Fall is here. Crops are ready to be harvested. All of the hard work farmers have done since the spring is about to pay off.
Pumpkins, turnips, squash, zucchini, beets, eggplant, celery, apples, cranberries, grapes, pears, and pomegranates. There are more, but these are the main ones.
Market cycles aren’t regular like crops are, but they do exhibit similar behaviors. They too experience dormant, growth, maturity and harvest seasons. Like crops, markets are not all on the same schedule. Some are replenishing and building energy while others are trending strongly.
Season length and intensity vary as well. Some markets lay dormant for years on end, while others shoulder the load and provide very long growth seasons. It’s an irregular and often frustrating pattern, but that’s the nature of the markets. It’s my job as a money manager to quickly accept this fact and go with what’s in season.
Today, many commodities are out of season. Their trends have matured and reversed. I view most commodities being in long-term downtrends with very high volatility at the moment. Energy is the standalone sector that remains in an uptrend. What’s in season are fixed income, currency and equity markets. All have been trending very strongly for the past year or two. This is where the opportunity is now.
I will be positioned with the prevailing trends in these markets until they mature and reverse. We’re not there yet. I don’t know when the trends will stop, so the correct move, given the limited information we have on the future, is to ride the trends with proper risk control.