What is the Cost of Being Early?
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Commodities move in large cycles, particularly relative to the stock market. There are times when commodities are cheap, and it is prudent to invest, and times when they are expensive and it's best to stay away.
However, not all cycles are equal.
In 1929 and 1999, commodities rebounded sharply in a V-Bottom. In 1956, they took 12 years from first looking cheap to bottoming, relative to stocks.
Should investors stay away if this cycle resembles the late 1950s? The answer might surprise you.
Our well-known chart tracks the ratio of commodities to stocks. Even though the ratio took 12 years to bottom, commodities and natural resource equities performed well.
There was no cost to being early.
Our newest commentary, What is the Cost of Being Early?, looks at many nuances present when commodities become radically undervalued and should be read closely by anyone with, or considering, an allocation to the industry.
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