I have traded in several bear markets in my career … they have never been easier.
Being systematic and following my rules allows me to maintain my emotions and stick to the plan.
They also give me the time and energy to consider dominant mega-trends that will create the conditions for the next bull market.
Inflation: The not-so-mega-trend
I’ll start with inflation.
I would not consider this a trending trend, since I am in favor of the Fed’s perception that inflation is transient. But I also know that passing does not mean “ending tomorrow”.
Problems in the supply chain and shortage of chips are expected by 2023. (We are playing in the supply chain trend in Green Zone FortunesBy the way.)
And after the Fed’s extraordinary monetary policy for the COVID period flowed trillions of dollars into the economy, I do not expect a handful of 0.5% interest rate hikes to return the situation to normal.
So expect inflation to last for a while … which is convenient for commodity prices, as they are one of the best performing asset types in inflationary periods.
We can play the inflation trend with commodities. But I’m much more interested in the mega – trends of “change the world” that I see evolving. At the top of the list is the renewable energy revolution.
I see that the biggest opportunities on this front lie in industrial-scale power generation. Watch my “Infinite Energy” presentation Find out more.
But electric vehicles (EVs) represent another huge opportunity for renewables.
Electric Vehicles (EV): Trend Trend with potential
Electric vehicles currently account for about 9% of global car sales, with the majority coming from China and Europe. But that percentage is only going to go up more, because virtually every major automaker in the world has committed to going all electric:
- Jaguar Land Rover plans to sell only electric vehicles by 2025.
- Volvo and Mazda are not far behind, promising to do the same by 2030.
- Ford plans to be all electric in Europe by 2030.
- General Motors, Nissan, Daimler and Honda plan to be there before 2040.
It happens, and it happens now.
The mega trend here is clear. But investing in it is more challenging.
Leading EV maker Tesla Inc. (NASDAQ: TSLA) Will be slaughtered in the technology bear market. It has dropped more than 28% to date!
And it’s a mediocre sport 58 out of 100 In my stock rating system.
EVMT Commodity ETF: A single fund for two trending trends
One way to play the inevitable leap in EV sales – along with the current spike in inflation – is Invesco Electric Vehicle Metals Strategy No K-1 ETF (NASDAQ: EVMT).
This name is full here, but it details exactly what it is A fund traded on the stock exchange everything on. EVMT is a new ETF that holds futures contracts for the metals most commonly used in EV manufacturing:
- Nickel (36.26% of EVMT’s fund allocation).
- Copper (27.52%).
- Aluminum (18.22%).
- Cobalt (9.84%).
- And iron ore (8.14%).
I am bullish on commodities in general and I expect the demand for this particular array of metals to skyrocket as electric vehicles occupy a larger share of the market.
Unfortunately, there is one notable omission. Lithium – a critical metal for battery production – is not included in the portfolio as there are no stock market futures for this commodity.
In the absence of lithium, I can not call EVMT a perfect game on the renewable energy trend. But I think the idea behind it has a lot of potential – even now when inflation is high, and also in the future when electric vehicles are really taking off.
And if you’re looking for more focused ways to play the trend of renewable, take some time Watch my “Infinite Energy” presentation.
For good profits,
Chief Investment Strategist
EV Commodity ETF Plays Multiple Trends Source link EV Commodity ETF Plays Multiple Trends