In last weeks WSJ, copper futures plummeted. Copper, also known as Dr. Copper due to its ability to forecast global economic trends, thus indicates a slowdown is around the corner (if not already in place).
Last weeks WSJ also reported Brent crude futures dropping.
The two piecesnof information, when looked at jointly, may just be portending a slower growth environment. So how does this justify Gold falling in price? A bubble just popped. Is all!
Re: Dr. Copper forecasts global economy slowdown.
So what is the common investor to do? For most, nothing different. Stick to your asset allocation. Dollar cost average. Rebalance 2 to. 4 times a year.
Re: Dr. Copper forecasts global economy slowdown.
And what is an individual stock picker to do? Nothing different, really. Continue to use same approach - analyse income, cash flow and balance sheet statements. Make sure earnings are high quality. And did not increase unsustainably, thus pushing P/e artificially low (Apple anyone?)
One thing to do. Odds are slowdown happens. So industrial stocks go down. IFF they do, back up the truck.
Re: Dr. Copper forecasts global economy slowdown.
Right on cue, today's WSJ discussed Caterpillar, a classic industrial and cyclical stock. CAT was close to 52 week low, in line with copper prices. Its gear over year revenue growth has been slowing for about last 3 quarters. In the last quarter there was a decline of 9%. Sure enough, the stock has lagged the market by 38% in last 12 months.
Is it time to pull the trigger? CAT missed earnings expectattions. And stick was up 2.8%. Guess the miss was baked in.
Plan to look at its balance sheet. Also, I would like to see a 25% drop in stock fro. Friday close. That would peg it at 59.