One lesson of last nine years is that listening to Wall Street strategists is harmful to your future wealth. Doing just the opposite of daily hype of the business media is a good way to enhance your future wealth. Many Street strategists missed, for example, the rally in Gold while the stock market has produced really dismal returns. Now again they are attempting to mislead investors. Collapsing Wall Street firms really have very little to do with what happens in the world. Instead, the bail out plan simply diverts capital to more non productive investments. While U.S. may be mired in a Wall Street induced recession, the Chinese economy will continue to expand. Consumer incomes in Asia will continue to grow. And, those people will continue to eat. Agri-Food is not facing another 1930s, for the circumstance today are totally different.
Agri-Food commodity prices have been hurt as speculative funds continue to evaporate. The only similarity of today to the 1930s is the cleansing from the system Street firms and banks that served no real economic purpose. Quicker that cleansing process is completed the sooner we can return to real investing. Leveraged hedge funds speculating in mortgage debt served no real economic purpose. Those firms that served them served no economic purpose. As the world moves out of this period of cleansing it may finally start to seek out true economic trends of investment merit. We suspect that the Chinese, Indian and other Asian consumers will continue to eat, regardless of whether the U.S. bails out superfluous Street firms. The portfolio of Agri-Food commodities, while down as speculative funds panic, continues to do far better than the stock market. That should ultimately be reflected in the prices for Agri-Food stocks. Is your portfolio ready for the next cycle, the Agri-Food cycle?
AGRI-FOOD THOUGHTS are from Ned W. Schmidt,CFA,CEBS, publisher of Agri-Food Value View, a monthly exploration of the Agri-Food grand cycle being created by China, India, and Eco-energy. To review a recent issue, email to firstname.lastname@example.org.
Should Brown Gold be in your portfolio?
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