arawak

Why I Don't Own Commodities

Assessing the health of a sector based only on past performance is a dangerous and foolhardy way to invest. There's a reality out there that shines like the sun -- the days of the Westerner eating the lion's share of the pie are soon to be a thing of the past. Europe and America have enjoyed consuming the bulk of the world's resources for decades but that indulgence, my little piggies, is coming to an end. As the delta in living standards between West and the billions elsewhere (India, China) narrows, even ever so slightly, we're going to find that the world just isn't big enough.

I remember even 15 years ago in school it was quoted that "if everyone lived with the per capita resource consumption of the US, we would need 3.5 Earths." Barring huge breakthroughs in science (rapid development of fusion reactors), living standards in the US are going to decline as everyone else rightfully comes to the table for a bite.

A previous poster mentioned offshore oil and the tar sands of Canada. We wouldn't even be CONSIDERING these oil sources if we were not desperate for every last drop of the black petro we can find. Tar sands are what they sound like -- several steps below the worst crap crude that comes out of Venezuela. Turning it into gasoline is going to require many more refining steps and extra energy resulting in ... higher oil prices!

Commodities may flap around here and there but the sky is the limit for the next several decades.