Following the Flow of Capital towards Profitable Investments Montrose CO

According to Money Morning contributor Shah Gilani, capital waves offer potentially rich returns for investors with the global vision to recognize and exploit them, and the courage to stay in the game. Timing the movement of interest rates, commodities and currencies is key. While Australia and Canada are ripe for investment, the highest stakes are in the showdown between China and the US. See the following article from Money Morning for more on this.


Back when oil was trading at a record high of $145 a barrel - and was generally expected to go higher - I concluded that the forces at play were speculative, not fundamental - driven by new institutional money looking to diversify away from too many concentrated equity bets. I argued these forces were temporary, and not entrenched, meaning that oil prices were actually headed for a fall.

The "forces" I was referring to are called "capital waves." Capital waves create some of the biggest trading opportunities in the markets today. Investors who are able to spot capital waves and identify their likely impact have a huge advantage over those who don't.

With oil, for instance, pundits were calling for new highs of $200, $250, $300 and even $500 a barrel. But behind the curtain, there was a major capital wave at play: I knew that oil was being pumped out of the ground like mad, and that shipping rates were exploding because oil was being stored in offshore, idled tankers. I knew that as little as $20 billion had been "re-allocated" out of the equity markets and into this new-asset-class investment for pension fund accounts.

As a speculative frenzy seemed to be enveloping the oil market, I called for oil prices to plummet - to more than a few looks of incredulity or outright guffaws.

When the secondary capital waves took hold, the speculative advance in oil prices first stalled - and then oil prices plunged as capital exited in another wave.

Don't feel bad if you missed this opportunity. That's the important thing to remember about capital waves - they're out there if you know where to look and how to interpret them. In fact, as good as this oil play was, I see even better opportunities ahead.

Investors too often focus on specific stock selection and watch their investments get swept away when powerful undercurrents spawn market-moving capital waves.

But finding that needle-in-the-haystack stock isn't as important as picking the right haystack.

At this critical market juncture, the easy money has already been made. Whether investors are able to hang onto recent gains and take advantage of future opportunities will be determined by where - and how quickly - giant capital pools react to financial, economic and political forces.

The new religion in investing doesn't rely on faith. If you know the sea is being parted, you don't have to walk on water.

You instead must understand how to read the ripples and invest in the waves...

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