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Get Out of Commodities - Barron's [View article]
1) Capital Expansion: DEER, CAT, BUCY, JOY, etc. are enjoying phenomenal growth because farms and mines are buying their equipment as they expand production to try and meet demand.
2) During the strong dollar 10 year run in the 90's the commodity sector stagnated and companies contracted to try and stay alive. The deeper you push a cork underwater the higher the parabolic rise when the pressure is released. Adjusted for inflation, commodities are just now getting back to 100 year "norms", and the pop will take them higher.
3) The public and most funds have not yet participated in the commodity boom as evidenced by their total portfolio percent exposure to the sectors. We can't call it a bubble until we see greater participation by the public at large.
4) The mines, farming, and energy services sectors are the only sectors hiring at record levels, another sign that the top is not yet in.