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DURING INFLATIONARY PERIODS, RESOURCE EQUITIES HAVE GROWN PURCHASING POWER
(Just took a glance at article.) Probably not incorrect. However, buying anything (stocks, bonds, commodities) involves making judgments about current valuation. Like equities, the various sectors within the commodity markets are prone to “bull” and “bear” markets, If anything, these swings are more exaggerated / severe in the commodities markets. (For a quick refresher pull up some charts on NYMEX crude futures over the past dozen years.)
I caught a bit of Bloomberg’s latest Wall Street Week yesterday and am eager to view the whole program. One guest speculates that after the stock market falters or falls severely, the than disillusioned (and poorer) Robinhood crowd will abandon equities and pour their money instead into commodities - driving valuations up to levels where they could eventually bring down the entire economy (speculation of course).
Ben Carlson discusses historical real returns for commodities, stocks, bonds, and cash.
"Many investors want to be invested in commodities today because of worries about inflation. And commodities can have high returns under inflationary environments. But stocks have a much better track record over the rate of inflation in the long run."
"The performance of commodities may also be surprising to some investors. Commodities have negative real returns over the past 100 years! Now there could be some selection bias here. You can see from Reid’s numbers that gold has a much better track record."
"A decade feels like a long time but might not be worthy of consideration when it comes to 'long-term' for the stock market. In 3 out of the last 11 decades, the stock market has experienced negative real returns."
"There can be negative real returns on bonds for an extended period of time. The four-decade stretch from the 1940s through the 1970s saw negative real returns for bonds."
"Cash has had negative real returns in 5 out of the past 11 decades. You can probably expect that to continue from such low rates at the moment."
Comments
I caught a bit of Bloomberg’s latest Wall Street Week yesterday and am eager to view the whole program. One guest speculates that after the stock market falters or falls severely, the than disillusioned (and poorer) Robinhood crowd will abandon equities and pour their money instead into commodities - driving valuations up to levels where they could eventually bring down the entire economy (speculation of course).
"Many investors want to be invested in commodities today because of worries about inflation. And commodities can have high returns under inflationary environments. But stocks have a much better track record over the rate of inflation in the long run."
"The performance of commodities may also be surprising to some investors. Commodities have negative real returns over the past 100 years! Now there could be some selection bias here. You can see from Reid’s numbers that gold has a much better track record."
"A decade feels like a long time but might not be worthy of consideration when it comes to 'long-term' for the stock market. In 3 out of the last 11 decades, the stock market has experienced negative real returns."
"There can be negative real returns on bonds for an extended period of time. The four-decade stretch from the 1940s through the 1970s saw negative real returns for bonds."
"Cash has had negative real returns in 5 out of the past 11 decades. You can probably expect that to continue from such low rates at the moment."
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