Peter Brandt: Buying Commodities at the Bottom

Published on
20 November, 2018
Topic
Food agriculture, Valuation, Equities
Duration
8 minutes
Asset class
Commodities

Peter Brandt: Buying Commodities at the Bottom

Featuring Peter Brandt

Peter Brandt of Factor LLC joins Real Vision to highlight some of the greatest opportunities he sees in the commodities complex right now. He analyzes the situation, reviews the key charts, and explains how to make the play. Filmed on November 13, 2018 in Tucson, Arizona.

Published on
20 November, 2018
Topic
Food agriculture, Valuation, Equities
Duration
8 minutes
Asset class
Commodities
Rating
55
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Comments

  • WS

    Wouter S.

    26 11 2018 21:08

    2       0

    Sorry but this was not the best RV production. Closing argument: “we are gonna neééd a price recovery to help farmers and to bring prices back to the real world”. Quite shallow statement. Commodity markets trade fundamentals on the Long run and not basis such sentiments. Also if you compare 20 to 30 year price charts vs equity markets you need to be able to digest maybe a couple of years of rolling your long through a hefty carry (contango) market (esp soy and corn). Dis he take that into consideration?

  • IO

    Igor O.

    25 11 2018 20:41

    0       0

    You don't need commodities chart in SnP points to know that stock market on top of the cycle and commodities on its bottom.

  • RH

    ROBERT H.

    25 11 2018 19:04

    3       0

    But what if commodity prices instead of being wildly deflated, are actually more constant and, instead, the S&P point is the wildly inflated unit?

  • MF

    M F.

    25 11 2018 14:15

    0       0

    I'm afraid my comment (constructive critique) is a repeat, to which I don't know why this isn't being addressed. Firstly, the utmost respect for Peter, as a well seasoned trader that combines an outstanding wealth of knowledge and a degree of humility rarely seen together in this industry. However, as mentioned now too many times to remember to RV, can "The Trade" section be usable for those that are time constrained and looking for rubber meeting the road, with actual specific trade set ups. I.e. state instrument, entry price, target price, stop loss, catalyst, time frame, and risks to the trade. This is something that RV should tell the speaker for "The Trade" section to prepare ahead of time and present at the end (it used to happen, and now its hit and miss). Otherwise, markets (including and esp commods) can move massively even in a few days, so without knowing the expert's entry, its just a conversation...not a real trade...which then belongs in another section of RV or dare i say CNBC...there are many other areas of RV it can go, but pls keep "The Trade as actionable, which requires specifics". I view "The Trade" section for real trades, that are specific, timely, and punchy...without specifics, its just another chat....Again, i think this is an RV issue, nothing wrong with Peter's ideas, which are of course insightful as ever. Time is a precious commodity...pls allow this part of RV to be actionable for trading, not generalities (or call it/make it something else)...thanking you in advance.

  • SB

    Stewart B.

    25 11 2018 13:55

    0       0

    Interesting interview however some of the earnings of SP500 stocks have been paid out as dividends and some reinvested. The constituent names have also changed. On the other hand, a given weight of coffee, oil, sugar etc are the same today as decades ago. Apples and oranges.

  • BB

    Brian B.

    24 11 2018 13:57

    0       0

    The Corn market now is nothing like it was years ago. This is a very poor recommendation.

  • CK

    Cirilo K.

    23 11 2018 21:33

    0       0

    Love Peters work but i am also not so sure about the usefulness of these comparisons. The S&P 500 from 1980 is not the same as today. The S&P index companies grew with the economy and accumulated profits year after year and as a consequence the index is more valuable now. Many Commodities on the other hand cost less to produce inflation adjusted because of productivity gains. Just look at the cost of producing corn over many decades.

  • TB

    Thomas B.

    21 11 2018 21:27

    3       3

    I am only a retail commodities futures trader and do only have a fraction of Peter Brand's experience, so I probably have to apologize for daring to making this remark. But this analysis lacks - to my mind - the time horizon and any reference to CoT data which are most relevant to any commodity trade. Those data are published and available for free. If one is willing to learn how to interpret it, this is an invaluable resource for any trader. Actually I can just not believe that Brandt doesn't use it. I don't see any value in comparing commodity prices to stock indices. Only if you would trade the spread.

  • MP

    Mark P.

    21 11 2018 11:52

    0       0

    Compelling charts. As someone too early in this space tactically if not strategically (entered the Farmland space with Ceres Farms earlier this year) I believe USD needs to peak before ag and other commodities shine again. Deflationary /disinflationary waves as we appear to currently be in both USD friendly and classically a real headwind for commodities (maybe gold exception in cases where it becomes safe haven asset...one day?). Observations from a non professional investor.

    Mark

  • BD

    Borut D.

    21 11 2018 09:30

    0       0

    He is probably right, but the logic is in my oppinion flawed.

  • AB

    Aron B.

    21 11 2018 04:57

    3       0

    What about copper ? Nobody wants to touch it because the coming recession/end of business cycle/everything bubble but some copper miners offer and will give you a bargain later when indexes break down. If you look at it from a 20 year perspective it does make sense to have an eye for these. I have mine on Lundin so far. Anybody ?

  • ss

    sid s.

    21 11 2018 03:33

    0       1

    Peter is great as always.

  • KB

    Kirk B.

    20 11 2018 21:04

    10       0

    As a retiree, I am not a trader, but rather an investor who manages our investment portfolio as an endowment, investing in a variety of diversified, non-correlated investment assets. Based upon the trends that Peter highlights in agricultural commodities, I believe that a small allocation to agricultural commodities is currently appropriate for such an endowment portfolio. After researching the available investment vehicles, I selected the RJA (Elements Rogers International Commodity Agriculture Trust) ETN as the best diversified agricultural commodity fund with adequate liquidity. Other funds to consider are DBA ETF and JJG ETN.

  • JG

    John G.

    20 11 2018 19:32

    2       0

    For ag commodity ETF's you can look at DBA, WEAT, CORN, SOYB. These ETF's trade in futures so pay attention to the contango/backwardation of future prices.

  • SS

    Steven S.

    20 11 2018 19:23

    0       1

    I would think that over long periods of time, one would expect that the ratio of commodities to the S&P would decrease. Commodities don't generate revenue and as technology advances, we have a greater ability to increase yields of agricultural products. On the risk side, commodities can't go bankrupt. Wouldn't currencies or even short-term bonds be a better way to normalize commodity prices over long periods of time? I can see comparing commodities to the S&P over short periods of time, but it makes much more sense to me to compare the ratio of commodities to the S&P against a long-term declining trend line.

  • MS

    Mark S.

    20 11 2018 19:11

    4       0

    Hope you come back with a look at some individual trades in these commodities. Even if you're not quite ready to pull the trigger just yet, maybe discuss the action and levels you're looking for as possible entry points, target levels, etc.

    Tks, Peter, always a pleasure to see you.

  • FA

    Fadi A.

    20 11 2018 18:26

    1       0

    Can you suggest ETF's or special stocks for this trade

  • AC

    Andy C.

    20 11 2018 18:13

    17       1

    Isn't the opportunity here to be short equities? Commodities continue to be produced at expanding volumes supporting increasing world population with productivity enhancements in production techniques over the years. The charts imply to me that equities (SPX) are overvalued vs commodities and reversion to mean possible. More likely for equity prices to come down to correct the imbalance IMO.

  • MP

    Mirjam P.

    20 11 2018 17:42

    1       0

    Interesting charts though I can‘t wrap my head around „… bought by one SPX point“. The charts seem to show „... bought by one unit of SPX“?

  • NG

    Nick G.

    20 11 2018 16:46

    2       6

    Or, translated into English: what any uneducated third world farmer can produce is worth less every year compared to what people at the vanguard of technology are being repriced at. Hardly surprising, is it? Not much of a long term trade going long ignorance and short innovation.

  • WB

    Wes B.

    20 11 2018 15:58

    9       0

    Could just be SPX crashes to meet the commodity prices...

  • NH

    Nigel H.

    20 11 2018 13:29

    3       0

    A stock market collapse and USD deval will sort that out promptly in 2019.

  • Nv

    Nick v.

    20 11 2018 13:21

    2       0

    Very interesting. Thanks Peter