Commodity Trading & Trend Following

It goes without saying, nothing is safe. Banks are imploding and even gold has fallen almost 10% in a very short while.ֲ In normal times, the most time tested advice after a market decline is “Don’t be afraid.” ֲ The question is ,are these ֲ normal times? I would tend to believe not. More people lost money trying to catch a bottom or a good deal than at any other time. It seems to be a daily occurance with watchers of CNBC waiting to hear from the experts that the bottom is. The current economic situation can last for a very long time. However most people I speak with want to believe that it will be over this year or next. It makes me think of the people who left Lebananon or Cuba with a suitcase and thought they would be returning the following week. Those people are sitting on their luggages and are still in shock of what transpired.ֲ 

It is truly unbelievable how fast all of this is happening within 60 days in the fall last year the worlds banking system was shocked. Many today are shocked and in still denial.ֲ 

Looking at the background it would not be very hard to believe that we could be on the verge of tremendous inflation. Many countries whose currencies have weakened or taken loans out in US dollars are starting to feel inflation. Inflation is a wealth destroyer. Try this excercise… take out your excel spreadsheet, take the number $100 and each year divide out 2%,5%,10% for 10 years and look what your dollars are worth at the end. Put these facts together, Govts are printing money like toilet paper, there are droughts throughout the world, farmers do not have access to credit, what do you have? A recipe for massive inflation. What does the number look like with 10% inflation. Very ugly.ֲ 

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What can you do? Consider learning about managed futures. Read about trend following. Never invest more than 5% of your net worth into any idea. Look at history… Look at what happened to the US dollar during the depression ( I know.. you need to check)..Look at what happened to commodity prices in the late 1970s.ֲ 

You do not need to be a victim…There are situations one can make money. Last year and even for much longer periods CTAs were able to compound money. How much is your mutual fund worth today that you purchased in 1997? You know the answer.