As, I write this, I hope that the UK will finally show growth after a prologned recession. The US economy is howing signs of recovery, with unemployment figures improving, consumer confidence returing however caution is recommended in this assessment. The bubbles we have had over the decade:
1.) Technology Companies ( Early 2000s)
2.) Housing Market ( 2007, through SIV the Banking Sector got itself entagled with the Housing Market)
The question I raise, is there a tendancy for human rationality to keep creating buubles that eventually burst. While, it is a premature assumption, I perceive a bubble being formed in the Commodity Markets. Commodity over the last decade has become an asset class in its own. SUgar, cotton, gold, cocoa and silver have been amongst the strongest performers in 2009. In the istance of cotton and some commodities, it is clear that fundamental demand and supply variables have caused the apparent rise is prices. I urge keen investors to observe the devlopments in this sector closely over the next year.
Usually, before 2007 portfolios of leading money managers emerging markets comprised 6% of their protfolios, this figure has risen to nearly 20% now. In the decade to last month global emerging markets funds returned an average of 175 per cent, while the FTSE all-share index returned only 15 per cent. I think that the next recession will orginiate from one of these leading Emerging Markets. I am already plainning how to captialize on this and already studying the exposure the various Investment and Commerical Banks have in this sector. A few of these banks have already been mentioned on this forum.
Even, though the current recession is coming to an end, my preparation from an investors standpoint is underway to spot the next bubble and how to capitalize on it.
Please feel free to comment on these observations.
I MUST STATE EXPLICITLY THAT THIS MESSAGE REFLECTS MY VIEWS AND SHOULD NOT BE MISINTERPRETED AS INVESTMENT ADVICE.