investment opportunities come from entering and following the major trends based on solid fundamentals for years. We have already seen a dramatic turn up in Commodities since 2000 based on growing demand from a world hell-bent on consuming and wasting as much as the Western world. This boom in demand has been fueled by the ever growing bond market with declining rates for the last 27 years. Historically, rates usually decline for 20-40 years, and they are likely to keep declining as central banks try to minimize the effect of excessive mortgage and other debt. We can see that once debt levels reach a parabolic level, the central banks have no choice to keep rates very low until about half the debt is retired. This happened previously in the 1920-30's in the USA, in the 1980-90's in Japan and is now occuring in the USA. Each time central banks kept rates very low as long as necessary to absorb the financial losses. With the numbers even bigger this time around and many other countries involved, we are likely to have low interest rates for many years. Historically, bull market in commodities have ended with a rapid rise in interest rates, and that is unlikey for a number of years maybe even into the next decade.
Infrastructure and Materials for consumption
The performance of the infrastructure sectors have been the strongest, with Energy, Utilities, Materials and Industrials far outpacing Technology, Financials and Consumer related sectors. These trends are likely to continue with the poor state of infrastructures in the West, but also global demand for infrastructure buildup in Asia, and increased consumption.Charts courtesy of StockCharts.com
Charts courtesy of StockCharts.com
A proper system for Entry and Exit is advised
Depending on the attractiveness of a specific stock, I may enter part or all of the trade when StochRSI rises above 20 or 50%, or wait until it rises above 50 and 80% as shown by the green arrows. Similarly I will reduce or even get out completely when StochRSI goes below 80 and 50%, or I may wait for a break below 50 and 20% before exiting totally as seen with the red arrows. I watch the longer term chart, the position of the PPO and S/R lines to help in my assessment, but you may find your own comfort levels for entry and exit based on Risk/Reward, StochRSI, PPO and Price/Volume considerations. Using a StochRSI and/or PPO system for entry and exit can help to reduce emotional trading decisions with their pitfalls.
Mining
Agnico Eagle Mines Ltd.
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Charts courtesy of StockCharts.com
Coeur d'Alene Mines Corp.
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Charts courtesy of StockCharts.com
Freeport McMoran Copper and Gold Inc.
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Charts courtesy of StockCharts.com
Northgate Minerals
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Charts courtesy of StockCharts.com
Energy
El Paso Energy Corp.
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Penn West Energy Trust
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Infrastructure
Capstone Turbine Corp.
Pros: Aging power grid and power failure storms on the rise, potential target of 3, 6, 20, even 50, clear stop
below 1.00, technical strength, possible positive cycles, and classic half scale base pattern like we saw in Silver from
1993-2003 suggesting a powerful breakout in 2008.
Cons: Could drop quickly below 1.00 if it breaks support near 1.50.
Charts courtesy of StockCharts.com
Charts courtesy of StockCharts.com