Even experienced stock investors fall for the fallacy of irreversible trends: the assumption that a trend will continue indefinitely. When the market is going up (as in the late 1990s), people assume it will continue to go up, and that's when speculators enter the scene and even cabdrivers have a hot tip for you. That's the moment to get out.
Right now, because of the glut of overvalued homes, the credit crunch, the mess in Iraq, and the downturn in the economy, most of us assume -- extrapolating from current trends --that oil and gold will keep going up and the dollar will sink to new depths.
But trends are reversible. Change happens, not only because of the implementation of structural improvements but because the stock market reflects not today's conditions but a best-guess estimate of what things will be like in six months.
A correction in the commodity market this past week resulted in oil dropping to $113 a barrel. Nevertheless, Goldman Sachs has forecast a price of $149 by the end of the year. They're the smart guys and what they say will probably happen. So don't see your Exxon or your Chevron just yet.
But keep in mind that the incentive to create a non-petroleum-based energy source has never been greater, and consider this prediction: the liquid natural resource that will prove most scarce in the ninety two years left in this century is likely to be not oil but fresh water.
Water utilities are worth a look, especially those with decent balance sheets offering dividends a point or more above money market rates.