All Investments Don’t Have to Move in Step with the Market Avoid Conventional Wisdom

Trend Reversals and Underlying Value

Any time we see a headline saying commodity X is trading at a 30-year low, we’ll be sure to look closely at the industry for the company or companies still doing okay, which are most likely to lead the way off the bottom. Conversely, if we see stories about commodity X trading at a 30-year high – much more likely today – we’ll look at companies that are dependent on the commodity and have had input costs driven through the roof. The more dependably cyclical the industry is, as the commodity price trend reverses itself the true value of the company is likely to come out.