Skip to main content

Chart of the day: commodities vs. shares

Chart of the day: Dow Jones - AIG commodity index (^DJC) versus the S&P 500 (^GSPC) and the Dow Jones Industrial Average (^DJI), on a two year timeframe.

As you can see from the enlarged version of the chart (click chart to expand), all three indices are down by 30-40 percent over the two year period (April 2007 - April 2009).

You'll note that while US shares entered their bear market at the end of 2007, commodities to continued to outperform stocks (by a wide margin) up until the summer of 2008, when commodities joined the "liquidation party" which hit most major asset markets worldwide. Both stocks and commodities have taken their fair share of abuse on the downside since.

The three indices have staged a bit of a rally off of their early March lows, with ^DJC and ^DJI leading the way in relative performance (now down the least in percentage terms) on this two-year chart.

However, if you flip to a one-year timeframe, the stock indices, ^DJI and ^GSPC, are shown to be outpacing the commodities, ^DJC, in terms of relative performance (with commodities showing a - 45% return over the period).

Some of the long/index commodity ETFs such as DBC, DJP, and DYY seem to have been forming a base and showing strength lately (Disclosure: no position in any of these at time of writing).

Will the leading commodity indexes begin to outperform shares, or do the major US stock averages still have some juice to the upside?
Labels:

Popular posts from this blog

Nasdaq credit rating junked.

S&P cut Nasdaq's credit rating to junk status citing debt burdens and its questionable strategy to buy a controlling interest in the London Stock Exchange. Financial Times reported that the exchange's counterparty credit & bank loan rating were lowered fromm BBB- (lowest investment grade rating) to BB+. The change will increase Nasdaq's borrowing costs should it wish to pursue aquisition targets. For an earlier look at the exchange consolidation trend that brought about Nasdaq's push for a stake in the LSE, please see "Exchange fever" .
Read more

Clean Money - John Rubino: Book review

Clean Money by John Rubino 274 pages. Hoboken, New Jersey John Wiley & Sons. 2009. 1st Edition. The bouyant stock market environment of the past several years is gone, and the financial wreckage of 2008 is still sharp in our minds as a new year starts to unfold. Given the recent across-the-board-declines in global stock markets (and most asset classes) that have left many investors shell-shocked, you might wonder if there is any good reason to consider the merits of a hot new investment theme, such as clean energy. However, we shouldn't be too hasty to write off all future stock investments. After all, the market declines of 2008 may continue into 2009, but they may also leave interesting investment opportunities in their wake. Which brings us to the subject of this review. John Rubino, author and editor of GreenStockInvesting.com , recently released a new book on renewable energy and clean-tech investing entitled, Clean Money: Picking Winners in the Green Tech Boom . In Clean ...
Read more

Jesse Livermore: How to Trade in Stocks (1940 Ed. E-book)

If you've been around markets for any length of time, you've probably heard of 20th century supertrader, Jesse Livermore . Today we're highlighting his rare 1940 work, How to Trade in Stocks (ebook, pdf). But first, a brief overview of Livermore's life and trading career (bio from Jesse Livermore's Wikipedia entry). "During his lifetime, Livermore gained and lost several multi-million dollar fortunes. Most notably, he was worth $3 million and $100 million after the 1907 and 1929 market crashes, respectively. He subsequently lost both fortunes. Apart from his success as a securities speculator, Livermore left traders a working philosophy for trading securities that emphasizes increasing the size of one's position as it goes in the right direction and cutting losses quickly. Ironically, Livermore sometimes did not follow his rules strictly. He claimed that lack of adherence to his own rules was the main reason for his losses after making his 1907 and...
Read more