It was reported yesterday that the drop in the commodity sectors was because of rumors of hedge funds liquidating assets in those areas. It basically tells me that this sell off was un-called for like I stated the other day.
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Again the market took another hit in the morning hours with commodities leading the way. All day on CNBC, they stated that it was possibly because of hedge fund managers. I myself don’t know too much about the hedge funds nor do I follow them. Hedge funds managers typically do short-selling to hedge against losses in the market. The members of hedge funds are the very wealthy and people like us would never qualify to be involved in a fund like this and to me it sounds too risky.
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I would like to explain hedge funds with my readers, but I don’t know where to start, so I went on Wikipedia to get a better idea of how to explain it to you, but after reading different sites I’m more confused than I was before I reading them.
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Investopedia is a site that I follow on my feed and enjoy reading it daily. Their description of a hedge fund is a little easier to understand. If you feel like having your head spin please feel free to read the explanation (good luck).
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What ever the reason for the sell off, I’m taking advantage of the share price of a few different stocks. Stocks like Freeport McMoran (FCX) have great fundamentals and are way down after dropping over 15% in the last two days. When I sold off my shares of FCX about two weeks ago when it was in the low $90 range. A week and a half ago it was near $94. Today it hit a low of $78.40 before it gained a little strength and closed at $80.36.
I don’t know if there will be more of a sell off in this company , but I took a bite at $79 and expect to see this stock back in the $90′s again real soon.
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Whatever you decide to do, do your homework and due diligence before you take action
Happy trading.
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