Do trees grow to heaven? We know the answer to that is certainly no.
Can stocks go up indefinitely? Just like trees don’t grow to heaven, stocks don’t rise forever and without pause.
Equities are in what will go down as a historic bull market. We are 9.5 years into this historic run.
Just to give you an idea of how expensive stocks have historically been, we can look at the Shiller P/E ratio over the past 120 years for some historical precedence.
The ratio is currently at 31, and it has only been higher two other times in history, including the approach of the Great Depression and the Dotcom bubble.
It’s worth noting that stocks are even more expensive by this metric than they were leading up to the 2008 financial crisis:
It’s hard to say that there will be an imminent correction (or even a crash) in the market in the near-term, but the fact is that similar to Bitconnect’s inevitable collapse, fundamentals ultimately set in and real price valuation is realized.
Something we know has been extremely undervalued is the commodity sector. We’ve gone through one of the worst bear markets in commodities in all of history. In fact, it was so bad and with sentiment hitting such extreme lows in the space that I will likely tell stories about these days to my grandchildren and great grandchildren.
Having said that, if I were to be aggressive in any single sector right now, I would have no choice but to look at commodities.
Sure, momentum and our most recent sentiment say the Dow Jones is going to 30,000 and the gold market will be a nonevent. But I can assure you that investors are starting to dig their heels into this sector and are getting ready for a turnaround that will have equal and opposite forward momentum to what took gold down in a historical fashion.
We are in a commodity supercycle that is ready to explode to the upside. In fact, compared to stocks, commodities haven’t been cheaper than they are now when using the commodities-to-stocks ratio.
The turnaround in commodities will be face-ripping when it takes place. There is a tremendous amount of stored energy waiting to catapult this sector higher, and we are prepared and are going to dig our heels in even further.
This truly is historic, and we are blessed to be living in such a time as this to experience such a great transfer of wealth.
My next play on commodities will be released Monday morning, and you certainly don’t want to be on the sidelines for this one. We are setting ourselves up for a generational-type turnaround in commodities that might only happen one or two more times in our entire lifetime, and it’s time to strike while the iron is hot.
We’re looking forward to ongoing prosperity as a community here at CrushTheStreet.com.
Chief Editor, CrushTheStreet.com