When investing in commodities and cyclicals, look for industries that are in a major down cycle and are starved for capital. This step should be followed by a detailed analysis of the fundamentals of individual companies and behavioral insights within the sector to uncover stocks that are selling at a significant discount to their intrinsic value. Next, conduct a stress test to check whether the short-listed companies have manageable debt and are capable of surviving another couple of years in a downturn. Then wait for a few companies in the industry to go bust or shut down some plants and
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