The Time Is Right to Invest in a Livestock ETF
May 21st, 2008 | By Contrarian Profits | Category: Featured, Financial NewsThe time is right to invest in a livestock ETF. Livestock prices have remained cheap over because grain prices have remained low. But this has changed… and an ETF is a great way to play the upswing in livestock prices.
“Hogs, like most commodities, went nowhere for 30 years,” says Ian Davis in The Growth Stock Wire. “In 1977, hogs sold for about 55.5 cents per pound. Today hogs sell for only about 79 cents per pound. That’s a rise of 42% in 31 years, or an annualized return of 1.1%… well below the inflation rate.
“Why are hogs so cheap? One reason may be that an overabundance of cheap corn for decades led to an oversupply of hogs. According to the Iowa Farm Outlook produced by Iowa State University, corn accounts for about 80% of hog feed. But now, the brutal combination of pricey corn, increased energy costs (for processing and shipping), and cheap hogs is wreaking havoc on hog farmers worldwide.
“This trend cannot continue. Hog farmers are not running charities. When the input costs for hog producers soar, the price of hogs must also rise. By buying hogs, we are piggybacking (excuse the pun) on the uptrend in agriculture and crude oil.”
Read on how to profit when this upswing kicks in with this livestock ETF.
Tom Dyson in DailyWealth agrees with Ian’s read on livestock: “When the gold price rises, jewelry gets more expensive. It’s the same way with farm animals. When the corn price rises, livestock must get more expensive. Corn has doubled in the past 18 months, but livestock prices are still in the same range they were six years ago. They will catch up with corn.”
Tom also recommends that his readers invest in a livestock ETF. “Two trade in London under the symbols CATL.L and HOGS.L,” says Tom. “They track the Dow Jones AIG sub-indexes for live cattle and hogs.”
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