dcstrade (92.95)

Forgotten Commodities

September 07, 2011 – Comments (2) | RELATED TICKERS: RJA , PSLV.DL

If you think you know how to find a bargain in the markets, please leave a comment on my video about trying to find the ultimate bargain between commodities, stock and real estate indices:

http://www.youtube.com/watch?v=YIuwBemEuew

This is the result of a weekend project. My goal was to take an unbiased look at commodities to determine what, if anything, is underpriced. The method was to remove the U.S. dollar as the basis for these prices by looking at ratios with respect to many other commodities, the Dow Jones, and a nominal U.S. real estate index. Data was compiled from the CRB Commodity Yearbook, Wikinvest, and a Shiller home price study found here:
http://www.econ.yale.edu/~shiller/data.htm

Data is through August 2011. Earliest data available for each commodity (sorry the years don't show up in the video too well, it's the later of the two for each pairing):
Wheat, Corn, Sugar, Gold: 1901
Cattle: 1904
Silver, Copper: 1910
Soybeans: 1913
Cotton: 1915
Petroleum: 1945
Coffee: 1948
Real Estate: 1953

I now own RJA, an agricultural commodity index (or will soon), based on this study.