From The Globe and Mail's November 21 interview with Bill Miller:
A lot of investors in Canada are obsessed with mining and energy. Why have you been a skeptic on commodities?
Well, we were wrong. There's two things. One of them is the secular case and the other's a cyclical case. Secularly, we have not been fans of commodities, broadly defined. That's because the empirical evidence and theory, both together, would indicate that commodity prices decline in real terms over time.
Extractive companies, by and large, don't earn their cost of capital over the cycle. They can be cyclically attractive-buy them when the cycle's bad and sell them when the cycle peaks---but generally speaking, they tend to be trading vehicles, versus investing vehicles. In trading vehicles, you've got to be right on both sides. We prefer things that we can invest in for five, 10, 15 years and earn large amounts of money.
The question now is, are we at a cyclical peak, or, as the bulls would argue, is it a secular change-that is, energy prices and copper prices and lead prices and wheat prices will now not decline in real terms from here. I think the jury's out on that.
You're still a skeptic on the peak-oil theory?
I'm not a skeptic on the fact that ultimately, production of oil and gas will peak and will go down. I'm a decided skeptic on the notion that we're close to that. This is one of those things you have in energy markets, certainly, and in gold, certainly where you have people who are believers. And they'll get an idea like Hubbert's peak in their heads and then any evidence which is against it, they'll throw out and any evidence which supports it, they are in favour of it.
Cambridge Energy Research just published another field-by-field analysis globally, where they're still making the point that production is going to keep increasing, and you're probably at the earliest 10 years away from a peak.