Hi Mr. Tan,
I would like to seek your advice on commodity investment during this period. I have bought X commodity fund a few months ago and my gain is around 5%, after paying the 5% sales charge to the bank.
Should I sell off this fund? Should I set a profit target or should I continue monitoring the commodity market and sell it once the commodities prices starts going down?
REPLY
I am not familiar with the timing of commodity prices. I cannot advise you on this matter.
Commodity prices are already at a high level. Some people think that they will go higher due to shortages, high demand, etc. But, there is a risk that it is already over-priced.
In the past, some stock, commodity and property prices have gone beyond their realistic level due to speculative reasons. Remember the dotcom days? When the bubble burst, the investors make a big loss.
I know someone who invested on a commodities fund since Jan 08 and have made a cool 20% gain. Jim Rogers is still bullish on commodities.
ReplyDeleteOf course, do not put everything in one basket. Remember commodities is cyclical and is different from equities and bonds.
Peak oil activists postulate that world oil production is plateauing and will soon enter terminal decline. I believe that they are correct and oil prices will easily go to $300/barrel from the current $130/barrel. In the long term, peak oil coupled with the inflationary policies of the U.S. Federal Reserve will send commodities higher.
ReplyDeletehttp://sgentropy.blogspot.com/
The recent rise in commodity has fuel many crisis in many countries such as the recent riot in Indonesia.:
ReplyDeleteRiot police deployed over Indonesian fuel protests
http://www.radioaustralia.net.au/news/stories/200805/s2242514.htm
As you know prices of petrol is predicted to rise to US$200 per barrel by end of year 2008, and if we continue to speculate in commodities, aren’t we part of the problem by shooting ourselves in our own foot??
Think about it.
Banks are coming out with more and more commodities fund. So are the banks going to cause problems again?
ReplyDeletehongjun