One of the oldest sayings in Wall Street is “There is always a bull market somewhere”
Apparently, now the biggest bull market is in industrial sand. There is a huge – and growing – shortage on the high-quality silica sand required in the fracking industry in the US.
According to Thomas Dolley, a mineral commodity specialist for the U.S. Geological Survey, best described what is going on in the industry… “It’s a gold rush. Demand for frac sand is jumping through the roof.” (see article here and here)
In an earlier post, we had discussed Rip Van Winkle trades wherein you put on a trade and forget about it for the next 20 years.
While stocks,realty etc may be some of the investment classes for such trades, even currencies can be a fertile area for Rip Van Winkle trades.
Take for instance, the historical data of USD and the Pakistani Rupee (PKR) for the last twenty years
One would have made 4x just holding onto this trade .Considering the huge leverage one could employ in the forex markets, the returns could have been much much higher
Does this trade still hold?Considering the country’s dire economic straits, radicalization of its people,the immense incompetence of its political leadership the imminent withdrawal of US from Afghanistan and drying up of western aid, it is fairly clear that the Pakistani Rupee will head lower with time.
So the right thing to do is to sell PKR and buy USD and keep rolling the positions for the next twenty years.
Rip Van Winkle trades are trades wherein you put on a trade and forget about it for twenty or more years.
Many times such trades turn out to be the best trades of all.
In the Indian context, some of these trades would have been:
1.Buying agricultural land on the outskirts of any of the metros/cities.
2.Buying blue chip stocks like ITC, Infosys etc
3.Buying prime residential/commercial property in the metros
It is a useful thought experiment to think of Rip Van Winkle trades for the future:
What trades ,if you put on now and not do anything for the next 20 years, can give a great return?