Fin - Breakout - US

The Commodities Trade Is Over, Time to Move On: Hilary Kramer


Whether you're sipping free drinks in a casino or nibbling free advice on Wall Street, how many times have you heard it said, "Let your winners run?"

I'll go out on a limb here and guess that you've probably heard it a lot. Well, you won't hear any of that today, at least as it pertains to catching a bounce in commodities and the stocks related to them.

That's right, if you were thinking about maybe -- just maybe -- reloading the boat for a second run in commodity XYZ (take your pick really), at least one pro says, don't do it. "The popular trade (in commodities) is really over," says Hilary Kramer. "It's been a really crowded trade, and it's over."

In fact, the editor of says with money rotating out and growth in China slowing down, the better trade in this space is on the short side. She then rattles off five stocks that she thinks could be headed lower, including US Steel (X), Allegheny Tech (ATI), Caterpillar (CAT), Deere (DE) and AGCO (AGCO).

"At this point, CAT is a short in my mind," she says. "They have gone too far, too fast and the demand won't be there going forward."

Beyond weakening demand, Kramer says a dollar comeback will further dampen any enthusiasm the sector might generate. The U.S. dollar will strengthen, she says, adding that with QE2 ending, and Europe/the euro also relatively weak, it will "ruin the commodities," or at least keep them in a tight range.

Even things like gold (GLD) will be subject to the markets emotions , she says. "Once we learned that George Soros was selling," it was clear that it was time to move on.

But move to where? Kramer sees upside and momentum and biotech and health care equipment, as well as contrarian potential in financials since they are currently so out of favor.

Whether you agree with her thesis or not, you have to respect her track record. Have a listen to the interview and let us know what you think.

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