The CRB rallied strongly as the economy strengthened. The CRB peaked close to 370 in April-May of 2011.
The CRB began sliding in 2011 as the economy weakened. As of this writing it stands at close to 305, about 16% below the April-May peak.
Commodities follow closely the trend of the business cycle. They strengthen when the economy improves. They decline when the business cycle weakens (click on the chart to enlarge it).
In my The Peter Dag Portfolio (and in my free videos on www.peterdag.com) I show that commodity sensitive stocks follow closely the pattern of the CRB.
Caterpillar (CAT), for instance, has followed the pattern of the CRB very closely since late 2009.
The point is that investors should try to recognize first the trend of the business cycle and then develop a strategy consistent with historical patterns. It may not be a good strategy to buy commodity sensitive stocks when the economy weakens and commodities decline.
More details in my The Peter Dag Portfolio and my free educational videos on www.peterdag.com.
George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
2009 Market Timer of the Year by Timer Digest
To find out more about my in depth views of the markets and my strategy just visit our website https://www.peterdag.com/ where you can subscribe to The Peter Dag Portfolio. You can also call me at 1-800-833-2782 to discuss your specific investment portfolio.
Disclaimer.The content on this site is provided as general information only and should not be taken as investment advice nor is it a recommendation to buy or sell any financial instrument. Actions you undertake as a consequence of any analysis, opinion or advertisement on this site are your sole responsibility.
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