1. Food
Rising wealth in India and China is set to boost the global demand for food and cattle grain in coming years. For the first time in history, the food and grain prices have been rising due to an increase in food demand as opposed to poor crop yields.
During the current commodity boom, while base metal prices and oil prices have gone up significantly, food prices are only beginning to catch up. With an ever increasing appetite and improved diets of more than one third of the world population in India and China, the future for Asian and international companies producing corn, whole grain, and barley has never looked better.
Food Stock Picks: Synutra International Inc. (Nasdaq: SYUT), Chiquita Brands International Inc. (NYSE: CQB)
2. Metals
Zinc and copper have come down tumbling from record highs. There is still a lot of steam in the global base metal bull cycle. Base metals have never looked more attractive in recent times. While the North American demand for base metals might be slowing, the global demand is likely to remain strong, powered by the red hot economies of Brazil, Russia, India and China. Global mining conglomerates like Rio Tinto and BHP Billiton are set to continue to ride the boom.
Metal Stock Picks: BHP Billiton Ltd. (NYSE: BHP), Rio Tinto plc (NYSE: RTP)
3. Energy
Emerging markets especially BRIC (Brazil, Russia, India and China) are expected to keep their economies humming along based on domestic demands as opposed to being driven by exports. BRIC countries need a lot of fuel to power their growing economies.
Despite a projected slowdown in the US economy, the overall global demand for oil is set to outpace the discovery of new oil assets. There are plenty of extremely well run globally integrated oil companies which offer tremendous opportunity to ride the oil bull market.
Energy Stock Picks: Occidental Petroleum Corp. (NYSE: OXY), Enel SpA (NYSE: ENSTY)
4. Gold
Whenever financial markets turn sour, people turn to gold. Over the centuries, Gold has been considered a safe store of value and wealth. Even though the price of gold has risen from $300 in 2001 to over $800 in 2007, the rally in gold might just be beginning. Adjusting for inflation, gold would have to reach $2,100 to match the all-time high set in 1980.
Historically, gold tends to get a seasonal lift in winter and peaks with the Indian wedding season in Jan-Feb. The biggest driver for the rise in gold, of course, is weakness in the US dollar, which despite making a comeback, might be on the road to a further slide.
Newmont Mining Corp. (NYSE: NEM), Clough Global OPPRT (AMEX: GLO)
5. Industrials (Railroads)
Railroad stocks are pillars of any economy. While economic growth might be slowing, and recession remains possibility, Railroad stocks will continue to do well. Fundamentals for railroad stocks look great given the severe correction in recent months. These stocks look great from a mid to long term perspective.
Railroad Stock Picks: Union Pacific Corp. (NYSE: UNP), Norfolk Southern Corp. (NYSE: NSC)
6. Consumer Staples
Consumer staples are goods that people need on a day to day basis regardless of whether the economy is booming or contracting. Companies that make household and consumer goods such as diapers, soap, toothpaste, and cleaning supplies will always find their products in demand whether the stock market goes up or down. With the overall wealth of people in emerging markets on the rise, large and innovative global Consumer Packaged Goods companies look like great defensive plays in a bear market.
Consumer Staples Stock Picks: Procter & Gamble Co. (NYSE: PG), Unilever NV (NYSE: UN)
Putting it all together
Putting it all together, you can actually make money in both bear and bull markets... it just depends on how you see the market: up or down today?
In 2007, there were two major market bumps, once in July and another one in November. How many will there be in the coming years? It doesn't really matter if you know how to take advantage of down markets.
What's certain is that many more bumps are to be expected in the future. The key is to follow the market trend, even if that requires flipping your position in a day, a week or a month.
In essence, in a down market, the opportunities to make money are just as great as those of a rising, or Bull market. You simply have to keep your eye on the general trends in the market and adjust your positions accordingly to seize the opportunities as they present themselves.