13, 2007 -- Friday the 13th is considered to be a day of bad luck. Nonetheless, the Dow Jones rose sharply and closed out the day and week at a new all time historic high while the CRB index came within a whisker of its all time best level. The widely followed commodity index posted a sharp gain thanks to an outstanding performance with crude oil, soybeans, cattle, metals and a host of other hard asset markets. Fear of Friday the 13th is called paraskavedekatriapobia but it did little to hold back the buying enthusiasm the bulls harbor for paper and hard assets.
I understand first hand phobias and fears. One of my brothers has an irrational fear of the number 13, triakaidekaphobia and another, though he lives in San Francisco, suffers from amaxophobia which is a morbid dread of boarding a trolly car. And on occasion since I spend so much time composing, I suffer from graphophobia, a fear of writing or verbophobia, a fear of words.
Lately, I have developed a fear of bulls, tauophobia, because I am uncomfortable with the scenario in the marketplace where everything is on the rise. Stocks and commodities are being punched higher day in and day out. It is to the point, "if you are not long, you are wrong." Looking at prices levels for both stocks and commodities, I am amazed those "long" are not afflicted with altophobia, the fear of heights and algophobia, the fear of pain. But I also realize that bull markets on the cusp of peaking, are piled high with investors and traders that have no fear of heights or pain. Markets peak when the bulls feel bullet proof. Yet, I do not fear high priced cattle. For months, I have argued that futures and cash prices would rise to new all time historic highs no later than the last half of '07. Or, by the first half of '08. This week ended with distant cattle futures closing at nearly $98, a record high plateau for this time of the year.
Cow slaughter has finally slipped below year ago levels. In the January to May period, cow slaughter was holding 15 percent to 17 percent above last year. The long awaited drop in available supplies is lending and should continue to lend support to prices going into the July 20, Inventory Report. My work hints the report will hold a bullish surprise, propelling cattle prices even higher. Certainly, prices may soften in the period ahead rather than strengthen, but values will defy the pull of gravity well into the future.
The grain complex on the other hand, despite the strong showing with soybean prices will live or die with each weather forecast. Mother nature over the next few weeks will determine how high prices can rise. But traders and grain producers need to understand clearly the fear of gravity, barophobia, pulling prices sharply lower at any time is a distinct possibility. It all comes down to the weather conditions in late summer. Some argue those not buying into the stock and commodity markets at this point are suffering from the fear of money, chrometophobia, or wealth, plutophobia. The thought of having too much money makes some uncomfortable, causing anxiety. Those fears spawned the old sayings, "money is the root of all evil;" "money is power and power corrupts." And everyone's favorite; "money can't buy you happiness." Today's markets offer the best money making opportunities ever seen. Daily, weekly and monthly there are enormous sums being made. That is why the cry heard after the close today when stocks and commodities both closed with historic gains was, "if you are not long, you are wrong!"
I doubt hard and paper assets can continue to track each other as they have been doing because the crowd is usually wrong. History shows clearly, when investing or trading possessing demophobia, fear of crowds, is an asset, not a liability. Stocks and commodities are at lofty levels because the crowd is all leaning the same way. If and when they shift positions, things will change quickly.
A phobia to overcome is, epistemophobia, the fear of knowledge. The key to success in today's marketplace is knowledge and having access to timely information. In a month or year from now, the landscape from a market and price standpoint will be far different from what is being here and now. Learn what you can about the markets and do not fear to do so. Those not suffering from phonaphobia can call me at 406-682-5010 for more timely market information.
(The information in this article is the opinion of Commodity Insight's Jerry Welch and subject to change without notice.)