A lot can change in two short weeks.
Just 15 days ago, all we could do was watch from the sidelines as local shares plunged.
The S&P/ASX 200 (ASX: XJO) was on its way down, and even ventured below 4,900 points for a brief moment…
Uncertainty was once again on the rise and many feared there would be further losses left to endure.
But instead of falling, the market has done quite the opposite…
The S&P/ASX 200 has lifted more than 7% since its low on the 8th of April, and even threatened to rise above 5,300 points at one point on Thursday!
The rally took a break on Friday, but there are certainly some encouraging signs for all the bulls out there…
ASX on track for 6,000 points
Consider this from The Australian earlier this week…
According to the author, Credit Suisse believes the Australian share market can still crack 6,000 points by the end of the year!
Most investors had all but given up on those ambitions, assuming that a return to 4,000 points was a more likely scenario.
But not so, says Credit Suisse…
Instead, they think the current bear market will be "shallow and relatively painless."
It's what they refer to as a "gummy bear" market, as opposed to a more damaging "grizzly bear" market.
Of course, that's not great news for the investors who listened to the financial media earlier in the year when shares were on their way down…
After all, it's likely that many individuals sold their shares and returned to the 'safety' of cash after the Royal Bank of Scotland warned investors to "Sell everything".
But for those of us who remained calm and stayed invested, this could be very good news…
Speaking of drastic recoveries…
No doubt you will have noticed the recent resurgence of this resources titan…
When BHP Billiton Limited (ASX: BHP) shares dipped as low as $14.06 on 21 January, many investors assumed there was still more pain to come.
In fact, one analyst even reportedly said they would fall as low as $6.30 in the near future!
But instead, the shares have rallied higher, defying the market's expectations.
Late this week, they even rose above $21 for the first time since November, marking a magnificent 51% recovery in just three months…
The reason for the recovery is simple.
As a commodities business, BHP relies on higher resources prices to grow its earnings.
It appears to have hit the jackpot recently thanks to the resurgence of iron ore and oil, which happen to be the miner's two most important commodities.
Figures from The Metal Bulletin have iron ore at US$70.46 a tonne, up from a low around US$38 in December.
The resource soared 8.8% on Thursday night and rose almost 21% this week alone…
Oil prices have bounced as well. From sub-US$30 a barrel, Brent crude is now fetching just under US$45 a barrel.
But of course, BHP isn't the only company to have benefited…
Fortescue Metals Group Limited (ASX: FMG) is up an astonishing 142.5% in the same time…
Rio Tinto Limited (ASX: RIO) is up 38.2%…
Santos Ltd (ASX: STO) shares have soared 87.1%…
And Woodside Petroleum Limited (ASX: WPL) is also up nearly 11%.
Missing out on those kinds of gains can be one of the most painful experiences for an investor.
Many will be kicking themselves for not buying those shares back in January or February, while plenty will likely be tempted to jump in today.
Whether or not that would be wise is a different question altogether…
Will commodity prices rise from here?
They could, but there are plenty of analysts who have their doubts…
Even some prominent industry insiders appear bearish, including Mike Henry, BHP Billiton's own iron ore and coal chief!
According to The Australian, Henry thinks the high iron ore price will only last a couple more months. He said:
"I wish I could say this is going to be sustained over a large period of time, but I don't think it will be."
Christian Lelong from Goldman Sachs agrees…
According to The Australian Financial Review, the analyst said (my emphasis) "We think this market will go back to $US35 during the fourth quarter."
That's 50% below its current level!
Unfortunately, there's just as much uncertainty surrounding the future direction of oil prices. Should it fall, that would spell more bad news for BHP and its fellow energy producers.
That's the risk investors take when buying resources shares.
They put a lot of faith in the direction of commodity prices, which the companies themselves have no control over.
An investment in the miners today could pay off if commodity prices continue to rise…
Or it could prove disastrous if commodity prices do fall from here.
Personally, I find it difficult to see them rising too much from these levels, suggesting there could be far better opportunities elsewhere…
But where else is an investor to look?
It is a common misconception among investors that they need to have the miners in their portfolio, or that they need to own the banks…
The reason behind that thinking mostly stems from their blue-chip status, and their heavy weighting on the broader market.
After all, the Australian share market is highly concentrated.
The banks and miners make up more than a third of S&P/ASX 200, with Commonwealth Bank of Australia (ASX: CBA) accounting for more than 9% of the index on its own.
Meanwhile, the banks also offer some very generous, fully franked dividends which many investors find difficult to ignore…
But the truth is, investors can still find great dividends and achieve plenty of growth without overloading on those shares.
Heck, not one of the banks or miners have made it to the official Motley Fool Share Advisor scorecard at this point, and yet the service is significantly outperforming its benchmark index…
In case you were wondering how that is even possible, the process is relatively simple…
Scott Phillips (who runs the service) and his team look for companies with sustainable competitive advantages…
They pay close attention to balance sheet strength and opportunities for growth…
A high-quality management team is just as important, while solid dividend yields are often just the cherry on top.
Rather than loading up on the banks and miners, there are plenty of great companies already on the Motley Fool Share Advisor scorecard that are still rated as solid "Buys"…
