Re: The Pound is Too Strong
Hi Chicadoodoo,
Don't misunderstand me, I'm not a professional trader nor is that my intent, my interest is just to get as much as I can for my needs towards the end of this year.
It is true though with anything that is bought and sold, even more so if they become the fashion, that bad rumours can extinguish said market in a thrice. Now, for example we have the iPod problem where Apple is fighting in the courts with a rival about patents. The shares of Apple are plummeting, when they plummet, people think twice about buying the product and so it goes.
However, that nor the tulip story are bubbles (the guy in the tulip article said it was). A bubble is when the market cannot withstand the same intesity for too long, so in the case of the internet bubble, start up companies were being bought at ludicrously high prices. It was claer that this couldn't be sustained for too long. Some people earned money in the early stages, but when the excitement lulled and people could see the wood for the trees there was no real justification for this hyper pricing of companies and so the investors cashed in their chips whilst they could, many of course burning their fingers.
The same with the mortgage bubble, which after the hype of cheap flexible interest mortgages made for just about anyone, once the 'flexible' part of the mortgage passed and the people couldn't afford the mortgage after the adjustment, everything fell like a pack of cards.
So, bubbles are caused by non sustainable actions. In the tulip case it all went to pot after a rumour. That just created a disasterous fall in prices.
What will be a safer bet this year is corn, I can't see a bubble there. I have an 8 acre farm rearing goats. Around a third of the farm I dedicate to growing corn, amongst other things. As the winter is late this year I have to buy corn to feed the animals. I know that if I buy corn gradually, it will go up and I would have to accompany the price as I buy. However if I buy the year's supply now, I have to gamble that the price of corn will rise further to sell on the market the corn that I will grow.
Corn is used to make sugars and other ingredients in foodstuffs and since last year has doubled in price! I think with the rise in fuel costs and other commodities will have to follow suit. I hope so anyway, otherwise who will all be bubbled out will be me!
Best regards.