Our 20 year involvement in commodity investing has shown us that taking a “supercycle” view has never proven to be profitable and in fact, we have taken the very opposite tack in our approach to commodity markets. When it comes to commodities, we prefer to call ourselves secular bulls, but cyclically cognizant. We realize that :
1) Commodities are not homogenous, there is no reason why the price of corn should move with copper
2) Commodities, as inputs into the production process, are by definition cyclical in nature and this cyclicality in the medium term cannot be repealed
3) The seeds for the next downturn are always sown during the boom years and vice versa
4) A long secular trend is composed of a number of highly cyclical and volatile counter trends which can obviate long run returns if not managed properly
The Informed Contrarian 