Gas prices are skyrocketing. So how to invest in this raging bull market in energy? The biggest gains will come from investing in small-cap explorers and producers.
Markets and commodity prices have fluctuated wildly since the Russia-Ukraine conflict broke out on the evening of February 23 (Eastern Standard Time).
And because Russia produces many of the world’s most critical commodities, this will likely continue. Yet unlike most metals, copper didn’t spike immediately on news of the Russian invasion.
Small-cap investors enjoyed a great year in 2020.
When looking at small-cap vs large cap-performance, it’s plain to see.
In 2020, the Russel 2000, a small-cap index, produced a 20% return, surpassing the S&P 500’s 16.3% return.
But since March 2021, the small-cap market has moved laterally.
But why are small-cap funds falling?
Between market factors changing, inflation, and the inherent risk that comes with investing in small-cap stocks, small-cap companies had a rough year in 2021.
“You take the blue pill – the story ends, you wake up in your bed and believe whatever you want to believe. You take the red pill – you stay in wonderland and I show you how deep the rabbit-hole goes.”
Remember those lines from The Matrix?
They came from Morpheus (Laurence Fishburne), who delivered them to Neo (Keanu Reeves).
It was his way of giving Neo the choice of living in a fantasy land most people believed was real…
Or seeing the world as it really is.
Neo chose true reality, of course.
Now, 23 years after The Matrix was released, it feels like we’re living in a real-world version of that movie.
It seems to me like just about everyone has taken the blue pill.
Consider that most people are glued to their cell phones 24/7… addicted to social media… absorbed in video games…
Well, guess what?
I once trekked through the Himalayas. In preparation for that trip, I put together an array of equipment I thought I’d need. The most important piece was a portable water purifier.
I knew it would come in handy for purifying water from mountain streams and lakes.
But after two weeks using it in Kathmandu – the first stop on my trip – the filter became hopelessly clogged.
Copper had a nice ride in 2021.
After a stomach-churning 2020, the red metal went on to rebound sharply in 2021, hitting an all-time high of $10,512 per metric ton on May 9, 2021 – an increase of 130% compared to March 2020’s pandemic lows.
The stock market game is not for everyone and certainly not for the uninformed. However, someone with the right strategies and research skills can create wealth even in chaotic times. Some of the wealthiest investors have made their fortune trading in volatile micro-cap stocks.
But knowing where to invest, how much to invest, and when to sell or trade does not come naturally to most investors. You’ll first need to understand what kind of stocks are out there so you can build your own plan.
Commodities had a stellar year in 2021. Whether it was fossil fuels, coffee, oil, copper or quartz, last year marked a decidedly bullish turn for several key commodities.
Gradual economic recovery, combined with an ongoing supply-side hangover from the pandemic, pushed prices up.
Fossil fuels including propane, heating oil, coal, ethanol, and gasoline surprisingly ended up being some of the strongest performers in 2021, thanks to OPEC cuts and the unprededented pandemic-induced lows of 2020. Oil prices this week hit a two-month high, with analysts predicting prices will continue to rise in 2022 as demand outstrips supply.
But the best performing commodity in 2021 by far was lithium—up 486% according to Trading Economics – a trend that looks set to continue innto 2022.
According to The US Geological Survey (USGS), the total amount of discovered copper is 2.8 billion metric tons. The USGS also estimates that undiscovered resources contain about 3.5 billion metric tons of copper, which would mean that there are roughly 6.3 billion metric tons of copper on Earth.
What if you could magically increase your bank account by 2,000%? That would sure make it easier to pay off your bills! Of course, there’s no way you can create money like that at the snap of a finger.