Optimists like to say that there’s always a bull market somewhere. The challenge is deciding where the aphorism applies, and where it doesn’t. As always, there are doubts for each and every asset class. Inevitably, there is hope as well. Beauty and bull markets, in sum, remain in the eye of the beholder. Time is the final arbiter of who’s right and who’s wrong, but waiting ten years is about as practical letting your cat baby-sit the parrot.
Now that we’ve dispensed with the usual caveats, we’re free to point out that commodities, broadly defined, appear to be caught up in a phenomenon that some might label a bull market. In fact, more than a few pundits are applying the term these days, and forecasting that more of the same is on tap. One of the early adopters of this theme has been the celebrated globe trotter/investor Jim Rogers, who jumped on the band wagon early by launching the Rogers Commodity Index in 1998, a contrarian move at the time, given the soaring equity market back then.
In 2006, commodities as an investment look decidedly less contrarian. Indeed, most broad-based commodity indices have done quite nicely in recent years. The Dow Jones-AIG Commodity Index, for instance, gained an annualized 18% a year for the three years through the end of 2005, comfortably above the S&P 500’s 14.4%, for instance. And last year’s performance showed that commodities’ momentum was in particularly strong form, as the chart below reveals.
