Credit Card ’s Talk

It was just a few short months ago many were saying the bubble had burst in commodities. First of all, I never bought into the bubble talk. How can there be a bubble in commodities - when not one of your friends can name 5 gold stocks? Back in the internet bubble days, taxi cab drivers could rattle off the names of internet companies without skipping a beat. Before there can be a bubble the masses must participate.

The commodity bull market is being driven by simple supply and demand dynamics. Just think about the amount of copper that will be consumed as China industrializes. Mass industrialization takes many years. Everyone knows that Rome wasn?t built in a day and China will be no different.

What the bubble promoters forget is that no bull market goes straight up. The days of buy and hold - I call it buy and forget are over. There is no certainty that a stock will be higher in 6 or 12 months; although that is what Wall Street teaches. I believe to profit in today?s stock market you have two choices:

Looking at BHP?s chart, the ideal purchase price over the last month would have been around $35. If all the stars lined up you could have purchased it at $35, but more than likely you would have been petrified that $30 was right around the corner. Using charts, there is a strong likelihood that you could have picked it up at $38. Not quite $35, but in retrospect not a bad price. I think that you would be pleased with a 13% return in 3 weeks. Commodity stocks are simply too volatile to simply buy and forget. There will be many more drubbing such as the past 5 months before this bull market is over. An effective strategy is needed to navigate through these rough waters. Dollar cost averaging and charting are two that I believe work. BTW, BHP is most diversified mining company in the world. It has 37,000 people spread across 25 countries around the world. Globally it ranks 2nd in copper production, 2nd in thermal coal, 3rd in nickel, 4th in uranium, 6th in aluminum and 1st in silver. It also mines titanium, iron, coking coal and molybdenum. It even produces oil and gas. If you could only buy one mining stock - BHP would be an excellent choice.

About the Author

Michael Dawson recently said goodbye to a 20 year career in Engineering, Marketing and Sales to focus on living his dream of financial independence. He has since founded The Time and Money Group as vehicle to encourage others to do the same. The company’s mantra is Why trade time for money … when you can have both. Sign up for their free weekly newsletter, where he and others discuss the different paths to financial freedom and offer insights for your successful navigation.

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Make sure to read one of Dawson’s most popular articles: Saying Good-Bye to the Time for Money Swap