Dear Reader,
2:48 pm and my phone was ringing off the hook…
“Hello?”
“…so I’m writing an article on El Niño,” said the journalist from the Daily Telegraph. “And I’d like your take on what it’s going to do to commodity prices…”
Something freakish is happening with the weather this year. The dreaded El Niño weather phenomenon is back. And it is going to trigger a chain reaction that we haven’t seen for years… and probably won’t see again, on this scale, for another decade.
It disrupts weather patterns around the globe. It brings torrential rain where it isn’t expected. And it can bring drought to some of the wettest places on earth. That wreaks havoc on agricultural production. And investors who bet on the right crops could make the sort of returns that would seem outrageous even at the height of a raging bull market.
Here at The Right Side, we’ve been tracking how the El Niño phenomenon could be one of the great money-making opportunities this year. In fact, I’ve written to you twice about it here already. Now the journalist at the Telegraph had caught wind of it.
Your best way to profit from the El Niño effect
I gave them two investments that could do well as El Niño hits – cocoa and palm oil. Of course, I had already mentioned both of them here in The Right Side before.
But then I bit my tongue. I held back the one investment that I honestly believe is going to outperform every other one over the next twelve months as El Niño rips through the southern hemisphere. It looks set to deliver a 102% profit over the next twelve months. But I held it back for one simple reason…
I promised you that as a loyal reader of The Right Side, you would be the first to receive my report on this investment opportunity. And that’s exactly why I am writing to you today. My special report on how you could profit from El Niño is ready. And you can download it right here.
I won’t be sending it to anyone else until Monday. But you will need to act fast to get the most out of this opportunity.
El Niño is always a huge money-spinner – if you are in the right investments. El Niño strikes every 2 – 7 years. But every decade or so, a really big one happens. We are now overdue for a big one. And meteorologists are warning that this year’s El Niño might be the strongest in a decade.
Just take a look at the graph below. It shows you how the price of palm oil jumped when the last major El Niño struck in 1997. Up by 127% in just six months. The price of coffee soared by 115% over six months that year. This is the sort of gain that I am expecting from El Niño this year.
Here’s a point that I really can’t stress enough though – you can’t just stick your money into any commodity or crop and expect its price to go through the roof during an El Niño. You really need to understand the supply and demand situation with them if you want to make a profit. Coffee and palm oil did so well in 1997 because their supply and demand balance was so tight.
That’s why I am betting that this time one particular commodity is going to take off in the same way. I’m looking for a gain of 102% on this one simple investment. Production of this crop has fallen drastically over the last year. It won’t be enough to meet demand.
On top of that, it is particularly vulnerable to the effects of El Niño. So production could fall even more dramatically over the coming months as El Niño really starts to take hold. But like I said, you really need to move quickly to book the biggest profits on this.
The time to get in is now… ahead of the crowd
You see, it won’t be long before this investment story hits the mainstream press. You can’t keep a profit opportunity of this size hidden for long. But the thing is that by the time the mainstream picks-up on it, the biggest gains will already be gone.
The trick to making a killing on this investment is to get in ahead of the crowd and then wait for them to pile-in. It is that feeding-frenzy by speculators and investment hoi polloi that sends the prices of commodities through the roof in situations like this. That’s when we will cash-out.
It is a simple, straightforward strategy. But to make the biggest profits you will need to act quickly.
The mainstream media has been really behind the curve on this opportunity. But it is starting to happen. The Telegraph ran its story about El Niño two weeks ago. You can bet that others are going to follow.
You can also bet that when they do write about it, they are going to focus on the havoc and destruction that El Niño causes. Because that is the sort of rubbish that sells newspapers. But I want to focus on what we are actually here for – the profit opportunity that it opens-up.
That’s the good news.
The bad news is that I have probably shot myself in the foot by revealing that I held back my best advice from the Telegraph’s readers. I don’t imagine they will be calling me up for another quote on El Niño once it really starts to hit. But I can live with that if it gives me the chance to make a 102% before the hoi polloi catch-on. You can download my report on how you could do the same right here.
Good investing,
Manraaj Singh
For The Right Side
Editor’s recommendation: Manraaj Singh is the investment director of Profit Hunter, a service focussed on finding “off the beaten path” investment opportunities. We expect Manraaj’s El Niño story to get picked up quickly on the internet now that he has issued this report. That could cause a surge of investment into this investment. Act now to ensure you get in ahead of the crowd.
Please note: Forecasts are not a reliable indicator of future results. Your capital is at risk when you invest in shares; never risk more than you can afford to lose. Please seek independent financial advice if necessary.
MARKET NOTES
Decoupling between global stocks and corporate earnings
BY SHIVVY ARORA
We last wrote about what Citigroup call the “Twilight Zone” back in April. It’s a phase where share prices rise even though earnings are dipping. There are some reasons behind this apparently strange behaviour…
Investors have already factored in the bad news of plunges in corporate profits. And despite the dismal economic outlook, the whole ‘green shoots’ psyche has made them less risk averse.
Take a look at today’s chart. It shows the movements of the MSCI World Earnings Index (global earnings; black line) versus the MSCI World Price Index (global share prices; grey line) from 1970 to date. Grey columns highlight previous worldwide recessions.
There’s a definite decoupling of earnings and share prices at the moment
Source: Citigroup, Datastream
Look closely and you can see that we’re in the ‘twilight zone’ at the moment, with share prices putting in a good rise despite a downward trend in earnings.
But investors should be cautious. The earnings cycle haven’t bottomed out yet and it will be some time before it’s back on an uptrend.
The Daily Reckoning – Showdown with the bond vigilantes
BY BILL BONNER
Paris, France
Friday, 31 July 2009
It’s time for summer vacation in France.
“You can forget about getting anything done in the month of August,” said colleague Simone Wapler. “The French are busy with serious things... real things... like painting shutters and picking green beans... fixing curtains and making strawberry jam. They don’t want to hear about economics or markets...”
France begins its summer vacation today. We’ve come to join them...
But we will keep an eye on the money anyways... because it’s just getting interesting...
Two interesting things are happening. First, the feds are facing a showdown with the vigilantes... you know, the people with money – $2 trillion worth of reserves, $1.5 trillion of it in US Treasury paper. They’ve got to convince them that they’ll protect their investment. If they fail, the vigilantes sell their bonds... cause the dollar to collapse... and force up US interest rates – which will come down like Round-Up on those green shoots of recovery.
Meanwhile, stocks are not only anticipating a recovery, they’re counting on it. And for that, they depend on stimulus from the feds. But what Bernanke giveth in stimulus, the vigilantes are likely to take away....
More on that in a minute...
The other big thing that is going on is the rally in the worlds’ stock markets. On Wall Street, for example, the Dow rose 96 points yesterday. How far will this rally go? Should you try to take advantage of it?
As a rough rule of thumb, a bounce can be expected to recover half of the losses from the crash. The Dow went down 7600 points below its pre-crash high. So, we can expect a rebound of about 3800 points – which would put the index back around 10,300. By that measure, this rally could still have a lot of life in it – enough to convince practically everyone that the depression will soon be over. Don’t believe it. This depression is going to last at least a few years... and the bear market isn’t over. The Dow will eventually close below 5,000. At least... that’s our story and we’re sticking with it.
But let’s go back to poor Ben Bernanke. And poor Tim Geithner. The poor fellows don’t seem to know what they are doing. But why should they? Ben Bernanke spent his career as a professor of economics. Modern economics is fundamentally an intelligence-destroying trade. The longer you spend in economics, the less you know about how the economic world functions. Many years ago, the profession got the wrong idea of what it was up to. Ever since, it’s been barking up the wrong tree. (More below...)
As for Geithner, he is a smart young man... destined for hackdom almost from the day he was born. Ivy league university... consulting firms... government – a protégée of Robert “nobody saw the crisis coming” Rubin – you can’t blame Geithner either; he hasn’t had time to think about how an economy really works.
But at least their mission is clear: to convince the world of two things at the same time... both impossible and mutually exclusive! The Chinese vigilantes must believe that the feds won’t undermine the dollar... and the rest of the world must believe that they will! Inflation is necessary for recovery and growth in the US... or so everyone believes.
It was French economist Jacques Rueff who revealed the scam more than half a century ago. The whole idea of Keynesian stimulus, he explained, was to cause inflation... which would reduce the real price of labour. In a modern democracy, politics prevents wages from falling. But in a correction, if wages don’t fall people don’t get jobs. Keynes’ didn’t mention it, but the only reason his stimulus works is because it pulls the wool over the eyes of the working classes – reducing their wages by inflation so employers can afford to hire them again. Ergo, no inflation... no recovery in the job market. No recovery in the job market... no recovery in the economy.
But inflation will cost the Chinese plenty. And they’ve let it be known they won’t sit still for it. Keep reading...
To read the Daily Reckoning in full, click here.
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