I came across this (below). Instead of buy the dips, perhaps short the commodity rallys is a better mantra for the next 6 mos? (Due to the change in risk appetite I would add a long TLT position to this, particularly with gold looking like it might be weak for awhile now). And, unlike gold and copper which were the most recent parabolic movers and will take longer until sentiment becomes more balanced, oil had its Katrina blowoff in Sept 05 so I think it will recover first. Also, since we have seen how uranium can from high hydrocarbon prices, it might perk up earlier also.
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Secular bull and bear markets in commodities usually last for an average of about two decades. Since the recent bull market began about five years ago, this leaves another fifteen years to go. However, given the recent incredible bullish outlook on commodities--such as Market Vane recording 97% of traders bullish on silver, and 96% bullish on copper--the behavior of almost all commodities over the next half year is likely to consist almost entirely of declines, with occasional sharp bounces. The early stages of bear markets in equities reliably coincide with declines in commodities, as was seen in previous equity bear markets that began in 1980, 1990, and 2000. Since most commodities have risen so sharply in the past half year, even a 40% pullback for many of them would not violate their long-term upward trends.
At this point, if you haven't fallen asleep, you're probably thinking: "The Canadian dollar will fall? How loony! Everyone knows that inflation is rising, so how can you state that it's not? Interest rates are obviously going higher, since I hear them say so every day on the radio. My broker told me last week to put some of my money in commodities, since they're going up. And if real estate prices have a little drop, they'll be at new all-time highs in another year or so."
It's never easy to go against a 97% consensus. But this is likely to be one of the most profitable times in history to do so, since the overvaluations in so many asset classes are at such rare and exaggerated extremes
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