Tech Talk Forum - Timing The Markets - Investing in Financials or Commodities?

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Investing in Financials or Commodities?
Aug 19^th, 2008, 9:51pm

With the markets rocking back and forth between financials and commodities, I was wondering, if you could only select from the two, what is your preferred sector in which to invest at this point in time? Financials or Commodities...where one's gain almost certainly results in a loss to the other. Finally, those Game Theory classes have come into use. Roll Eyes

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Re: Investing in Financials or Commodities?
Reply #1 - Aug 21^st, 2008, 9:03am

Forum Admin wrote on Aug 19^th, 2008, 9:51pm:

With the markets rocking back and forth between financials and commodities, I was wondering, if you could only select from the two, what is your preferred sector in which to invest at this point in time? Financials or Commodities...where one's gain almost certainly results in a loss to the other. Finally, those Game Theory classes have come into use. Roll Eyes

The bottom is nowhere to be seen in financials - AVOID AT ALL COSTS
Commodity - Hard to say, but this is a better place to be. Monitor slowing growth. The talk now is of global slowdown due to the U.S. I do not believe this will be the case so I would go long on commodities.

In my blog i've been monitoring both and my outlook has not changed. Sadly, markets are trading on sentiment and it is crying for the banks and confused for the metals/energy.

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Re: Investing in Financials or Commodities?
Reply #2 - Aug 21^st, 2008, 1:24pm

I wouldn't touch US financials and I have a stop on my XFN at 22. From today's FP "Canada's six big banks are expected to report lower quarterly earnings next week thanks to weak capital markets activity, higher loan loss provisions and more writedowns, and already there is concern about next year." I will be out of XFN in a day or two.
Gold may bounce close to the 900 level and oil is fretting over US/Russia tensions. Both will be short lived. Commodities is the best bet this week and next. Too tough to look beyond a week these days.

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Re: Investing in Financials or Commodities?
Reply #3 - Aug 21^st, 2008, 8:31pm

I would not use such strong wording on financials, as I have made some real good money punting BMO twice this year. I hope the financials come under real pressure in the next 2 weeks, as I would like another kick at the cat.

I agree about a short term commodity rally. Gartman says it'll be a time to sell into it, not add to positions. Watch the DXY-N and volumes.

OTOH, there are fundamental shortages of gold, which confuses the issue. Dealers are short gold coins, and there is a lack of central bank selling under the Washington Accord. I wonder how YE jewellery demand will sway the mix in the coming months. Time will tell....

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Re: Investing in Financials or Commodities?
Reply #4 - Aug 22^nd, 2008, 9:39am

I'm leery of US financials, but of the view that Cdn Bks and Ins Co's are in better shape than their US counterparts and offer better potential. I have about 12% exposure to Cdn Bks, but I'm keeping my finger on the trigger as we move into reporting next week. Have a look at GMP.UN. It's earnings continue under pressure, but it's way oversold..might be a sleeper showing early signs of a turn.

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Re: Investing in Financials or Commodities?
Reply #5 - Aug 25^th, 2008, 11:08am

Interesting call by Larry Berman on BNN today. He's short term bearish on gold and oil. Says watch oil closely, if it breaks 110 it will fall to 100 or below very quickly and will take commodity related stocks with it. If that happens, look for US consumer stocks to soar! I'm long commodities and suffering today. I may have to re-tool this week.

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Re: Investing in Financials or Commodities?
Reply #6 - Aug 25^th, 2008, 5:55pm

Oil below 100 [even 110] and stocks soaring is a long shot at best and hardly worth comtemplating. Saudi Arabia and Russia, who have lots of money now, will not give away a scarce commodity at $100 when a few months ago they were getting $147. They will turn off the taps.
Stocks don't soar for long in a secular bear market. There has never been a new bull born in a secular bear market with a PE of 20 for the SPX. Bull markets are born in single digits.
The seaon for commodities has started, inflation will increase and people are beginning to wake up to how serious the financial situation has become [ IOUSA]
Oil may remain flat, Gold should srengthen.

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Ironwood Full Member Offline DVTechTalk Follower Posts: 107 Ontario, Canada, canada, 386, 399 Gender:	Re: Investing in Financials or Commodities? Reply #7 - Aug 27^th, 2008, 8:03am This has been my view, and I remain long commodities and Canadian financials. The recent US dollar strength will be short lived.
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Don_Vialoux YaBB Administrator Offline DVTechTalk Author Posts: 258	Re: Investing in Financials or Commodities? Reply #8 - Aug 30^th, 2008, 7:36pm Technicals and seasonal influences are starting to turn positive for the Canadian financial service sector. More comments will appear in the Tuesday September 2nd edition of Tech Talk.
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Re: Investing in Financials or Commodities?
Reply #9 - Sep 5^th, 2008, 7:38am

I am on the camp that investors should stay well clear of financials, most especially in the U.S. The Canadian bank stocks are attractively valued but will be negatively associated with US banks.

Until housing prices stabilize, I wouldn't touch banks.

Conversely, bank stocks will rally well ahead of a housing market stabilization...so there's money to be made in banks.

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Poll
Question: Currently what is your preferred sector to invest?
Financials 1 (11.1%) Commodities 4 (44.4%) Both 2 (22.2%) Neither 2 (22.2%) Total votes: 9 « Created by: Forum Admin on: Aug 19^th, 2008, 9:51pm »