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Strategies & Market Trends : Commodities - The Coming Bull Market

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To: Stephen O who wrote (1036)2/12/2002 4:12:07 AM
From: craig crawford  Read Replies (1) of 1643
 
Are Commodities Down So Low They Have Room to Grow?
nytimes.com

February 10, 2002

By JONATHAN FUERBRINGER

Stocks may be stalled right now, but at least they have recovered nicely from the sell-off after Sept. 11. Commodities have not. That may be an opportunity for adventurous investors.

There are two reasons for investors to be interested in commodities. One is that if the economy is set for a rebound, a rally could be in store because commodity prices are very low. The other is that commodities tend, over time, to move in the opposite direction from stocks, so they are a good way to bring diversification to a portfolio.

First, the rally. Since Sept. 11, the Goldman Sachs (news/quote) Commodity index is down 17 percent while the Dow Jones-AIG commodity index is off 11 percent. The difference exists because the Goldman index, which consists of 26 commodities, gives more weight to energy. The AIG index, not as well known, was unveiled in November with more than a decade of data; it has 20 energy, metal and food commodities. It has been lower than it is now less than 20 percent of the time since 1990.
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