bull market for commodity stocks

Before I write anything, I should write down about the comments from Ross Healy on ROBTV.

He mentioned that there are three steps for a sector heading to a bull market. First, it is disappointing. Everyone dislike this sector and every company in that sector. Second, it is the growth of book value. At this stage, no one will take notice on them because they have already delivered enough disappointment. I think it is the excellent opportunity to build the position. I think right now it is the end of second stage for the commodity stocks. Third, it is the stage to take off. I agree with David Prince and Don Coxe. This is a 15 years bull market for commodity stocks. The net increase demand for commodity from China, India and South America drives base metal and oil and gas stocks price.

Don also suggests that investing in dividend-paying stocks will be a good hedge strategy, because if we come into recession market, at least, it generates income for the investors. I sense that Don is predicting a long period of time recession, like Japan. Normally, he predicts 15 years for triple waterfall collapse. Japan is in 13th year. Hence, he recommends investing in long duration bonds or zero-coupon bonds as well as dividend growing faster than inflation such as Bank of America.

I believe it is a good strategy.

Come back to my recent performance. I have purchased suncor for Siang at $33.30. I was very lucky that after my purchase, stocks shot to $39.5 in one and half week. I currently use stop limit protection to limit the risk of sharply decline in one day.

I heavily invest in base metal and oil and gas stock. Encana is another one. I bought it at $64.60. It was close at $67.77 on Friday. It is going to ride because they are going to stock split in April 2005. That will be a good news for this stock price.

I continue to invest in those sectors. I have not found a good agriculture stock. I am interested in those stocks now.

PBR and SSL are very interesting stocks. I have watched them and will pull my trigger.

January has already passed

Most major indexes were down in January. Generally, it is not a good sign because most of time new money will enter into mutual funds. Don Coxe has already expressed his concern. However, most traders know that every 5 ending year was up in the past century. Whether it applies 2005 as well is worth watching.

Laura has expressed her optimism for this year. She forecasted 8% to 10% return for 2005. I am not sure for her prediction. I think she meant that investors must be selective. She also mentioned normally commodity stocks are peak at 1.3 times book value.

I have built a position for Alcan (AL). It was purchased after the earning warning. I have confidence in aluminum price. The dividend yield is 1.5%. I like this company.

I found I am the type of person who likes to buy and hold. Have missed some profit taking oppotunities. Sometimes I asked myself whether I should change myself a little.

God stocks really hurt me. Placer Dome has been down 20%. Should I dump them? I think I still bet on weaker US $. I am thinking purchsing more.

I continue to purchse more stocks. Right now, more than 80% are in basic metal and pharma setctors. I am very bullish on them.