Fresh Ideas

Posts Tagged ‘capital’

There are some speculations, but some analysts said that commodity stocks are the next huge thing in the money market. Maybe not as of this moment but by being patient and buying it now, you may not yet feel any rising, but in the next 6, 9 or 12 months things will surely step up.

As you well know, sell-off has been in a free fall now for commodity stocks. If you will buy now for less the price and just buckle up and accept the pain of the losses in the following months, you may understand what these financial analysts are saying. Things will really pull off, and when it do, you will surely see the return of investment.

Actually, growing demand for commodities in rising economies like China, India, Brazil and the Middle East are still going up.

The demand for commodities on developed countries are in declined now and their economies are slowing down.

The problem now is with the supply and not with the demand. The issue on the global capital crisis that lead to problem in lending has dried up for smaller players. Yes, indeed these companies like the ones from the oil industry need capital to fuel them up in supplying the countries demand, and without these supplies, demand will not sufficed.

Also, one issue now is the falling oil prices. And this will really hurt the production and exploration of oil companies because it will not be profitable for them to continue producing if they will only sell it half the price than it should be.

The current crisis will surely make the supply and demand gap grow tremendously.

If you will just analyze this, if you will buy these commodity stocks now, time will come when the demand will rise again in the developed countries together with the current demand on developing countries, and with the very tight supplies now because of limited capital for production, there will be big returns in these stocks.

The real test here is if you can stand from the storm. The return of the investment is for long term, maybe 1 or 2 years from now. It’s just a matter of time, and you’ll need to have lots of patience to weather things down.

And if you agree with me, this is the right statement from Warren Buffet for what is happening now, “buy fear and sell greed”.