Trends to Watch for in 2011
As we turn the calendar and start fresh in this New Year I wanted to share with you some of the best trends to look for in 2011. Some of the most profitable themes in 2010 may continue to perform as we see the economy start to improve. In the new 2011 BigTrends outlook (soon to be released) I laid out a couple of new areas to focus on but here I want to be more specific. We all know the issues around the dollar with the Fed (more on that below), yet the biggest beneficiary has been commodities. Rising costs and demand for hard goods has caused a big rise in everything; from gold to silver, coal, steel, fertilizers and a host of others too numerous to mention. I would think only a severe slowdown in China and other emerging countries would cause a meltdown in commodity prices. Some of my favorites include BTU, MEE, POT, MOS, X, MT, SSRI, SLV, NEM, ABX and SLW. We saw a resurgence late in the year from the banks and brokers; this is likely to continue as short-term rates remain low. Technology is always somewhere to find good return especially in a low volatility environment. Earnings are about to be released and we'll see how everyone did during the Xmas season.
Always on Fedwatch
One of the most annoying commentaries these days is the opinion of others about the Fed and their actions. It seems the solutions are plentiful and nobody holds back. Most have a displeasure with the policy – and yes, I get that. However, the game is being played by the Fed and we're all spectators. Like when you go to a ball game you can boo one or both teams or the officials; you're entitled as you bought a ticket, but at the end of the game you can't control the action. The same example applies with the Fed and their self-imposed mandate. I personally have faith and belief they are on the right path – as radical as it may be – but they are at least trying to make something happen. Pay the piper later on? Sure, but better later when the economy is on higher ground than now when it seems so vulnerable. I say let us allow the Chairman and the Fed to do what they know how to do, pay attention to the economy and be on guard when they may look toward tightening (probably sooner than most think).
Getting Ahead: Discipline+Patience = Success
The market is a tough battle. Each day there are chances and opportunities to make money though, it is the greatest form of free market capitalism known to man. It's a vast ocean with treasures; we just have to be able to unearth them at the right moment. We have the ability to navigate carefully through markets, put our bets out there and see where the chips fall. But if we are too loose with our capital then we are headed for a bad ending. Discipline is one of the keys to success: learn your craft and practice. Each day that passes is one more great learning experience – capture it, analyze it and grow from it. Use a trading system, pay attention to the timeless patterns of price/volume and believe in what you see and not what you hear. Patience is the biggest virtue in trading, yet many are unwilling to wait. When capital is at risk we don't want the negative outcome, right? However, I've often found the best wins are when we exercise the patience into a trade – much different than when one goes violently against us. In that case, just move on.
Comment your predictions for 2011 below!
