Time To Move Capital Into Next Bull Market – Part I
If you remember the dot com bubble as clearly as I do and are a technical analyst then you will recall the month which the NASDAQ broke down and confirmed a new bear market has started. The date was November of 2000.
You may be wondering why I bring this up. What do tech stocks have to do with commodities?
Good question because they have nothing in common. But the key here is that when a bull market ends in one asset class that money is shifted into another. That money moved into commodities and resource stocks and in a big way.
Precious metals and miners exploded, surging an average of 1000% return (10 times ROI) over the next six years, topping out in 2008. In fact, these resource stocks bottom the exact month which the NASDAQ confirmed it was in a bear market on Nov 2000.
Compare Dot-Com Bubble & Burst to Precious Metals Stocks
Over the next couple of weeks, I will be sharing some of my top stock picks in the metals sector (gold, silver, nickel, and copper). If you missed the 2001 and 2008 metals bull market then you best pay attention and be sure you don’t miss what is about to happen.
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Compare Bull Market in Stocks with the Energy Sector
The financial markets and asset classes move in cycles, and there are times when specific sectors outperform others. Resources stocks specifically the energy sector is about to enter its strongest phase within the US equities bull market which started in early 2009.
Oil stocks have a lot of positive things in their favor in my opinion, though many will disagree. But it’s all in how you look at the data and your investment horizon.
During the previous market tops which are the same for NASDAQ, DOW, S&P 500, energy stocks have outperformed most sectors. Why? In short, we will always need energy, many of the companies pay dividends and when money starts to roll out of equities the underlying commodities typically hold their value for an extended period of time.
These past stock market tops generated 36%-40% returns during a time when most traders and investors were losing their shirts, or should I say lost 50% of their life savings… Which train would you rather be on?
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Now take a quick look at the price of crude oil
Oil has formed what is called a (double bottom, or “W” formation and also appears to be completing a cup & handle pattern). Whatever you want to call it, they are all very bullish patterns, meaning a higher price for oil is expected.
In short, higher oil prices mean more profits for energy companies; it’s that simple.
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Next Bull Market Conclusion
In short, every good investment will eventually become a bad one and vice versa. Knowing when to shift our capital from one sector to another is vital for steady long-term growth of our portfolio.
Over the next couple weeks through this multi-part series I will be sharing some very lucrative stock picks which I am investing in and the second one will likely be a nickel resource company that looks poised to rocket higher.
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