Monday, October 23, 2006

Commodity Debate

The latest issue of Forbes has an interesting article highlighting the debate about the future course of commodity prices between Jim Rogers and Stephen Roach:

While the Dow Jones booms, commodities like oil and gas swoon. Jim Rogers, the man who called the raw materials rise years ago, is upping his bets. Economist Stephen Roach thinks that's nuts.

We have been underweight commodities recently and in our latest tactical update to be published this week, we maintain that position. However, Jim Rogers makes a good case for a long term commodity bull market. Stephen Roach always seems dour about something - he's known as a permabear on Wall Street - but he was right about stocks a few months ago. He was ridiculed at the time because he got more bullish right before the correction, but I'd say he's been vindicated.

I tend to think commodities are reflecting the general view that the economy is slowing. If that proves short lived, commodities could add some return to your portfolio. We'll be watching closely.

No comments: