One thing I know, the world is expecting ever higher food and commodity prices. You can basically pick up any periodical these days and read something about it. Here’s a couple recent examples:
Maybe you agree with these views. But what matters for investing is what you believe will happen relative to current expectations. In this case, the question is will commodities/food prices come in higher or lower than the consensus view? Because the consensus view (particularly stuff as broadly aired as Fortune and TheStreet.com) should already be mostly reflected in share prices. My experience is that food supply is more adaptable than people usually believe/extrapolate, which argues that a surprise in higher food supply is more likely than many appreciate today. But whichever way you go, note that to make a bullish bet on this issue means you think prices will be even higher than soaring expectations. Maybe it’ll happen—but step with caution. It’s not as easy as simply agreeing with the consensus view.
Another example: Refiners have had a heck of a run recently. Should you get in? A recent Bloomberg headline reads: World Diesel Demand Makes Refiner ‘Diamond Age’: Energy Markets. Will results for refiners come in even higher than “diamond age” expectations? Maybe, maybe not. But that’s the question an investor faces.
Lastly, a brief non-Investing tangent: There’s been a tumult of books and essays lately released about how modern media is killing/skewing/altering traditional books and how that changes the way our minds work. David Shields’ new book, Reality Hunger, is not only a good meditation on those subjects, it’s also an experiment in form. The book makes its arguments in little prose bites, none of them more than a page or so long. It’s staccato and sometimes jarring, but there’s also a certain kind of rhythm to it that makes it flow nicely. What’s most refreshing about Shields’ work is that it allows the form of books to morph into how minds are working these days as opposed to arguing whether long form books are becoming obsolete. This is a much better way to meditate on the issue than to lament over the fact that few people read really long books any longer.
For years I’ve made a practice of reading the Wall Street Journal daily. And to really do it, even for a very skilled skimmer, takes the better part of an hour. In any given week, I generally have a goal of reading the WSJ, FT, Economist, Bloomberg Businessweek, and The New Yorker. Then monthly (or bi-weekly), the New York Review of Books, Forbes, Fortune, and Foreign Policy.
That’s a lot of reading, but to my mind that’s what the investing job requires. I know people who do considerably more. I tried a tactic over the last month that’s worked beautifully so far: for daily newspapers, let them build up and then bang them all out one day each week. It’s simply amazing how many stories become generally irrelevant after just a couple days. Yet, it’s all still fresh enough that you stay informed and don’t miss an important op ed or editorial. It’s simply a myth that investors (except very specific types of jobs, like for traders) need to have up to the second information in most cases.
In the meantime, I’ll keep experimenting—reading is a skill set that needs to be continually honed and absolutely can be improved (both speed and comprehension). Most folks don’t bring much consciousness to how they read, but it matters.