phillips49

Are Current Commodity Prices as High as Compared with Previous Years?

Just to see how what I suggested might look, I pulled some data from inflation.com. They have a table of the average annual oil prices adjusted for inflation through 2007.
The average of 30 years of inflation adjusted oil prices from 1978 through 2007 was $42.70/bbl. The 2008 average was $98.66, so our current price is >100% higher than the 30 year inflation adusted average. That's quite a little bit different from taking the highest high.

Are Current Commodity Prices as High as Compared with Previous Years?

I love numbers, you can do just about anything you want with them. Take the highest-high, multiply by inflation and compare it to current price. I don't think that approach really tells us if commodities are fairly valued today. Maybe the average of the inflation adjusted yearly averages compared to the current year average would be more accurate.

In Light of Peak Oil, Financial Diversification Is a Bad Idea

Someone really ought to speak to T.Boone Pickens about diverification. I mean really his hedge fund is very unbalanced. I mean he's only turned a $1 in $28 in last 7 years. He really should have stuck with the S&P and made 3.5% like smart money does!

In Light of Peak Oil, Financial Diversification Is a Bad Idea

pearl2k,

I doubt that military consumption of fuel in support of IRAQ will make much of a difference in global supply/demand.

On a different note. The problems in this region go back 1000's of years. In my opinion, when America leaves, (if we can ever make a gracefull exit) the entire region will once again de-stablize into fighting factions and civil war. History is on the side of my opinion in that regard. Any de-stabilization in this region will push the price of oil out of sight. Dissidents believe in reign or ruin. This is demonstarated on a smaller scale in Nigeria and it's problems with rebels. The US gets about 10% of it's imported oil from Nigeria.

In Light of Peak Oil, Financial Diversification Is a Bad Idea

WOW!!! Good article!!! It is almost like talking to myself, (not that I'm that smart) except written much better. To me investing 101 says invest in companies that:
1. Have product that is demand
2. Have high long term growth potential
3. Have high profit potential
4. Have the ability to pass along cost of business increases
5. Have great cash flow
6. Have a moat such as high cost of entry into the business segment

For the last several years, natural resources and energy have met these criteria because a growing world NEEDS these things.

Coal needs to be added to the list of investment considerations along with the miners, mining equipment, infrastructure and ag. It's all good!!!

Some say these companies are high risk because of the link to commodities. Right now though Financials, Consumer and Tech are all looking higher risk to me. I add Tech because it is consumer driven and the consumer is at risk.