categories that offer the opportunity for outsized gains in the short and long term. And as you probably know by now, we are particularly interested in sectors that are entering a new supercycle… What Is a Supercycle? As we explained in the beginning of this book, a supercycle in any given commodity is the time from its price bottom to its peak to its next bottom… When demand is low, price and production are curtailed or diminished. Supply falls. Once supply drops below demand, prices begin to rise. Producers begin to increase supply to meet the demand. At some point, supply will again exceed demand. When that happens, prices will fall and producers will curtail production. And the supercycle starts over again. These cycles in supply and demand are reflected in economic cycles. For example, economic expansion in China drove commodity prices higher between 2005 and 2012. Then as China’s economy slowed, prices receded. What do you think will happen from here as China’s and India’s populations explode, infrastructure is built, their GDPs expand, and their transportation needs skyrocket? That’s right – the next supercycle…
132
Made with FlippingBook - Online Brochure Maker