If you remember the dot com bubble as clearly as I do and are a technical
analyst then you will recall the month which the NASDAQ broke down and
confirmed a new bear market has started. The date was November of 2000.
You may be wondering why I bring this up. What do tech stocks have to do
with commodities?
Good question because they have nothing in common. But the key here is
that when a bull market ends in one asset class that money is shifted into
another. That money moved into commodities and resource stocks and in a big
way.
Precious metals and miners exploded, surging an average of 1000% return
(10 times ROI) over the next six years, topping out in 2008. In fact, these
resource stocks bottom the exact month which the NASDAQ confirmed it was in a
bear market on Nov 2000.
Compare Dot-Com Bubble & Burst to Precious Metals Stocks
Over the next couple of weeks, I will be sharing some of my top stock
picks in the metals sector (gold, silver, nickel, and copper). If you missed
the 2001 and 2008 metals bull market then you best pay attention and be sure
you don't miss what is about to happen.
Compare Bull Market in Stocks with the Energy Sector
The financial markets and asset classes move in cycles, and there are
times when specific sectors outperform others. Resources stocks specifically
the energy sector is about to enter its strongest phase within the US
equities bull market which started in early 2009.
Oil stocks have a lot of positive things in their favor in my opinion,
though many will disagree. But it's all in how you look at the data and your
investment horizon.
During the previous market tops which are the same for NASDAQ, DOW,
S&P 500, energy stocks have outperformed most sectors. Why? In short, we
will always need energy, many of the companies pay dividends and when money
starts to roll out of equities the underlying commodities typically hold
their value for an extended period of time.
These past stock market tops generated 36%-40% returns during a time when
most traders and investors were losing their shirts, or should I say lost 50%
of their life savings... Which train would you rather be on?
Now take a quick look at the price of crude oil
Oil has formed what is called a (double bottom, or "W" formation
and also appears to be completing a cup & handle pattern). Whatever you
want to call it, they are all very bullish patterns, meaning a much higher price for oil is expected.
In short, higher oil prices, means more profits for energy
companies, it's that simple.
An Oil Junior Resource Stock
There are times during market cycles when I like to own shares of some junior
companies. When a major shift looks imminent within a market or sector just
like we saw in 2000 and again in 2008 I like to hold shares in companies
which have the potential to rally several hundred percent.
A couple of weeks ago I talked about a speculative oil stock Cardiff
Energy Corp. which I own shares. The story behind this stock is real and the
horizontal well which they will start drilling mid-June 2015 has the
potential to generate 5-7 times of a vertical well. Below is the chart with
my short term targets.
The low priced crude oil is wreaking havoc with oil companies and share
prices. The best plays are those who have the lowest cost of production per
barrel and I heard this well could produce profits even if oil was
trading at $25 per barrel and sold at WTI pricing with no discount.
The energy behind this share price is very impressive and shows that
investors are confident in the horizontal well. If they strike oil who knows
where the share price could rally to.
Detail Third Party Report: http://rockstone-research.com/images/PDF/Cardiff1en.pdf
Side note: I met with Jack Bal the President, CFO, and Direction of
Cardiff Energy Corp. in Toronto recently to learn more about the company and
projects. Cardiff is currently doing a private placement to raise capital and
if I'm correct investors can get shares at 25% discount from the current market
value. And from what I understand they have room for a few more small
investors. If this is of interested to you give Jack Bal a call directly at
Cardiff Energy 1-604-306-5285, and you can mention this report if you want.
Next Bull Market Conclusion:
In short, every good investment will eventually become a bad one and vice
versa. Knowing when to shift our capital from one sector to another is vital
for steady long-term growth of our portfolio.
Over the next couple weeks through this multi-part series I will be
sharing some very lucrative stock picks which I am investing in and the
second one will likely be a nickel resource company that looks poised to
rocket higher.
