The world of investing can be tricky to navigate. In order to help the average consumer make informed investment choices, Stansberry Research is there to help. Stansberry Research is a privately held American publishing company with its headquarters in Baltimore, Maryland that specializes in investment research. It provides bimonthly newsletters on a variety of financial topics including natural resources, power, mining company investments, and even biotechnology. The newsletter has subscribers in over 100 countries around the world and is widely regarded with respect.
Stansberry Research is just released a report that has stated the commodities industry is ripe for investment currently. Commodities can serve an important part of an asset allocation program. They represent an easy way to increase the diversification of your investment portfolio outside of traditional investment classes. It is important to understand that commodities are cyclical and go through boom and bust periods detailed in Stansberry report. The reason behind these boom and bust cycles is not difficult to understand, but it is important that you understand them.
The two most important factors that drive commodities markets are the same factors that drive the vast majority of markets in the world. These factors are supply and demand. To put it in a way that is easy to understand if the supply of a commodity is less than the demand for it the price of this commodity will increase. This works in reverse as well if the supply outpaces the demand for a commodity the price will drop (http://dailywealth.co/reclusive.html). As these prices change producers can increase or decrease supply in order to reach an equilibrium point.
In typical markets, the same process occurs but on a much smaller scale. In the commodities, market supply and demand can become out balanced and can take much longer to rectify Dan in normal asset classes. This is due to the amount of time that it takes in order to increase supply. It takes a significant amount of time to build additional mines or to build additional oil pumps described by Stansberry Research. Put together this creates a market that is uncorrelated with the prices of stocks making them an easy way to increase the diversification of your investment portfolio.