Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
RIVIAN IPO Illustrates We are in the Mother of all Stock Market Bubbles - 16th Jan 22
All Market Eyes on Copper - 16th Jan 22
The US Dollar Had a Slip-Up, but Gold Turned a Blind Eye to It - 16th Jan 22
A Stock Market Top for the Ages - 16th Jan 22
FREETRADE - Stock Investing Platform, the Good, Bad and Ugly Review, Free Shares, Cancelled Orders - 15th Jan 22
WD 14tb My Book External Drive Unboxing, Testing and Benchmark Performance Amazon Buy Review - 15th Jan 22
Toyland Ferris Wheel Birthday Fun at Gulliver's Rother Valley UK Theme Park 2022 - 15th Jan 22
What You Should Know About a TailoredPay High Risk Merchant Account - 15th Jan 22
Best Metaverse Tech Stocks Investing for 2022 and Beyond - 14th Jan 22
Gold Price Lagging Inflation - 14th Jan 22
Get Your Startup Idea Up And Running With These 7 Tips - 14th Jan 22
What Happens When Your Flight Gets Cancelled in the UK? - 14th Jan 22
How to Profit from 2022’s Biggest Trend Reversal - 11th Jan 22
Stock Market Sentiment Speaks: Are We Ready To Drop To 4400SPX? - 11th Jan 22
What's the Role of an Affiliate Marketer? - 11th Jan 22
Essential Things To Know Before You Set Up A Limited Liability Company - 11th Jan 22
NVIDIA THE KING OF THE METAVERSE! - 10th Jan 22
Fiscal and Monetary Cliffs Have Arrived - 10th Jan 22
The Meteoric Rise of Investing in Trading Cards - 10th Jan 22
IBM The REAL Quantum Metaverse STOCK! - 9th Jan 22
WARNING Failing NVME2 M2 SSD Drives Can Prevent Systems From Booting - Corsair MP600 - 9th Jan 22
The Fed’s inflated cake and a ‘quant’ of history - 9th Jan 22
NVME M2 SSD FAILURE WARNING Signs - Corsair MP600 1tb Drive - 9th Jan 22
Meadowhall Sheffield Christmas Lights 2021 Shopping - Before the Switch on - 9th Jan 22
How Does Insurance Work In Europe? Find Out Here - 9th Jan 22
MATTERPORT (MTTR) - DIGITIZING THE REAL WORLD - METAVERSE INVESTING 2022 - 7th Jan 22
Effect of Deflation On The Gold Price - 7th Jan 22
Stock Market 2022 Requires Different Strategies For Traders/Investors - 7th Jan 22
Old Man Winter Will Stimulate Natural Gas and Heating Oil Demand - 7th Jan 22
Is The Lazy Stock Market Bull Strategy Worth Considering? - 7th Jan 22
METAVERSE - NEW LIFE FOR SONY AGEING GAMING GIANT? - 6th Jan 2022
What Elliott Waves Show for Asia Pacific Stock and Financial Markets 2022 - 6th Jan 2022
Why You Should Register Your Company - 6th Jan 2022
4 Ways to Invest in Silver for 2022 - 6th Jan 2022
UNITY (U) - Metaverse Stock Analysis Investing for 2022 and Beyond - 5th Jan 2022
Stock Market Staving Off Risk-Off - 5th Jan 2022
Gold and Silver Still Hungover After New Year’s Eve - 5th Jan 2022
S&P 500 In an Uncharted Territory, But Is Sky the Limit? - 5th Jan 2022

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Agri-Foods Benefit from the Feds Decision to Destroy the Dollar

Commodities / Agricultural Commodities Mar 24, 2009 - 12:36 PM GMT

By: Ned_W_Schmidt

Commodities Best Financial Markets Analysis ArticleTrends may persist, but never exist eternally. Both parts of that little piece of wisdom provide useful guidance for investors. Trends, clearly, are an investor's friends when the investor lives in harmony with that trend. However, always remember that the trend will end regardless of how solidly good the fundamentals might be, or how miserably bad the fundamentals might appear. On this latter point, have not received one email on the positive fundamentals for oil since it fell below $140.


Some trends are destined to be short-term in nature from the very beginning. Others may last for years. Seeking out short-term trends, for the majority of investors, is a waste of time. Those persisting in the pursuit of short-term trends need to remember what breakfast means to the pig. On the other hand, structural trends of a longer term nature are more similar to the relationship of the chicken with breakfast. Agri-Food is one of those longer term, structural trends that will allow investors to participate in more than one breakfast.

Our first chart this week is a comparison of the performance of the Agri-Food Price Index, a basket of major Agri-Food commodities, and the S&P 500. The superiority of the price performance of Agri-Food commodities over U.S. stocks is readily apparent. Despite the positive and negative turmoil created by the hedge fund pestilence, Agri-Food commodities have retained the high ground.

Second, the Agri-Food Price Index has walked through the down trend line drawn into the chart. That down trend is no longer controlling. The more dominant, longer term, structural trend is now the more powerful consideration. Bets against the structural trend will fall to the house. Bets with the structural trend are more likely to prosper.

Third, Agri-Food prices seem to have completed Wave II of an Elliot Wave structure. That should mean that Wave III is soon to unfold. That implies a further advance ultimately into a Wave V some time in the future. That view is supported by, and consistent with, the positive underlying fundamentals which suggest a wave structure of ten year or more in length.

As Gold investors are well aware, the Federal Reserve recently announced that it will mindlessly monetize the deficit of the U.S. government. As a consequence, the bear has returned to the market for U.S. dollars, and Gold has soared. Another beneficiary of that dollar crushing monetary policy will be Agri-Food commodities. Consumers living in national monies other than dollar will find Agri-Food commodities an economic bargain, and demand will strengthen.

Agri-Food investments have not been immune to the ravages of the bear market. This author does wish possession of some magic investment knowledge that will always prosper, without fail. A discovery that will only be revealed to a generous few. Alas that is not the case, the favored Agri-Food stocks went down too. That situation, though, appears to be changing.

The second chart this week portrays the performance of a basket of Agri-Food equities relative to the S&P 500. Prior to the bear market, the relative performance was excellent, but it too succumbed to savagery of the hedge fund liquidation. Over the time period shown, Agri-Food stocks hold a slight edge. More importantly, the Agri-Food stocks have also walked through the down trend line that had been in place. It no longer controls, as the fundamentals again seem dominant.

Agri-Food stocks are part of a structural change in the demand for food arising from economic change in China, India, and other sectors of the world. With more that half of the world now living in urban centers and more than half of the world living in developing nations, the demand for Agri-Foods is moving into a demand structure never before witnessed. Supply no longer is the dominant consideration. Any analysis of Agri-Food commodities built on the decades of supply dominance will miss out on that which is to come, demand dominance.

Commodities is not a homogenous group. Any analysis assuming such is in error. Agri-Foods are just one component of the commodity asset class. Agri-Food will also benefit from the Federal Reserve's intentional destruction of the dollar. Agri-Foods investments are also an offensive investment in that they will benefit from the unfolding prosperity of China, and later from India. Does your portfolio have an offensive element? The rest of the world will move past the economic carnage of the Obama-Bernanke-Geithner financial debacle. Will you also move on?

By Ned W Schmidt CFA, CEBS

AGRI-FOOD THOUGHTS is from Ned W. Schmidt,CFA,CEBS, publisher of The Agri-Food Value View , a monthly exploration of the Agri-Food grand cycle being created by China, India, and Eco-energy. To receive the most recent issue of this publication, use this link: http://home.att.net/~nwschmidt/Order_AgriValueRECENT.html

Copyright © 2009 Ned W. Schmidt - All Rights Reserved

Ned W Schmidt Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in