A view on commodities

[nirav_j]

I was referring to similarity in their charts but still I hear what you are saying. However, I still believe nifty has more chances to have 2008 deja vu D) than crude or any other commodity. Coz, IMO, I have seen that commodities no matter how volatile their price is, have this inbuilt trait what is known as 'secular bullish'. Something stocks would never have, be it microsoft or apple. As I said in one of my earliest posts here that commodities have a definite intrinsic value no matter what market price is, while stocks have none no matter what their market price is. Take for example, if I have 100g gold biscuit in my pocket, anyone anywhere, even in the non-urbane corners of the world, would recoganize its value and it may be exchanged for a fair local price/services if need arises. Now if instead of gold biscuit I have 1000 US T-bonds or Apple shares on me, I would be having great deal of difficulty convincing a tribal Yemani or Mongolian or eskimo that these colorful printed papers are worth more than the yellow metal. What more, even if I were to get transported back in Roman times or even before, 100g goldy would help me survive.

Anyway have a nice weekend, friend. It is always a pleasure interecting with you. Take care.

Dear DSM,

Apologies for this post, but considering the example given above, I simply couldn't resist -->> :rofl::rofl:

 

[DSM]

DD,

Thanks for your post and it is always nice to exchange ideas and opinion on the forum, especially when there is a divergent view. While most people would automatically take offence and defend their stance, I see contrary opinion as a different view for consideration, so much appreciate whenever your post.... (not that I disagree with you) but your post makes one to think of value of things in exceptional situation.....

A thought provoking question : Assuming there is a (God forbid) a nuclear winter, or a cataclysmic event (the kind the world has never seen such as extreme solar storm of a magnitude and duration the kind of which that has never happened till now - and hence not anticipated, basically a black swan event) If that were to happen, what would hold preference and priority on the basis of value? 10 biscuits of gold, demat account showing ownership of shares in top 10 companies the market value before the event was say 100 crores, 10 bags of grains and provisions or 10 guns with loaded ammo. (Situations such as these may never occur in our lifetime, but cannot be 100% ruled out. E.g extreme solar event the kind of which has never happened before (we as humans are prone to look at only such events that have happened previously - and hence do not or cannot forsee the extreme) It would be thought provoking to think what would have value when the society and law and order breaks down and there is chaos all around..... most things that hold value in society would cease to, while basic necessities and means of defending oneself would have immense value (Not surprisingly, the ones we consider as loonies or extreme far right in the US make provisions for survival with canned food and ration, tools and arms) This is just some food for thought - in light of your post.

Incidentally, while talking to a builder friend this topic came up, and it was argued that for him, it would be ideal to diversify his portfolio of properties from only Mumbai - to a place that would be hundreds of miles away..... sort of a place of refuge to avoid concentration of risk.....

http://rt.com/news/solar-storm-earth-electricity-391/

I was referring to similarity in their charts but still I hear what you are saying. However, I still believe nifty has more chances to have 2008 deja vu D) than crude or any other commodity. Coz, IMO, I have seen that commodities no matter how volatile their price is, have this inbuilt trait what is known as 'secular bullish'. Something stocks would never have, be it microsoft or apple. As I said in one of my earliest posts here that commodities have a definite intrinsic value no matter what market price is, while stocks have none no matter what their market price is. Take for example, if I have 100g gold biscuit in my pocket, anyone anywhere, even in the non-urbane corners of the world, would recoganize its value and it may be exchanged for a fair local price/services if need arises. Now if instead of gold biscuit I have 1000 US T-bonds or Apple shares on me, I would be having great deal of difficulty convincing a tribal Yemani or Mongolian or eskimo that these colorful printed papers are worth more than the yellow metal. What more, even if I were to get transported back in Roman times or even before, 100g goldy would help me survive.

Anyway have a nice weekend, friend. It is always a pleasure interecting with you. Take care.

 

[DSM]

Dear Nirav,

Yep, DD has made a thought provoking post - which I have taken it further to an extreme. We take many things for granted.... but have to question, what if our basic assumption and view that we hold of the world does not hold? What happens (for example to value of real estate) if there is extreme drought and lack of water in the city of Mumbai? Not an impossible scenario to imagine, but a question we avoid asking..... How well are we prepared for this? Very little I guess.....

Dear DSM,

Apologies for this post, but considering the example given above, I simply couldn't resist -->> :rofl::rofl:

 

[amitrandive]

Hi DD,

All the above are ifs and buts. And as traders we will always look for confirmation in the charts..... I think that the global engine will chug along the same track, and the dips will be considered an opportunity to have gone long. In my view Nifty is bottoming or will bottom out...... Interesting times ahead.... Let's see what happens.....

Just my Views

All the other things discussed are beyond our control and it is useless to predict/analyse.There are political/economic experts for those issues.

We are traders and our job is to trade profitably,irrespective of the global events.

Price Action is God ,follow it and you will end up being right most of the times.

 

[nirav_j]

Dear Nirav,

Yep, DD has made a thought provoking post - which I have taken it further to an extreme. We take many things for granted.... but have to question, what if our basic assumption and view that we hold of the world does not hold? What happens (for example to value of real estate) if there is extreme drought and lack of water in the city of Mumbai? Not an impossible scenario to imagine, but a question we avoid asking..... How well are we prepared for this? Very little I guess.....

Hello DSM,

I went this :rofl: based on absolute example given and the referring to commodities as being "secular bullish" and implication that stocks are not ..

taking a 100G gold biscuit to either a yemeni tribesman or any other non urbane corner of the world only increases the probability of one getting shot and the biscuit stolen.

I also believe that doomsday planning should be left to doomsday actually happening .. till then, a well balanced portfolio is the way to go


Commodities have shown some wild swings over time just like stocks and are their values are derived ultimately from the demand supply equation ... so much for the "intrinsic value" and "secular bull run" of commodities ... !

To disregard stocks as colourful printed papers is a bit silly .. Theres a saying, a picture speaks a thousand words, heres an example for the non belieber; HDFCBank ..

 

[DSM]

Amit,

Also Google for the word Hypothetical discussion. It is different from Trading BTW....

Just my Views

All the other things discussed are beyond our control and it is useless to predict/analyse.There are political/economic experts for those issues.

We are traders and our job is to trade profitably,irrespective of the global events.

Price Action is God ,follow it and you will end up being right most of the times.

 

[DSM]

Hi Nirav,

Broadly agree, except doomsday planning should be left to doomsday actually happening We have to plan for eventualities for events that we don't hope to happen.... Adequate insurance, diversification of assets (including geographical diversification) is wisdom.... I remember watching TV news during earthquake in Kutch, Gujarat (in which over 25,000 people were killed) An old lady standing in line with a bowl for food... the previous day she was mother to 4 sons having 4 jewellery shops.... An extreme case no doubt (not sure if their shops were insured) but extreme events (Fukushima, Chernobyl are just of one extreme types) Many dangerous ones than these, would be vastly under-rated.

Hello DSM,

I went this :rofl: based on absolute example given and the referring to commodities as being "secular bullish" and implication that stocks are not ..

taking a 100G gold biscuit to either a yemeni tribesman or any other non urbane corner of the world only increases the probability of one getting shot and the biscuit stolen.

I also believe that doomsday planning should be left to doomsday actually happening .. till then, a well balanced portfolio is the way to go


Commodities have shown some wild swings over time just like stocks and are their values are derived ultimately from the demand supply equation ... so much for the "intrinsic value" and "secular bull run" of commodities ... !

To disregard stocks as colourful printed papers is a bit silly .. Theres a saying, a picture speaks a thousand words, heres an example for the non belieber; HDFCBank ..

 

[Catch22]

Hi Nirav,

Broadly agree, except doomsday planning should be left to doomsday actually happening We have to plan for eventualities for events that we don't hope to happen.... Adequate insurance, diversification of assets (including geographical diversification) is wisdom....

Have just got back home ,and I see very interesting conversation going on in commodities thread ..I do agree ,we have to plan for eventualities .we need to wisen' out ,This however is my personal view. It is a global concern now.I remember asking you once ,regarding this sometime back.
Take care.

 

[PreSap]

Positive news for Crude, I assume?

 

[ankur07090]

I am also waiting to take position in crude near about 3950 :rofl:

any suggestions are welcome