If you’re one of my long haulers, then you know rising commodity stocks have been the hottest thing to trade on the market the past few months.
I’ve been talking all about how basic materials — like lumber and lithium — have been rising like crazy. Well, all of them are derived from commodities.
And they tend to follow inflation levels...
A strong inflationary shift is on the horizon thanks to the Federal Reserve running the economy extra hot. This was to offset damages caused by the COVID-19 pandemic that government officials now call the biggest threat to the U.S. economy since World War II.
But what you need to know when it comes to what rising commodity stocks to trade is there’s a strong negative correlation between them and other stocks...
And it dates back to hundreds of years of academic research and real trading action in the stock market.
A lot of hedge fund traders use commodities, futures and ETFs to hedge their portfolios to reduce risk and volatility. In some cases, it allows them to lower risk and volatility, and make smoother equity curves.
But back in the day, this wasn’t so practical.
That’s because traders had to have commodities and equities in separate accounts with different brokers. So that means the margin clerk looking at their account couldn’t see the benefit of their commodity trades, and vice versa.
But this has changed in recent years. ETFs now track all major commodity markets, which gives everyday traders the chance to combine their portfolios and benefit from both all at once.
Before we get into the two rising commodity stocks to trade and one ETF I want you to see, there’s something else I need to point out...
Commodities often move in super cycles, which means their trends can last for several months — and even years. So now is the best time to start looking at these rising commodity stocks to trade because they’re starting to uptick.
If you’re looking to diversify your account or trade commodities but don’t want to open a futures account with a new brokerage, or learn all of the things that come along with them — like expirations — these are three great ways.
And I would include the first ticker in your portfolio as a hedge because if stocks drop and commodities rise… BOOM!
You’ll have it made.
Check out my short video below and don't forget to subscribe to our YouTube channel if you haven’t already so you can be notified as soon as we post our next video!
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