@loobs11 , It is not possible for me to offer you personal...

@loobs11 ,

It is not possible for me to offer you personal investment advice, but what I will point to is the following long-term investment returns (capital gains plus dividends), over various investment time frames, for resources sector poster-child and so-called "blue chip", namely BHP.

BHP Total Annual Average Investment Returns (% pa)
20-Years: 11.0%
15-Years: 12.1%
10-Years: 1.9%
5-Years: 2.5%


By comparison, let's look at the comparative exercise for other major ÄSX companies, also called "blue chips:

AMC Total Annual Average Investment Returns (% pa)
20-Years: 10.8%
15-Years: 11.3%
10-Years: 14.5%
5-Years: 15.1%

CBA Total Annual Average Investment Returns (% pa)
20-Years: 12.4%
15-Years: 12.1%
10-Years: 10.4%
5-Years: 7.3%

CSL Total Annual Average Investment Returns (% pa)
20-Years: 22.3%
15-Years: 27.4%
10-Years: 18.8%
5-Years: 24.3%


As you can see, over just about every long-term time frame, BHP (the world class, best-of-breed etc., etc., mining company) has under-performs other non-mining companies.

(And remember, those time frames correspond to a period where China has been undergoing massive industrialisation, resulting in once-a-generation tailwinds for commodity producers. But even that was insufficient to prevent BHP generating inferior investment returns.)


So, if the resources sector demonstrably does not make for a good long-term investment, to generate superior investment boils down to timing the commodity cycle accurately.

Which means having the guts to go against the herd and to buy at the bottom of the cycle, and then being disciplined enough to sell at the top of the cycle.

Of course, this sounds easy to do, but identifying the troughs and peaks of commodity cycles is a difficult thing to do, because no one rings a bell declaring the cycle to be turning.

So, for your current investments in resources stocks, the question you need to be able to answer accurately is:

"Where in the cycle are we now? Near the bottom? The top? Or somewhere in between?"

I'm not too sure myself, but one thing that appears clear to me is that we are a long way from the bottom... because there is far too much love for the sector at the moment.