The next big thing

Discussion in 'Economics' started by Tea, Oct 7, 2003.

  1. Tea


    (another thread got me thinking about this....)

    In the late 1960's and 1970's commodities were the place to be for traders (up trending markets).

    In the 1980's debt (bonds) was the place to be.

    In the 1990's equity (stocks) was where it was at.

    What will be hot in the 2000's?

    I remember Michael Milken saying that it was debt in the 80's and equity in the 90's (this was in the early 90's). Have not heard much from him lately.

    Real estate seems like a local phenomenon where local land restrictions and local immigration are just as important to prices as nationwide trends like inflation. So I'll leave real estate out of this discussion.

    My prediction - commodities will be where its at by the end of the decade.

    Globalization, which opened up new sources of supply and deflation - is in need of a breather. The war on terror is a break on further globalization. Everyone who has a commodity to sell can already sell it except for a few examples like North Korea. Newly industrialized countries like China are soaking up more and more of the available commodities.

    The US dollar is over-owned and will no longer be the international store of value. People will have to put their money into tangible things vs. intangible things like debt. So in general, commodities, currencies from countries that export a lot of commodities (Canada), perhaps farmland. Jimmy Rogers made this prediction before he went on his round the world trip. The thing he missed was that with the end of the cold war and with globalization - world commodity supply would increase. Now, supply and demand are coming into balance and perhaps shifting toward demand.

    Of course as a trader you can make money in any market going up or down as long as it fluctuates.

    What do you think?
  2. Well, I got halfway through your post and was certain you had listened / read some of Jimmy Roger's recent stuff. Then I see you reference him near the bottom and it all comes togethor.

    So perhaps you should say 'Maybe Rogers has something here' rather than 'My Prediction?'

    I generally agree with the basic ideas but let's give credit where it is due - this is a restatement of (a portion of) Rogers' current thesis.

    One caveat re: "commodities will be where its at by the end of the decade."

    Jimmy Rogers said that he began buying commodities X years ago and the time to sell will be when "CNBC begins broadcasting from the Soybean pit." If by "where it is at" you mean "popular" I might agree with you. If, however, you mean when is it time to get long, I would say every delay is costly and the end of the decade will be way too late. Think OIL baby! Note China and Japan are scrambling to compete for an oil pipeline from Eastern Siberia. China's oil imports are destined to rise dramatically in the years ahead - just look at growth of car sales in China now!

    I also believe that a huge bull, and even a bubble market in China assets will dwarf appreciation of commidities. But that is a whole 'nother ball of profits.

  3. I have heard the prediction for a commodities bull market from a few large top down bond money managers. It seems there are quite a few people who share your prediction. Now hopefully we can just get a few more commodities to become largely electronically traded.
  4. index trading is where its at.
  5. index trading is...moronic at best.

  6. Tea


    The reason I don't give Rogers more credit is that he has been wrong on this for almost a decade. He missed the whole end of the cold war increase in supply and commodity deflation. He is not just "early"- he has been a stopped clock.

    Also, I'm not saying wait until the end of the decade to buy (don't be ridiculous). I'm just saying for the sake of discussion -f or the rest of this decade - commodities may be where the money flows.

  7. Well, you say he was wrong for missing the bubble. He and I are both laughing at you. Trend-following during the tech-bubble was equivalent to doing something irrational because everyone else was doing it. Let me spell it for you: L-E-M-M-I-N-G. I give Jimmy credit for being severely out of favor and "wrong" from 1996~2000.

    Wrong for almost a decade? This is Jimmy on the record in 1989 Market Wizards:

    "I guarantee that the Japanese stock market is going to have a major collapse - possibly within the next year or two. Many of our stocks are going to go down 80 to 90 percent in the bear market. A lot more of theirs are going to go down 80 to 90 percent."

    Tea - might I suggest you check the Nikkei charts? Btw, Rogers' began buying the Nikkei at the beginning of the year - might want to check that chart out as well while you are at it.
  8. 1) We'll know what the big thing will be for 2000' in 2010's.

    2) Michael Milken is serving his term in jail for fraud, that is why you have not heard from him lately.

  9. Tea


    Boys, boys.....can't we all just get along?

    How about commodity index trading?
  10. Michael Milken has been out of jail for quite some time. In fact, both he and his brother made it to the Forbes 400 this year. Michael Milken's net worth reported at $875million; his brother Lowell has a net worth reported at $625million...
    #10     Oct 7, 2003