Saturday, July 7, 2007

I LOVE Omaha Steaks!



Investing Against the Herd: Stock Up on Livestock This Summer
With a blizzard of new exchange traded funds (ETFs) being offered every week throughout the world in just about every industry imaginable, there's one place that most investors have yet to identify as a great bargain. I'm talking about the meats, or lean hogs and live cattle.
Okay, I know what you're thinking: What are you going to do with 40,000 pounds of beef upon contract delivery, right? I'm with you. I prefer to avoid trading this theme with futures options or futures, and instead, recommend the only ETF available to ride the bull market in meats. {ETFS Livestock ETF (AIGL): Reference guide to the ETFS Livestock ETF exchange-traded fund (AIGL) and to the financial index on which it is based.}
Let's face it: How many investors do you know playing live cattle or lean hogs? Not many, I'm sure. And that's what makes this theme so interesting. It's the lack of knowledge and opaque nature of this commodity sub-group that dissuades most participants.
If you take a look at long-term charts of live cattle and lean hogs you'll easily identify a bull market over the last 20 years. Facts are that supplies have been tightening for years, especially as diets change in the emerging markets, demanding more protein-based foods. In China, the world's largest consumer of hogs, there's actually a shortage of pork since the first quarter as imports flood the country. Other countries across Asia are also boosting beef consumption at the expense of starches.
In addition to powerful long-term global demographics and livestock consumption, there's a seasonal event that occurs every year around May -- the Great American grilling season.
Throughout the Western hemisphere, barbeques rev up every summer as consumption enjoys a big spike, mainly in beef and poultry. With the exception of 2005, cursed by mad cow outbreaks in the United States, traders have made money in almost every May-to-August trade riding live cattle contracts.
Investing in lean hogs or live cattle means you're investing outside of the routine commodity markets, and of course, totally outside mainstream investments. Even better: Live cattle has no correlation to other commodities, stocks or bonds, offering a truly diversified investment - and that's no bum-steer!

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