Wednesday, February 10, 2010

Mark Mobius Likes Commodity Stocks

Mark Mobius Likes Commodities

While most of us that know Mark Mobius understand his focus and investment strategy concerning emerging markets, we also need to include his take on the commodity market as well.

For emerging markets, what all of us need to understand is commodities will continue to play a big part in their growth, whether its a large country or not, as for the most part it'll be stuff that generates growth for them majority of them, not high-tech products and services to start off with.

With that as a background, Mobius recently said that "Commodity stocks look good because we expect the global demand for commodities to continue its long-term growth. Consumer stocks are also favoured. With rising per capita income and strong demand for consumer goods, the earnings growth outlook for these stocks is positive."

Mobius added we must be good risk managers during this period of time, as there will continue to be huge fluctuations in all markets, of which commodities are usually always like, even in the best of times.

Some of the things Mobius advises to look out for and the risks he's talking about are:

"Risks such as the inability of governments to control the derivatives markets, loss of confidence, over or poor regulation and abandonment of the market economy philosophy do also exist. Therefore, we must pay attention to valuations and long-term earnings growth prospects in order to avoid buying or holding expensive stocks as a result of dramatic price rises that we have seen."

Mark Mobius Likes Commodities

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