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To: Les H who wrote (83505)	1/14/2000 7:26:00 PM
From: Les H	Respond to of 86076

Speculators Going for Dot-coms Updated 12:05 AM ET January 14, 2000 By DAVE CARPENTER, AP Business Writer CHICAGO (AP) - Not long ago, gold futures and pork bellies were big lures for those trying to produce magic with their money. But in the Internet era, stocks have turned them into cold commodities among small investors. Speculators have switched their focus to dot-coms - a move reflected in this week's decision by Merrill Lynch & Co. to fold much of its commodities operations. "Since we have the hottest stock market since the 1920s, with the public just going nuts over new offerings, I can see why people would abandon the tried-and-true commodities," said Fred Bogart, head of the precious metals department for Republic Gold in New York. The large commodities exchanges in Chicago and New York contend that business is booming, as evidenced by banner years for volume in 1998 and 1999. But agricultural commodities as a percentage of business are fading fast and gold fever is a thing of the past. Financial markets now comprise 80 percent of volume at the Chicago Board of Trade, which was the world's No. 1 futures market until being surpassed last year by the all-electronic Eurex, a Swiss-German exchange based in Frankfurt. Bond futures are its top product now. Across the Loop at the Chicago Mercantile Exchange, long known for its pork belly trading, eurodollar futures rule. Agricultural products account for only 3 percent of volume, down dramatically from the mid-'80s when commodity speculating was hot. No wonder - commodity prices hit multiyear lows last year, with farm prices way down because of heavy production and large surpluses worldwide. "Commodities have fallen out of favor," said Matthew Ford, a metals analyst for U.S. Global Investors Inc. in San Antonio. "Partially it's the attraction of Internet stocks over the past three or four years. And commodities have been going through a cyclical decline." The sea change in investing has caused several large brokerages to pull out of commodities. The latest, Merrill Lynch, said Wednesday it would no longer maintain sales or floor-trading operations for metals and agricultural operations and will cut 150 jobs. The brokerages have found that earnings from traditional commodities can't match those from stock-trading profits - particularly with the costs higher at "open outcry" exchanges that have balked at going all-electronic and retained the yelling-and-waving system. Traditional commodities are somewhat a victim of good times. Speculators thrive on volatility and wild price swings; a long run of bumper crops, general prosperity and comparatively mild weather worldwide have made for what researcher Dick Smetana calls "very dull" commodities markets. In short, it's tougher to make a killing from pork bellies or soybeans than it used to be. "With these markets being very lethargic, these people have moved into stocks," said Smetana, research director for AgResource Co. in Chicago. "With the stock market having an all-time run, sure, why not?" Commodities insiders, however, warn that the retail investors who said bye-bye to bellies may regret the decision, especially when it comes to serving the individual investor. Traditional commodities need only a round of inflation or an inevitable upturn in prices to be attractive again, they say, predicting a strong year ahead. When that happens, the small investor who wants to buy commodities again may find it more difficult. "I think commodities are coming back and the small investors are going to be shut out because they won't have as easy access to it," said Jeffrey Christian, managing director of the CPM Group, a New York-based research and consulting firm.