Trading Journal Entry (5/13/2011): The 3 P’s of Successful Commodities Investing

Just a simple reminder about the fundamentals: patience, profit-taking, and preservation. As that, I plan to slowly buy the dips on two soft commodities: corn (ethanol) and sugar, both undervalued with sugar doing a double bottom.

1) Patience: long and strong! Fear is stronger than greed and panic selling usually last 1-3 days longer after the panic sell-off. Further, the media is often wrong at both extremes: greed and fear. Commodities market such as corn and silver are highly volatile, thus, require a lot of patience in buying the dips. In my personal life, I should not spend money before I earned it, that is, have the patience. Unlike silver, ETFs are not momentum-like, thus, require a much much longer investment horizon.

2) Profit-taking: it’s never too early to  take profits, just too late. Profit is a good thing!!!

3) Preservation: it’s important to protect our profits with rising stops. Do not make aggressive speculation with the entire farm. Careful use of leverage. $AGQ is one great example of what can happen to a leveraged ETF on its way down.

Further, I noticed that bull markets move up by taking stairs but when they correct (or collapse) they take the elevator down. Thus, for future reference, shorting or inversing a bull market in correction could be highly profitable.

Profitably Yours,


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