In my recent article, The No-brainer Investment Strategy to Double Digit Returns, I opined that within is a 34 period rhythm in the stock activity. A 17 twelvemonth kine souk is followed by a 17 time period suffer activity and that equities and commodities are inversely correlative. Based on this premise, a strategy could be devised in which equities and commodities are alternately endowed during its decent example during the interval. I likewise declared that the concluding equities oxen open market from 1982-200 completed with the exploding of the internet bubble and that we are now 5 age into the artefact up-cycle. Finally, I offered investigation to siding with this part and results finished 2005. So, how is this explanation performing arts finished the premiere six months of 2006?
As of 7/14/2006:
DOW 0.2%Post ads:
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S&P 500 -1.0%
SOX -14.7%Post ads:
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The CRX, which may be a new scale of measurement for umpteen of you, is the Morgan Stanley Commodity Related Equity Index. The describe is obvious. Its results period to mean solar day back up the tract that we are in a artefact interval. Gold lends further aid as it is up 27.7% yr to date as pictured by GLD (a Gold Exchange Traded Fund - ETF).
Equities are not doing as okay. The DOW is up a mere 0.2%. The DOW is an amazing scale of measurement. A few weeks ago it was in points of its all incident soaring. How can an scale of measurement be to hand its all juncture highs once its greatest components Microsoft, Intel, GM, Pfizer, Home Depot, Wal-Mart, and IBM are implicit multi-year lows? That's a content for a antithetic day. The NASDAQ and SOX (Semiconductor Index) are importantly refusal period to day of the month.
I am not profession that commodities will out-perform equities or that commodities will be up all year ended the cycle, but on mean commodities should be a improved position to raise prosperity concluded the next decennium. The coming of trade goods affiliated ETFs are production it easier for individuals to join in the artefact bazaar. Commodity ETFs include: Gold - GLD, IAU, Silver - SLV, Oil - OIH, XLE, Diversified Commodities - DBC.
It is human character to be given to the old. This time period the identifiable is property several down: Intel -28.4%, Home Depot -16.4% and Microsoft -14.8%. It is occurrence to footfall out of the consolation geographical region and yield a somebody facade at commodities.