Here at The Options Edge, we look for great ideas. The primary focus of our ideas is individual companies that are too cheap, or too expensive, too hated or too loved. Sometimes we find opportunities in the commodities space. Like most assets, their price is driven by supply and demand, but speculators play a roll in setting prices, as well. Speculators tend to be trend followers and they use leverage to magnify returns. As a result, these participants often push prices up too high for too long as they chase shortages and momentum. When markets go against their bullish bets, they are quick to liquidate long positions and may initiate short positions. In this process, the speculators push prices down too far for too long. These swings create opportunities. The Third area we survey for opportunities is international investing opportunities. These opportunities may take the form of a particular company, but it may take the form of a macro opportunity for a particular country. In today’s note, we would like to discuss an opportunity where nobody is looking, Portugal.
