Wealth Building – Through Commodity Investing

I added the absolute must reads category a few weeks ago as an aide for people to quickly figure out what this site is about.  My challenge, since everything seems like a must read, is to not include each article in that category.  However, today, will you please go back and read “The No-Brainer Investment Strategy to Double Digit Returns.”  If you want to make serious money in the stock market over the next 10 years it will be in commodity related stocks.  This is my opinion, but I believe it is supported by research outlined in the article.  I realize that six months in the scheme of things is a small sample set, but let’s look at year to date results in the markets.

As of 7/14/2006

DOW 0.2%
S&P 500 -1.0%
NASDAQ -7.6%
SOX -14.7%
CRX 14.5%
GLD 27.7%%
CEF 39.5%

I have no idea how the DOW is calculated, but a few weeks ago it was within points of its all time high.  How can an index be near all time highs when its largest components Microsoft, Intel, GE, Pfizer, Home Depot, Wal-Mart and IBM are near multi-year lows?  Historically tech leads the market. Which way is it leading now?  The NASDAQ and SOX (Semiconductor Index) are significantly negative year to date.  The CRX is a new index to many of you.  It is the Morgan Stanley Commodity Related Equity Index.  The name is self-explanatory.  Its results year to date support the thesis that we are in a commodity cycle.  GLD is an ETF tracking Gold – pretty good return for a barbaric relic.  I had to do a double take when I saw CEF’s year to date return.  I have spoken about CEF more than any stock on this site.  Please go read the DCA Experiment for more details. 

It is human nature to gravitate to the familiar.  This year the familiar is letting many down: Intel -28.4%, Home Depot -16.4% and Microsoft -14.8%.  In closing, do yourself a favor and check your 401K year to date returns.  Most funds will be negative.  Unfortunately, most 401K plans do not have commodity related funds amongst their selections.  Remember cash is a position also.  A 4-5% return from a money market is better than watching your money disappear.

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