It's no secret that investing in stocks is very risky. In fact, it's probably the single most risky investment that a person can make but the rewards can be well worth it. What has the investment world seen recently? Well, all of the following items have happened:
- Falling housing prices of existing homes have just robbed demand for new homes and stock prices aren't exactly thrilled about the idea of even fewer means of economic recovery.
- According to the International Monetary Fund the mounting debt burden of the world's most developed nations is unsustainable and risks a future fiscal crisis.
- The average public debt ratio of advanced countries will exceed 100 percent of their gross domestic product this year. This is the first time this has happened since WW 2.
- Economist David Rosenberg notes that 4 in 5 previous periods where oil prices double as steeply as they are currently resulted in recessions which adversely affect stock performance.
How is this going to affect the stock market? It's probably not going to be in a positive way.
US and Worldwide Debt
Total U.S. public debt was more than $14 trillion at the end of 2010, a 72 percent increase over the past five years, while Japan's debt is about double the size of its $5 trillion economy. Europe is no better off with policy makers forced to create rescue packages for Ireland and Greece with Portugal and Spain right behind.
Now we're being hit with a surge in oil prices that takes money out of consumers' pockets: money that would have been spent supporting the economy. Wouldn't you think this is something for stock investors to worry about?
What if the Federal Reserve is right about QE2 in June? There's only been one other time where the Fed cut back on quantative easing.
What effect did this have? Interest rates dropped, the S&P dropped, the VIX jumped from 16.6 to 24.5, CRB futures dropped from 279 to 267. Gold was one of the only commodities that bucked the trend rising to $1,235 an ounce from $1,140.
Alternative Investments
Managed futures are becoming increasing popular as a result of this. For a nice performance history of the top performing managed futures funds worldwide, check out eManaged Futures at http://www.emanagedfutures.com/ and for a more complete history of all managed futures, check out the Barclay CTA Index at http://www.barclaygrp.com/indices/cta/sub/cta.html.
Historically, the market is now facing being lower 10% within 6 months based on similar oil price spikes or if we go into another recession, which is highly probable based on the 5 previous times we had a doubling of oil prices within two years, the market can be 40% or more lower. Is this something stock investors should be concerned about?
Get Sensible Invesmtent Advice Before You Make a Move
Diversify your portfolio and lower overall risk with other platforms like managed futures.
We believe this is the time to act now and diversify one's stock portfolio with commodities and managed futures while the market is still near its highs, not react to substantial losses before one diversifies! If ever there was a time for caution in the stock market and reason to diversify one's portfolio in non-correlated assets to stocks, like commodities, we believe it is NOW.
It's a Secular Bull Market - Possibly the biggest ever!
As proof that we are in one of the biggest secular bull markets in commodities consider that, since 1792 there have been five major bull markets in commodities in a whopping 219 years! Just over 19 years is how long the average bull market has lasted historically. We are ten or so years into the current bull market....only around half way through by historical standards!
