Why Commodity Stocks Headed Lower

Why Commodity Stocks Headed Lower

All the stocks in the base-metal space are going down. What’s going on? Is it purely that they all have trouble all at the same time, or what?

And the answer is “or what.”

It’s really unrelated to their individual businesses, and it’s about the metals prices.

Base metals’ prices have come off. They peaked in the beginning of September around the fourth or fifth, and they’ve come down.

And that’s a typical thing. This is why we put buy-up-to prices in our recommendations: because I know that these stocks are going to go up, and then they’re going to come back, and they’re going to go up and they’re going to come back.

But in the context of the longer term, the trend should be steadily upward, if you don’t look at minute-to-minute, hour-to-hour, day-to-day movements. If you look at it week-to-week, the stock price should continue to go up.

We put our trailing stops in to make sure that, if we’re wrong, we don’t lose a lot of money. And so, a lot of you are focused on the day-to-day, almost hour-to-hour movements of our stocks, and you’re fretting.

I have to reiterate: These are longer-term positions than options.

There are many of you, I know, who are trained to trade options.

And, man, with options, you’ve got to be right on the button with them.

Our stocks, not so much. Our time frame is six to 12 to 18 months, 24 months if the trend continues. Typically, not much longer than that. In my experience these trends don’t tend to last forever.

The gold trend that we had [in the early 2000s] — that lasted a decade! That was a lot of fun.

But for the most part, with commodity prices, we’re on an 18- to 24- to 36-month cycle. And we’re in a good spot right now.

So, yes, the answer to the question is: Our stocks have gone down. Is it something to be concerned about? No. If you haven’t gotten a position in them yet, is this a time to do it? Yes.

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