Calling the end to the decade-long commodity run was a popular thing to do in 2012. At one point in June, the average commodity had cratered – by 27% from June 2011 – prompting a chorus of comparisons to the peak and crash of 2008.
The main claim was that 2008 was the true secular peak and what we have witnessed since has been a false rally. The same pundits who proffered this opinion alleged that the 2012 price swoon was a last gasp, an aftershock of sorts, the final mark that the commodity move, which had started in 1999, was now dead. Since egg becomes nobody’s face, and Wall Street strategists are sensitive to such mishaps, the race was on to call the peak in commodities.
Unconvinced that we were looking at a commodity corpse, we spent oodles of energy in the back half of 2012 pleading with clients to maintain an appropriate perspective. In June, we drafted a list of seven markers that had been useful indicators of the ends of past commodity bull runs – some dating as far back as the early 1800s.
The markers are highly relevant for 2013, as the commodity bull run will be 14 years old and that much closer to its ultimate finish.