So here we are at the end of another year, the market has been gyrating more and more, volatility has started to pick up and likely here to stay. The FED reserve has lifted off on interest rates, commodities are in full rout, the US dollar keeps going from strength to strength, the weather is becoming more mental… what to make of it?
I tend to look at the other side of the coin, look for extremes and reversion to the mean. My belief is that i think 2016 will be the start of the commodity turn ( i believe it will take several years ), i think the US Dollar has peaked and will start to degrade over time and coincide with the commodity cycle bottom – i recall one commentator on tv speculating ‘stagflation’ may make an appearance and i can well believe it…it just ‘feels’ like something is up and it ain’t all sunshine and bunny rabbits. That said, everything is not going to go to hell in a handbasket and we’ll muddle our way through this but it’s just going to take time…have you got the patience? 2016 could be another year of ‘no change’…look at the start of 2015 on the S&P and look where we have ended up..coincidence?
Look at all the predictions from the experts, most seemed to have got this year wrong, what’s to say they will get 2016 right? What’s to say i am right? Nothing at all, i could be completely wrong and commodities keep imploding but when i see things getting to multi-decade lows, that to me, is a risk/reward i am prepared to take…we shall see.
Where is the growth going to come from? The looming climate crisis seems to be a good start – i’ve been looking at renewable energy stocks, anything from batteries, wind, solar, water, food, construction, aircon?, insurance anything which will be impacted by the more violent weather patterns we have been seeing over the last couple of years. The green ‘revolution’ had a misfire a few years back and imploded so i guess most investors are wary – i think nature will simply force everyone’s hand, there is no alternative. Hard to find quality dividend stuff in this area right now on pure play renewables but things like GE looks reasonably solid for the long hold. Currently i am looking for explosive EPS growth, solid cash flow, not levered to hell. Everyone is going to be affected by the climate stuff, you just have to look at what is going on around you and on the news, it is becoming more and more frequent. Low oil makes it hard to say why you should suddenly buy a solar stock but..look at the price action this year..interesting right? For me this thesis is a multi-decade one, not a ‘2016’ one but i am liking that some stocks in these sectors are priced below book and for bankruptcy when they are in ‘ok’ shape…looks like emotional investors again and that’s the stuff i like.
Anyway enough rambles for now, I hope everyone had a wonderful christmas and wish you a very happy new year 🙂 There are tons of opportunities out, what’s your idea? See you in 2016. T