vand wrote:I largely agree with Grantham except his idea that commodities are in anything like a half-bubble. It may seem that way having watched oil go from $20 to $80 since the first lockdown, but over a longer term oil and other commoodities have gone absolutely nowhere, and the ratio of commodities to other assets has fallen to all time lows. The bump up in 2021 was a mere blip if you look at something like the CRB/Dow ratio.
I would rather hold some broad commodities than trying to short growth stocks, as the economic factors that cause people to sell growth will be the factors that drive them into real assets.
Commodities aren't a good place to park your money over the long term as they tend to lose purchasing power over time, but they can have runs where they gain hugely. I think a good phrase to describe the current bubble is the "everything but commodities bubble"
I have held JP Morgan Natural Resources and it's predecessors since 1970, when it was Ebor Commodity Trust. It has provided several annual subscriptions to my PEP and ISA by taking profit when it had risen to a suitable level. Usually it then sank back to a lower level as the commodity cycle waxed and waned. Originally a substantial dividend payer, they essentially vanished, but have reappeared in recent years.
The approach of holding a fund or trust which is commodity oriented makes sense to me. The major miners and oil producers are easy to hold, but it is the rag bag of other commodities, from Palm oil to uranium, which can be better held via a collective investment. Holding physical commodities other than via a derivative of some sort is for the birds.
TJH