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The Most Hated Asset Right Now

Thursday, January 25, 2018 5:34

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Everything’s up!

Heck, everything is up a bit too much lately, right? People are starting to feel good about their investments again…

Is there any sector or asset that hasn’t soared?

Actually, yes…

While stocks have soared seemingly nonstop for years, this major investment class has performed downright terribly. Take a look:

Year	Return
2011	-10.7%
2012	-3.2%
2013	-13.2%
2014	2.6%
2015	-17.2%
2016	-3.1%
2017	-6.1%

In six of the last seven calendar years, this investment has lost money.

And in 2014 – the one year that it managed a positive gain – it only went up 2.6%.

While stocks have absolutely soared, this investment has lost nearly half its value since its 2011 peak.

What is this asset class? It’s agricultural commodities…

Specifically, those are the returns for the PowerShares DB Agriculture Fund (DBA).

It holds a broadly diversified portfolio of agricultural commodity futures. Here’s the latest breakdown of its top holdings:

Commodity	Weight
Soybeans	12.9%
Corn	12.7%
Wheat	12.5%
Live cattle	12.5%
Sugar	12.0%
Coffee	10.9%
Cocoa	10.2%

You might imagine – after seven years of bad returns – that investors have given up on these commodities. You would be right…

Jason Goepfert of SentimenTrader.com does excellent work analyzing investor sentiment. And these days, basically all these agricultural commodities are at the bottom of his scale.

Nobody likes them… And that gets me interested!

I love to buy what’s cheap and hated. It’s incredibly challenging these days to find an asset class that fits both.

But after a severe seven-year bear market, agricultural commodities might just be the most hated asset class.

They are cheap. They are hated. They are just missing the final piece before I’ll pull the trigger… We don’t have a real “uptrend” in sight – yet.

Everyone has given up.

This is the position where big gains start.

I’m not bold enough – yet – to be a buyer. But I will be a buyer when we finally see an uptrend.

If you’re looking for a hated asset that can rise whether stocks are going up or down, then you’d better put agricultural commodities on your watch list.

Shares of DBA are the easiest way to play it, once the uptrend finally returns…

Good investing,

Steve

Source: http://www.stansberryresearch.com/dailywealth/3757/the-most-hated-asset-right-now

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