The next bull market

[TexasHusker]

No bull market lasts forever. I recall doing really well in commodities in the first decade of the 2000s, but that gave way to a 10-year-and-counting equities bull market. But as inflation takes hold (which the gubmit steadfastly denies, but we all know the truth), another commodities bull market has begun. Instead of looking at Tesla and Audi, I am looking at the materials that need mining to build these cars, and their batteries. Instead of real estate, I am turning to lumber. Instead of Walmart, I am looking at wheat, corn, and sugar. I also acquired a small cotton farm.

As commodities are a different language than equities, take a look at the last 6 months performance of a few equities that are commodities-based. RIO, CLF, WY, FCX etc. If you want more diversification, look to Vanguard Energy (VDE) or Blackrock Natural Resources Trust (MDGRX).

And if you think fossil fuels are out of vogue, consider that we will still need it for a, about a billion other things besides gasoline. Starting with every piece of plastic and vinyl on the planet.

Some of the old names, such as airlines, are only going to survive as they were with continued welfare payments from Uncle Sam. The boardings will not return to pre-pandemic levels for a long time, if ever. The pandemic brought about some very permanent changes in consumer behavior.

[Singuy]

Hey welcome back!

I think you will see gigantic demand for air travel. I honestly think Airlines will make record profits from price gouging once the world opens up. There's so much in saving ready to be spent in people's banks right now with hundreds of un-used PTO hours banked up.

I don't know too much about the commodities market, but I don't see it as a very high margin play. Also aren't' we getting close to peak population growth from developed countries like China, US, and Japan?

[kork13]

I think you will see gigantic demand for air travel. I honestly think Airlines will make record profits from price gouging once the world opens up. There's so much in saving ready to be spent in people's banks right now with hundreds of un-used PTO hours banked up.

That's honestly what I'm anticipating as well. I personally have over 85 days of time off waiting for me whenever I'm finally able to use some of it. I expect that I'm not in the minority. There's hoping to be alot of pent-up demand, once things really start to open back up & restrictions ease off.

[rennigade]

That's honestly what I'm anticipating as well. I personally have over 85 days of time off waiting for me whenever I'm finally able to use some of it. I expect that I'm not in the minority. There's hoping to be alot of pent-up demand, once things really start to open back up & restrictions ease off.

Agree with both of you. I'm guessing there's going to be a boom once everything gets back to normal, which is going to be sooner rather than later. We're already planning a trip in September. In laws just booked alaska trip in June. People are ready to spend some coin on things other than home improvements and pools.

[disneysteve]

I think leisure air travel will pick up quickly. Business travel not so much, and that's where a lot of the airlines' profit comes from. Business travelers are far less price sensitive, often book on short notice, and pay full price.

There is absolutely pent up demand just waiting to get out there and travel. My PTO is use it or lose it so I don't have a bunch of time saved up. I had 6 weeks of staycation last year as a result, which was fine. It saved us a ton of money. But for 2021, we do have a couple of trips planned in the fall.

[LivingAlmostLarge]

Agree with both of you. I'm guessing there's going to be a boom once everything gets back to normal, which is going to be sooner rather than later. We're already planning a trip in September. In laws just booked alaska trip in June. People are ready to spend some coin on things other than home improvements and pools.

To be contrarian, how do you know that people haven't taken paycuts or lost their jobs? That people are still really struggling? How do we know that people aren't going to be struggling more in September when student loan payments come back online? Unemployment ends?

[TexasHusker]

To be contrarian, how do you know that people haven't taken paycuts or lost their jobs? That people are still really struggling? How do we know that people aren't going to be struggling more in September when student loan payments come back online? Unemployment ends?

If Biden has his way, everyone will have a lot more buying power when minimum wage is raised to $15 per hour.

[Singuy]

If Biden has his way, everyone will have a lot more buying power when minimum wage is raised to $15 per hour.

The min wage sounds good during a speech but most people are making closer to 12-14 today already as employers find a min wage pay has terrible employee retention.

[disneysteve]

The min wage sounds good during a speech but most people are making closer to 12-14 today already

True. The Federal minimum is $7.25 (which is a disgrace) but the minimum varies by state. It is at that $7.25 level in places like North Dakota, Alabama, the Carolinas, etc. But in more cosmopolitan states, places with higher COL, the minimum is higher (and rising).

In California, it's $13, going up to $14 this year. In Massachusetts, it's $13.50 now. Here in NJ, it's going up to $12 this year. There are also individual cities with higher wages than the Federal or state minimum. Numerous employers, like Amazon, Target, Disney, Wells Fargo, and more, have either already raised their minimum to $15 or are in the process of doing so.

If you look at where in the US poverty is greatest, though, it often correlates with where minimum wage is the lowest.

[disneysteve]

To be contrarian, how do you know that people haven't taken paycuts or lost their jobs? That people are still really struggling? How do we know that people aren't going to be struggling more in September when student loan payments come back online? Unemployment ends?

The economic impact of the pandemic has varied dramatically for different groups of people. Lower income workers, women, minorities, people without college degrees have suffered greatly. Their unemployment rate is much higher than that of men, especially white men, and those with college or advanced degrees.

Many of us, myself included, have done quite well the past year. I've remained fully employed. My family has been healthy. Our spending has been down significantly, and our investments have grown a lot. For 2020, our portfolio grew by 300K or about 23%. And that was on top of another 300K gain in 2019, which was about 30%. We're in the best financial shape we've ever been in. We were able to take advantage of some opportunities that popped up last year like buying more stock after the March crash, buying a few thousand dollars worth of hotel gift cards when they had a big sale, etc.

There are definitely a lot of people struggling, and that won't magically correct itself as things reopen. But there is also a large population sitting on huge investment gains and stockpiled cash from decreased spending who are ready and willing to go out and do things as soon as possible.

[LivingAlmostLarge]

The economic impact of the pandemic has varied dramatically for different groups of people. Lower income workers, women, minorities, people without college degrees have suffered greatly. Their unemployment rate is much higher than that of men, especially white men, and those with college or advanced degrees.

Many of us, myself included, have done quite well the past year. I've remained fully employed. My family has been healthy. Our spending has been down significantly, and our investments have grown a lot. For 2020, our portfolio grew by 300K or about 23%. And that was on top of another 300K gain in 2019, which was about 30%. We're in the best financial shape we've ever been in. We were able to take advantage of some opportunities that popped up last year like buying more stock after the March crash, buying a few thousand dollars worth of hotel gift cards when they had a big sale, etc.

There are definitely a lot of people struggling, and that won't magically correct itself as things reopen. But there is also a large population sitting on huge investment gains and stockpiled cash from decreased spending who are ready and willing to go out and do things as soon as possible.

Maybe I guess. I guess we've done well but our circumstances have changed and I am not looking at going out and spending. I'm not sure even if we were the same circumstances we would be going out. I still fear letting my kids catch covid. I don't know what what the long term effects are.

[srblanco7]

The economic impact of the pandemic has varied dramatically for different groups of people. Lower income workers, women, minorities, people without college degrees have suffered greatly. Their unemployment rate is much higher than that of men, especially white men, and those with college or advanced degrees.

Many of us, myself included, have done quite well the past year. I've remained fully employed. My family has been healthy. Our spending has been down significantly, and our investments have grown a lot. For 2020, our portfolio grew by 300K or about 23%. And that was on top of another 300K gain in 2019, which was about 30%. We're in the best financial shape we've ever been in. We were able to take advantage of some opportunities that popped up last year like buying more stock after the March crash, buying a few thousand dollars worth of hotel gift cards when they had a big sale, etc.

There are definitely a lot of people struggling, and that won't magically correct itself as things reopen. But there is also a large population sitting on huge investment gains and stockpiled cash from decreased spending who are ready and willing to go out and do things as soon as possible.

Agreed. We've done well thru all this, despite DW being furloughed for almost 2 months, and me taking a voluntary pay cut for 3 months. Our portfolio continues to rise +21.3% last year and +5.5% so far this year. Though we did use some of our pandemic cash stockpile on a master bath remodel - doing our part to fuel the home improvement boom.

That being said, we have friends that have been harder hit and I'd anticipate it will take them some time to recover. And we've been volunteering and gifting at a community food bank and the demand for their services is quite high.

[Snicks]

I agree the world has changed post covid. I do think there are some GOOD things that have resulted. First of all, improved hygiene. I mean it's about time there is attention to cleanliness, hygiene and these ridiculous "come to work even if you are sick and dying" kind of culture. So, i hope those are long lasting benefits. I think we have learned that a lot of work can be done electronically or digitally. We don't need business people to fly for "face time", now they can do a lot via Zoom, google meets and so forth. The personal touch then becomes a greater value and used more selectively. That should save fuel, resources and money for a lot of companies, etc. I do think most people still want to travel. And, there is nothing better than air travel. There is no substitute for that. However, I think the pandemic has cocooned a lot of us and we now have looked closer to home for our hobbies, fun, interests. More at home hobbies like cooking, remodeling, arts and crafts rather than being out so much. But, I don't know, human beings are an unpredicatlbe lot.

[disneysteve]

I think the pandemic has cocooned a lot of us and we now have looked closer to home for our hobbies, fun, interests. More at home hobbies like cooking, remodeling, arts and crafts rather than being out so much.

This is a great point. I'm the type that is happy at home but also likes to be out and about - kind of a mixed bag. I'm really surprised how content I've been throughout the pandemic not being able to go anywhere. There are times when I get antsy and wish there was somewhere to go or something to do, so once everything is relatively back to normal, I'm sure we'll be out there again.

Many of us have also seen how much less money we can spend when forced into it. It's going to be a little hard to go back to the previous spending level. As much as I miss restaurants, for example, I don't miss how much we used to spend eating out.

[LivingAlmostLarge]

I like not being rushed anymore. I used to feel a lot more pressured to be somewhere at X time. And eating out on the go happened a lot more because of it. I don't know how we are going back to it. Maybe? Or maybe not. We'll see.