basic materials stocks

Discussion in 'Trading' started by silk, Feb 13, 2007.

  1. silk


    Anyone notice that basic materials stocks are the only ones that get to trade above analysts price targets?

    Market sure loves commodities stocks. Even ones that don't seem to be doing so well go way up. Endless revaluation upward.

    2 theories.

    (1) Hedge funds are in love with commodities. That is what they like to play, thus inflows into commodity type stocks. Boom in commodity stocks has paralelled the hedge fund boom.

    (2) International investors who might not really like America or investing here, feel that the materials sector is place that they can still invest.
  2. Yep.

    Commodities are the 'in' thing now.

    And anyone knows anything about commodity bull runs knows that it's historical fact that commodity bull runs end badly.

    Totally cyclical, and higher prices create the increased supply that turns into a glut and causes price declines.