“....To begin, we were interviewed yesterday by our friend Ms. Sarah Eisen, of Bloomberg Television, and were asked about “Commodities as an asset class.” We wanted to be quite clear: commodities are not an asset class! Repeat, commodities ARE NOT an asset class. When stocks move higher, barring some truly exogenous circumstance for one company relative to another, they all move higher; and when stocks move lower in a bearish trend, they all move lower. Stocks are an asset class. One can say the same for the debt markets, for when interest rates are trending higher, all bonds… corporate and government… will trend downward, just as they shall all trend higher in prices as rates are trending down. Debt securities are an asset class. Property too is an asset class; but commodities? The correlation between cocoa and crude is tenuous at best; the correlation between copper and corn is perhaps even more so, while the correlation between cotton and cocoa is even more tenuous. If commodities all move higher together it is an anomaly, not a common event, and when they all move lower it is almost always because some exogenous event in the capital markets causes the margin clerks to run amuck and “sell everything” in a wild frenzied dash. The fundamentals that drive cocoa higher will have little if any effect upon copper production, and the things that drive corn prices higher will tend, on balance, to drive livestock prices down. As our little German grandmother would have said, “Asset class, schmaset class! Hah!”