Gold, Copper, Natural Gas, Oil

Many people watching federal debt levels and Federal Reserve policy are bracing for inflation as far as the eye can see, but is the ‘buy gold’ mantra really the best way to go given the current situation? I compared one year of futures prices for gold, copper, oil, and natural gas. With gold near all-time-highs, and oil still far below last year’s prices, oil may have more upside potential. Moreover, I think there is strong political will for massive infrastructure spending, so a commodity that benefits from industrial activity is likely to perform well. I think there is a strong case for oil producers being the winners for the second half of 2020.

 

Multiples and Total Return for 33 Mega Cap Stocks

Multiples are a key part of fundamental analysis used in stock picking. There is some debate over which multiples are best, or whether any of them are really useful. I put data for seven multiples into a spreadsheet for 33 of the highest market cap stocks traded on US exchanges. (I attempted to analyze the highest market cap stocks, but a a few were excluded because incomplete data was available for them.) I obtained the multiple data on Sunday, November 10 (primarily from TD Ameritrade). I calculated the total return (including dividends) supposing someone bought at the opening price on November 11, 2019, and sold at the closing price on August 4, 2020. I then charted the results for each multiple. The results were not promising for people who use multiples to invest. The linear regressions should be expected to have negative slopes, but this was only the case for PEG ratio. In other words, companies with low earnings and low book values had better returns for investors. I think I'll check the returns after a full year before I start buying stock with the lowest earnings I can find.