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Strategies & Market Trends : Commodities - The Coming Bull Market
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To: tyc:> who wrote (79)6/4/2001 5:10:30 PM
From: Moominoid  Read Replies (3) of 1643
 
The problem with natural resource stocks is that mining at least is tremendously capital intensive and so needs lots of investment to generate profit growth. On top of that the output market is notoriously cyclical with big price swings unlike anything you see in manufactures or services. The long-term price trend is also down and as these are commodities there is little pricing power at all.

So on the whole they are terrible investments unless you strike lucky and invest in an explorer that finds the big deposit or oil field or whatever or trade the stocks through the price cycles or find merger candidates etc.
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