Commodities may have been less correlated with stocks in the past (1970's and 1980's) because there was a lot of spare capacity. This allowed for price gyrations independent of stock returns. In the past, large positive returns were compacted into only a few years making the long-term averages higher. Those few high years of commodity returns offset many years of returns that were below the stock averages.
Is is possible that, as Virginia Munger Kahn writes in the August 2011 issue of Financial Advisor magazine, that, "...while supply shocks can still send commodities soaring and equities reeling, commodities and equities now march to the same drummer - global economic growth..."?
If so, the diversification benefits that many investors are seeking in commodities may not be as helpful as in the past. I tend to agree.
An Introduction
Hi. Welcome to BourGroup and my blog. Phil
Phil Bour is a CERTIFIED FINANCIAL PLANNER(tm) professional since 2004, a Magna Cum Laude college graduate and an accounting professional for over 35+ years. I love numbers, statistics and economic history.
I am also an Enrolled Agent (EA) to represent taxpayers before the Internal Revenue Service and to prepare tax returns.
"Phil"osophy: I believe that you can manage your money on your own (not necessarily through individual stock selection but through mutual funds, ETF's and other solutions) once you receive some one-time, professional guidance. Why pay annual fees when there may be little added value? For additional information, first read the "An Introduction" label at the left. Then move on to others.
Phil Bour is a CERTIFIED FINANCIAL PLANNER(tm) professional since 2004, a Magna Cum Laude college graduate and an accounting professional for over 35+ years. I love numbers, statistics and economic history.
I am also an Enrolled Agent (EA) to represent taxpayers before the Internal Revenue Service and to prepare tax returns.
"Phil"osophy: I believe that you can manage your money on your own (not necessarily through individual stock selection but through mutual funds, ETF's and other solutions) once you receive some one-time, professional guidance. Why pay annual fees when there may be little added value? For additional information, first read the "An Introduction" label at the left. Then move on to others.