Worst Month for Commodities Since 1980

If you, like me, are wondering where you've gone wrong in your trading over the past couple of months - we can take some minor solace in this fact.

The CRB commodity benchmark index fell over 10% in July, marking the worst month for the index since 1980 (which, incidentally, marked the end of the last bull market).

While I believe we are only in the 4th or 5th inning of this bull market, a couple lessons come to mind:

• The easy money has been made - buying oil at $12 was a no brainer. Buying oil at $120 could burn you in the short-medium term.
• All bull markets have pull backs. Commodities took off out of the gates to begin the year, but many have since retraced and given back most or all of their gains. This has been reflected in my trading performance (up an easy 100%, then giving most of those gains back since).

Bottom line, make your shopping list now, and go easy on the leverage. Nobody wants to be leveraged to the hilt during a correction, but it's tough to know when the next leg up will come - I prefer to have a skin in the game at all times.

My favorites right now: sugar, coffee, cotton, live cattle, lean hogs. Currently still long sugar, cotton, and live cattle.