Old Soros Partner Thinks Commodities are the way to go

[andrasnm]

He even started a fund and wrote a book - his name is
Jim Rogers - the author of the "Investment Biker" etc.
I trade spreads on futures and I can get 40-50 percent on my money. If you need to know how come/visit my website
http://www.coach4traders.com

[DesertCat]

[ QUOTE ]
He even started a fund and wrote a book - his name is
Jim Rogers - the author of the "Investment Biker" etc.
I trade spreads on futures and I can get 40-50 percent on my money. If you need to know how come/visit my website
http://www.coach4traders.com

[/ QUOTE ]

A stopped clock is right twice every day. Jimmy has been touting commodities for about 15 years. The problem is the long term trend in all commodity prices is down. Read some Julian Simon.

[tech]

[ QUOTE ]
The problem is the long term trend in all commodity prices is down. Read some Julian Simon.

[/ QUOTE ]

Too bad the last 25 years of data doesn't support Simon's hypothesis (on falling prices, that is).

[DesertCat]

[ QUOTE ]


Too bad the last 25 years of data doesn't support Simon's hypothesis (on falling prices, that is).

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In 1980 crude oil prices were $38. Adjusted for inflation, they would be $94 today. So oil prices clearly support Julian's hypothesis. Name a commodity that hasn't over the last twenty five years.

BTW, median household income in 1980 was $17,700, so the typical U.S. family's income equaled 465 barrels of oil a year. Now it's around $45,000, so now the typical U.S. family income is equivilent to 833 barrels of oil per year. That's called getting cheaper.

[icetonez]

Here's a good article on the subject: http://www.nationalreview.com/nrof_g...0403250830.asp

It looks like you're not missing much by not investing in commodities. However, like the article says, it might be worth it to make it a small portion of your portfolio to help ride out bull markets.

[icetonez]

er..BEAR markets

[laserboy]

What do you mean by the long term trend? Since 1959, a collateralized commodity index would have outperformed ALL asset classes, including the S&P500, with less risk.

http://papers.nber.org/papers/w10595

Regardless, Rogers does not advocate commodities as an inherently superior investment, just that they are presently undervalued relative to stocks and bonds. He invests in cyclical macro trends, not long term buy and hold. Since he started the RICI in 1998, the index has outperformed all mutual funds regardless of industry.

[laserboy]

1980 : Commodities :: 2001 : Tech Stocks

[tech]

[ QUOTE ]
Name a commodity that hasn't over the last twenty five years.


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Olive oil and some types of lumber, for starters. But with that said, 1980 is a bad starting point because of high inflation and high commodity prices (relative to a few years later). I suspect Julian was well aware of this when he made his famous bet. If you start in 1982-1983 and try to name commodities that have outpaced inflation, there are quite a few.

[DesertCat]

[ QUOTE ]
What do you mean by the long term trend? Since 1959, a collateralized commodity index would have outperformed ALL asset classes, including the S&P500, with less risk.

http://papers.nber.org/papers/w10595



[/ QUOTE ]

Interesting study, I'd like to read it but don't want to pay for it. I'm assuming they acounted for stock dividends in their comparison. Two comments however. First, volatility isn't risk. Second, they studied commodities futures, not commodities values, and Keynes speculated that commodities future buyers are getting an enhanced return from hedgers.

I'm also curious as to why they started the study in 1959, instead over a longer period, say like from 1919. Then the same results would be even more compelling.