Thursday, January 26, 2006

Running of the Commodity Bulls

The Commodity Bull is off and running...either get behind it or get run over! This site is intended to be a place for the average investor to gain some information about the commodities market, and most importantly hopefully make a lot of money. I believe that we are still in the early innings of a stock bear market and a commodities bull market, and I invested what little I had in this theory starting May '05.

Let me first start by talking a little about my personal preferences. I like to make money and the less work I have to do, the better, because working sucks. If work was fun they would call it "fun". Now the most effective ways to get rich are really not through investing - if you look at the Fortune top richest people, most of them started their own business. Buffett is one of the only people who got rich through the stock market. But personally, I don't need (or really want) billions. I'm fine with one mil, which means I can basically be financially independent. And starting your own business is too much work for me...I even tried that before, failed miserably, spent a lot of time on it, and lost money. Screw that. Real estate investing is supposedly a good way to make some cash, but again - too much work. I want a way to make money from the comfort of my big leather chair in front of my computer. So that's where I'm coming from. And I also like to roll the dice a bit and spice things up...not afraid to lay it on the line, especially if I think it might pay off. I've got nothing to start with, so that does help.

Last May I plunked down the $2,000 I had to my name into a futures account for the purpose of trading commodities (this was the minimum required to open an account), and since the sum has grown exponentially...so much so that it's astounding. For the gains, I can thank some solid research, fortunate timing, and the use of margin. Most people will not condone the use of margin on futures accounts, but when you are starting with only a few thousand dollars, you don't have much of a choice (for example, my first buy was one sugar contract which would have cost about $10,000 at the time).

Around the end of November or early December, my account topped the $10,000 mark thanks to a big rally in sugar, and I began to think a little bit loco, to the tune of: "Hey, I just added one "zero" to my account in 6 months...why not go for $1,000,000? It's only two more zero's!" So here I am starting my blog to track the account. I suppose you could do this with an "imaginary" portfolio but that would be pretty freaking lame. So I intend to boom or bust using my actual money for your amusement and hopefully education as well.

In the next few posts I'm going to try to get "caught up" - what trades I made, why I made them, what the current positions are, and what I think the current outlook is. If you haven't yet, pick yourself up a copy of Jim Roger's latest book "Hot Commodities". It really helped me learn how to analyze commodities themselves (hint: it's all supply and demand). I should note that Jim does not advocate trading on margin and I think he is right...so do as I say and not as I do.

There are very few good resources (especially free ones) that actually cover commodites. The WSJ has only one small writeup each day. By the time the Commodity Bull is starting to run out of steam, there will probably be plenty of free resources covering commodities just like there are covering stocks today. When that happens I'll cash out and hopefully buy a nice little condo in Kauai where I can drink Anchor Steam and listen to Eddie Money all day long.

So what I'm going to do is start at the beginning and catch up to the present day. Then I will continue to post and track my real time trades. I have a pretty short attention span so there's a good chance that not all of my commentary will focus on commodities, but that's OK because if more than 3 people read this thing I will be impressed.

Finally I should say that I didn't really know what I was doing when I started and I still don't really know. To this point that has been an advantage. I have traded according to the only 2 rules I know:

1. Supply/demand
2. The trend is your friend

Now that I'm getting "smarter" I actually have a few more rules to incorporate, and these will probably be the ones that ultimately sink me.

In the next post we'll get started with the resource that got my dillusions of fortune started - sugar.

1 comment:

Leena Sharma said...

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