The hysterical rally in global resource stocks in nicely illustrating the sense in the MB strategy for dealing with this bear market. The rallies are so explosive and short that it is virtually impossible to position for them. On the other hand the trend lower in resource stocks is reliable and intact and one that can be invested into with confidence. From Bloomberg:
Even with commodities mired in the worst slump in a generation, Goldman Sachs Group Inc., Morgan Stanley and Citigroup Inc. are warning bulls that prices may stay lower for years.
Crude oil and copper are unlikely to rebound because of excess supplies, Goldman predicts, and Morgan Stanley forecasts that weaker currencies in producing countries will encourage robust output of raw materials sold for dollars, even during bear markets. Citigroup says the sluggish world economy makes it “hard to argue” that most prices have already bottomed.