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Martin Tillier

Martin Tillier

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The Case for Buying Into 2 Dying Industries

Coal

Most retail investors come to trading in their accounts by way of investing, and that can sometimes limit their view of what is an acceptable trade. There is a difference between the long-term prospects for a stock, commodity or even an industry, and its prospects for a short-term trade. You may believe, for example, that the march of history makes Tesla (TSLA)’s success and domination of the auto market extremely likely, but that doesn’t mean that you can’t short it occasionally when the market gets carried away, especially given the company’s past penchant for overpromising and underdelivering in the short term. Similarly, just because you believe that the fortunes of an industry are headed down, that doesn’t mean that you should ignore the potential for short-term gains.

That is the case right now in coal and steel. Let’s be clear, as I have said many times here in the past, I believe the coal business is going the way of buggy-whip manufacturing. It is a fuel that has past its prime, and is being replaced globally by cheaper, cleaner fuels. Steel’s future is somewhat less bleak, but U.S. companies face a huge uphill battle to compete with foreign producers who work with much lower labor costs and fewer regulations. From a long-term perspective I wouldn’t buy U.S. stocks in either industry with your money, let alone my own. That doesn’t mean, however, that stocks in those industries won’t occasionally rally…

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