Commodities

Long: ETF USO at current price

Target:  80-90

Holding period 16-23 months.

The crude oil is a good buy.  The down side risk is diminish.  No one know where the bottom is, but this investment give an investor a good risk and reward ratio.

I strongly against using future contract in this one, because there is just too much volatility in this market.  My strategy has never been buy and sell commodity in a short term manner.  Holing for a long term trend is where all the profit come from.

A lot of short sighted analysis call the surge in Grain a bubble.  But I feel the whole another way around.  Lets examine the supply side first, the recent national geographic reports show that a the social structure of those developing countries such as China, India, and Latin America has gone through a dramatic change over the past 15 years. Where the next generation of the farmer family have moved away from home to pursuing city lives such as school and work.  This has shown me that the supply is has been and will be reducing in a big margin.  Second,the global climate change is also a huge factor.  Where most farm land are not able to crop like it was used to.  Add these two statement, I am looking for the supply side of these commodity reduced by a big margin. Second, let me cover the demand side.  In a classic economic concept, the grain will be classified as a necessity good.  Where change in the price and income number will not change the consumption habit of the user.  Moreover, these grain product is consumed by all the nation not just developed countries.  Furthermore, the evolution of technology has caused people use grain as an alternative energy. By just add these two statement I can see that the future supply of these grain will be very tight, and thing will not look pretty for the people for the next few years.  Furthermore, inflation will be another factor will cause these price to fly. Now come to the question to do we take advantage or hedge from this.  Like I always said buying and selling a soybean contract is very foolish and is a perfect receipt to lose money.  I think the wise way will be hold on to a Gold Certificate or buy yourself a undervalued real estate.