what is wrong with commodities stock sector?

[alertmeipp]

It has been lagging recently

[Zorrofan]

China is placing more emphasis in their latest 5 year plan on building consumer demand, less emphasis on infrastructure and more emphasis on cleaning up the environment. Many interpret this as less demand for commodities, thus lower prices.  I'm not so sure but time will tell......

 

my $0.02

 

Cheers

zorro

[constructive]

Before the slump they were going a little bit crazy. Commodities had abnormally high performance 2000-2008 and 2009-2011. Valuations now seem on the low side but maybe not by a huge amount, since 2008 and 2011 valuations were on the high side.

 

And I agree China plays a big role.

[bmichaud]

Will be interesting to see if GMO's "new paradigm" commodity thesis ends up playing out...if so, this is a great buying opportunity.

[alertmeipp]

Will be interesting to see if GMO's "new paradigm" commodity thesis ends up playing out...if so, this is a great buying opportunity.

 

You mean this?

http://www.munknee.com/grantham-paradigm-shift-taking-place-in-commodity-prices/

[bmichaud]

Yessir.

[alertmeipp]

Thanks, something similar:

 

http://mountaintownnews.net/2013/12/18/the-squeeze-on-global-resources/

[Guest hellsten]

Will be interesting to see if GMO's "new paradigm" commodity thesis ends up playing out...if so, this is a great buying opportunity.

 

You mean this?

http://www.munknee.com/grantham-paradigm-shift-taking-place-in-commodity-prices/

 

Thanks. Interesting theory from 2011. I'm not sure what the practical implications for e.g. ZINC, SD, and CHK would be today.

 

If you believe the theory, natural gas prices aren't random or speculation with a 1 in 2 probability. Isn't that just another way of saying that there's a 50% probability that the price of natural gas is low because of speculation and random price fluctuations? For zinc, the odds that prices are not random is 1 in 35. 1 in 2,200,000 for iron ore.

 

China's % of world consumption of steel (45.4%) and zinc (41.3%) is easy to understand the meaning of.

[DoddDisciple]

Commodities have always perplexed me. Most of the funds and ETFs are heavily weighted towards energy, like 50% plus. Leverage makes it where at any given point more of each commodity is being traded than is actually available on the Earth.

 

Does anyone actually employ Jim Roger's use and utility weighted commodity strategy? I see something like wheat or water rights being a hell of a lot more valuable than oil, but maybe I'm mistaken.