The Commodity Cycle – How to View the Current Stock Market & The Secret Cartels That Rule the World

Urgent News to Gain our Attention
We www.cymorfund.com are smitten daily with instant news from around the world. This overload of information colors our understanding of events occurring around us and makes the seeming urgency of today’s news distort our understanding of longer term trends.

Whether Greece will leave the EU, or whether Japan has an aging population, has to be taken in a longer term context, rather than the hysteria of today’s headlines. We are bombarded with information that is portrayed as “URGENT”, whereas it is the media need to gain our attention that is urgent.

Reporting the news is a method to get us to pay attention. If we pay attention, advertisers will pay the media to advertise to those that are paying attention.

Some Examples of Today’s Urgent News
China is experiencing a slowdown; or China has enough reserves to continue its boom.

The EU debts are crushing and impossible to deal with; or Germany is roaring ahead economically and has enough strength to carry Europe with it.

Pick whichever headline that you like. If you are a pessimist, the economics of the world are terrible. If you are an optimist, the world has sufficient resources to fuel growth after the current fears abate.

The Secret Cartel That Rules the World
Some people are believers in secret societies, conspiracies and behind the scenes agreements and Cartels that rule the world, such as Goldman Sachs and other Wall St giants. Actually, I don’t regard this particular view as crazy as it initially sounds.

These economic powerhouses have sufficient capital to dramatically influence any market, and I have no doubt that they do so, in both positive and negative directions.

Don’t forget that they are Traders and as long as the market is moving in either direction, they are trading and making profits.

An Overview of World Economics
The point of all of this, is that short term movements and ‘urgent’ news, do not influence long term trends. There are many factors that influence the markets, including large trading houses, or events around the world, but the important thing is to understand the long term trends and act accordingly.

One long term trend is the COMMODITY CYCLE.

Resource Stocks Have Legs
One of the sharpest central bankers in the world says this commodity cycle still has legs. Bank of Canada
Governor Mark Carney, who is also Chairman of the Global Financial Stability Board, was quoted by Reuters, in saying that it would be an error to think that the current elevated levels of commodity prices are a temporary phenomenon.

Carney said, “Eventually, all commodity booms end, but this one in our view will go on for some time.”

Foreign investors sold $2.6 billion of Canadian stocks in January and February alone. This represents the worst ever January-February outflow. Obviously, foreign outflows were probably horrible in March and April with the S&P/TSX Composite and the S&P/TSX Venture indexes falling.

The greatest concentration of stocks listed on these exchanges are commodity stocks, so commodities took a beating because of worldwide fears.

The Overview
In every cycle, as the bottom nears, investors and people everywhere become more nervous that ‘the bottom is falling out beneath us’. Chicken Little was terrified that “The Sky is Falling”.

The facts are that the bottom of every cycle is the start of the next cycle, and a cycle does not end until there is pretty well universal agreement that things are so bad that they can’t get better.

The Long Term Trend
Just remember, there are more middle class consumers than ever before, by a wide margin. All of these people with new found wealth are demanding more and more goods and services. Commodities will continue in great demand for the foreseeable future.

Investing
Be part of the next great boom. Don’t despair and don’t sit on the sidelines paralyzed by fear.

The views expressed in this blog are opinions only and are not investment advice. Persons investing should seek the advice of a licensed professional to guide them and should not rely on the opinions expressed herein. This blog is not a solicitation for investment and we do not accept unsolicited investment funds

By Larry Cyna

Mr. Cyna is an accomplished investor in the Canadian public markets for over 20 years, and has managed significant portfolios. He is a financing specialist for private and public companies, and has expertise in real estate and debt obligations. He has assisted private companies accessing the public markets, has been a founding director of public companies and continues as a strategic consultant to selected clientele. He is and has been a director, a senior officer and on the Advisory Board of a number of TSX and TSXV public companies in the mining, resource, technology and telecommunications sectors, and the Founding Director of two CPC’s with qualifying transactions in mining and minerals. He was an honorary director of the Rotman School of Management MBA IMC program, has completed the Canadian Securities Institute Canadian Securities Course & Institute Conduct and Practices Handbook Course, was a former Manager under contract to an Investment Manager at BMO Nesbitt Burns, a roster mediator under the Ontario Mandatory Mediation Program, Toronto, a member of the Institute of Corporate Directors of Ontario, a member of the Upper Canada Dispute Resolution Group, and the Ontario Bar Association, Alternate Dispute Resolution section. He obtained his designation as a Chartered Accountant in Ontario in 1971 and was the recipient of the Founder’s Prize for academic achievement together with a cash reward. He became a CPA in the State of Illinois, USA in 1999 under IQEX with a grade of 92%. He is a Member of the Institute of Chartered Accountants of Ontario and the Canadian Institute of Chartered Accountants. He holds certificates in Advanced ADR & in Civil Justice in Ontario, Faculty of Law, University of Windsor, certificate in Dispute Resolution from the Ontario Institute of Chartered Accountants. Previous accomplishments are Manager of Cymor Risk Consultants LP specializing in Risk Management Assessment; CEO of Cyna & Associates specializing in mediation and ADR; Founder & Senior Partner of Cyna & Co, Chartered Accountants, a fully licensed and accredited public accountancy firm with international affiliations; and was a partner in a large public accountancy firm. Mr. Cyna is well known in the Canadian Investing community. He is invited to, and attends presentations given by public companies usually 3 or 4 times each week. These presentations are intended by the various hosting companies to present their inside story to sophisticated parties and Investment Managers for the purpose of attracting funding, or of making parties more interested in acquiring shares of those companies. Being a part of this keeps Mr. Cyna deeply involved in the current market and leads to numerous investment opportunities.

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