The Upside of Down

By: Dudley Baker | Fri, Jun 27, 2008
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What the heck does this mean? With the financial markets in the United States finally kicking into a full blown bear market, we know where the down is in 'The Upside of Down'. Don't you love it when the talking heads on the financial TV channels still speak about the buying opportunities? They suggest buying the defensive stocks as they will decline less than the other sectors. What? Why would an 'investor' want to buy something knowing it will go down, just not as much as the others? I have never understood that silly argument. The financial sector is tanking, the banks are tanking and one of 'big three' auto companies is now selling at levels not seen since 1955.

The financial markets are in the toilet and it is time to look elsewhere for investment opportunities.

This brings me to the upside in 'The Upside of Down'.

Some investors are aware of the bull market in the commodities with many of the grains and the CRB blasting off to new highs, the daily news about the price of oil hitting $140 a barrel and the average gallon of gasoline in the United States over $4.00.

Gold has tested the $850 several times and is now solidly over $900. News of inflation is now becoming a daily event for consumers, speculators and investors. Is this not what we precious metals investors have waited for? It is only a matter of time before investors wake up to the opportunities available in the precious metals sector.

As investors eventually wakeup to the inflation within the system they will be drawn to the benefits of investing in our backyard. Those of us who have invested in the precious metals sector since the bottom in gold in 2001 are still the early ones. Just wait until the world wakes up. The potential gains are staggering but our patience has been tested many times and will be tested many times in the next few years before the ultimate peak is reached.

So, if you are a traditional investor and not yet on board with the commodity and natural resource sector shares or warrants, perhaps it is time to get started. When better than today with the Dow down over 350 points, gold up over $30 an oz and the HUI gold index up strongly. Can you not see what is happening? It is time to shift your investments in a different direction. This direction many of us believe is the natural resource and precious metals sectors and the numerous different ways to invest in this area.

Let's briefly explore a few different approaches which will provide some leverage as well as the opportunity for some serious capital gains. The list gets longer as more and more products have come to market. Exchange Traded Funds, ETF's, on gold and silver, mutual funds on the natural resource sector, common shares of the companies in the commodity and natural resource sector and call options, leaps and long term warrants on those companies. We would always encourage investors regardless of the size of your wallet, to diversify your portfolio. While many of us may be heavily weighed to the commodity and natural resource sector, it is necessary to spread this investment over numerous different shares, leaps or long term warrants.

We feel the potential gains with the ETF's and the mutual funds will be somewhat limited as compared to the gains from the individual company shares and the other alternatives. So, we suggest a portfolio of comprised of mining shares (we prefer the smaller companies with great management, sound financials, good properties and a safe /political/geographical location. While these small companies may possess greater risk, they afford us the opportunity to create great wealth. After you have prepared a list of your favorite companies, we then suggest you to consider which of these companies have long term warrants or leaps trading thereon. If a company on your list has a leap trading it may give you up to 2 years of time. If some of the companies have warrants trading some of these may give you 3, 4 or 5 years.

By focusing on the mining shares, leaps and long term warrants investors are wisely using leverage without the fear and risk of short term volatility in the markets. As you may recall from our previous articles, our investments are basically within the commodity and natural resource sectors and the common shares or long term warrants trading on those shares. We are confident we are positioned correctly to not only generate capital gains, but have given ourselves the opportunity to create great wealth.

For subscribers, we provide a table listing all companies with call options and leaps trading on the natural resource shares.

For those readers desiring more information on warrants you may wish to visit www.PreciousMetalsWarrants.com where you will find much more information and education on warrants.

 


 

Dudley Baker

Author: Dudley Baker

Dudley Pierce Baker
Founder/Editor - Guadalajara/Ajijic, Mexico
CommonStockWarrants.com
A Market Data Service for Warrants

Dudley Pierce Baker is the founder and editor of Common Stock Warrants and its predecessor, Precious Metals Warrants and a 1967 graduate of St. Mary’s University in San Antonio, Texas with a major in accounting.

Disclaimer/Disclosure Statement: CommonStockWarrants.com is not an investment advisor and any reference to specific securities does not constitute a recommendation thereof. The opinions expressed herein are the express personal opinions of Dudley Baker. Neither the information, nor the opinions expressed should be construed as a solicitation to buy any securities mentioned in this Service. Examples given are only intended to make investors aware of the potential rewards of investing in Warrants. Investors are recommended to obtain the advice of a qualified investment advisor before entering into any transactions involving stocks or Warrants.

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