It’s been a remarkable last week in global markets. Just during the past 10 days, the commodities markets — some of the most profitable investments of the past 18 months — experienced not one but two exceedingly rare "Black Swan" events. As measured by the Commodities Research Bureau (CRB) Index, two of the largest, one-day declines ever in the history of the index both occurred last week, 4.62% on March 17 and 4.07% on March 19. And that’s no mean feat, considering that the index goes back more than 50 years to 1956.
The bad news is that much of your gains in commodities-based positions were wiped out during a couple days of trading. PowerShares DB Agriculture (DBA) still is showing a small gain, while the Elements Rogers International Commodity ETN (RJI) slipped into negative territory — though both have recovered strongly after the last two trading days. Barrick Gold (ABX) also fell off a cliff, but has already begun to recover.
My view is that last week’s sell off will be considered a tremendous buying opportunity in the context of a commodities bull market that has a long way to go.
But there was other good news in your Global Stock Investor portfolio. Coca-Cola Hellenic Bottling (CCH) hit $47.71 yesterday to come within 30 cents of its 52-week high. Potash (POT) received a gushing upgrade from RBC Capital Markets, with a target price of $250 on the stock for the next 12 months. That’s a whopping 60% upside from today’s trading price. You were, however, stopped out of Veolia Environnement (VE), which struggled with deteriorating financial results in a bear market.
If you have extra cash, add to your commodity-based positions, which are still dramatically oversold after last week’s market action. This includes PowerShares DB Agriculture (DBA), Elements Rogers International Commodity ETN (RJI), and Barrick Gold (ABX). And it’s hard to find a stock out there with better prospects than Potash (POT).
PORTFOLIO UPDATE
Barrick Gold (ABX) plummeted as gold dropped 12% last week in its biggest weekly decline in 25 years, after hitting a record high of $1,034 an ounce on Monday of last week. Nevertheless, the outlook for gold is bullish and ABX has already started to recover. Grit your teeth and BUY on the dips.
Coca-Cola Hellenic Bottling (CCH) was seemingly immune from global markets as it hit a new record high this week. This Warren Buffett-style, “one decision stock” remains a BUY.
PowerShares DB Agriculture (DBA) ended the week pretty much where it started — even after all of the turmoil in the commodities markets. The agricultural boom remains a top theme in your Global Stock Investor portfolio, and DBA remains a top BUY.
iShares MSCI Brazil Index ETF (EWZ) fell this week, but has since staged a strong recovery. As global markets and commodities turn, this position will soar. The Brazilian real is also continuing to appreciate against the weak U.S. dollar. Brazil is a BUY.
CurrencyShares Japanese Yen Trust (FXY) pulled back off its record highs this past week. But the yen remains your top hedge on the markets and remains a BUY.
Millicom International (MICC) ended the week flat, after a sharp sell off last week. The stock may move on rumors of a potential buy out of African rival MTN by U.K. giant Vodafone. This is a highly volatile stock and is a BUY.
ArcelorMittal (MT) sold its Sparrows Point steel mill to Russian steel giant OAO Severstal for $810 million. The world’s biggest steel producer remains a BUY.
Potash (POT) got a huge boost from broker RBC Capital Markets this week. Citing two recent contracts inked with Belorussian Potash and Indian Potash that set the price of potash at $625 a metric ton (a 130% increase over a previous price), RBC Capital Markets predicted that shares of fertilizer-maker Potash will hit $250 within the year. To emphasize the point, RBC "crossed its heart" and upgraded the shares from "buy" to "top pick." That’s a roaring endorsement if I’ve ever heard one. Back up the truck and BUY Potash.
Elements Rogers International Commodity ETN (RJI) suffered from last week’s remarkable downdraft in commodities prices. But this, the most diversified of commodity plays, has already begun to tick back up. This is a terrific buying opportunity. RJI is a BUY.
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