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Holy Sweet Tooth, Batman! Cocoa Prices Soar

Holy Sweet Tooth, Batman! Cocoa Prices Soar

April 02, 2024

As a rule, I avoid drawing attention to market anomalies unless I believe there’s a good investing lesson for everyone.

The unusual price action in the cocoa market is giving me that opportunity. So today’s lesson is, “hindsight is 20/20.”

“In the financial markets, hindsight is forever 20/20, but foresight is legally blind,” wrote Benjamin Graham in his landmark 1949 book, The Intelligent Investor, the Definitive Book on Value Investing. “And thus, for most investors, market timing is a practical and emotional impossibility.”

As some of you may have seen, chocolate prices are climbing due to the cost of the underlying cocoa. In hindsight, when looking at the chart, you can see that cocoa prices have surged higher in short order. But who has the foresight to say what’s next?

This price action helps highlight the dangers of market timing.

Markets move in cycles, which include downtrends and uptrends. In rare instances, you get hyper moves, like today’s cocoa market.

Trying to time the markets is exhausting. Moving in and out of the markets based on economic analysis or business headlines must be challenging. Think about the disappointed market timer who followed the analysis that concluded cocoa prices would trend lower in 2024!

With investing, it's critical to “tune out the noise” and focus on what you can control, like your time horizon, risk tolerance, and goals. There will be ups and downs in 2024. Market timers will be busy.