The rootin’-tootin’ rally for stocks is not letting up so far in the new year. But the buzz about the market looking overheated hasn’t gone away either.
And so the hunt for other promising investments continues as well.
Take a look at commodities, suggests Josh “The Reformed Broker” Brown. Crude oil, metals, wheat and the like are worth checking out, in part because inflation will be one of 2018’s big themes, says Brown, the CEO at Ritholtz Wealth Management.
“If this is the year that the ‘I’ word becomes less absurd a premise, commodities could make it three in a row to the upside,” he writes at his blog.
The Bloomberg Commodity Index
has just scored a second straight up year in a row. Even so, the S&P 500 has been outshining material things for seven years.
“This is an unbelievable run of negative relative returns,” Brown says. “The space has been left for dead, both in terms of assets in related funds/market caps as well as in terms of sentiment.”
Yet there was a “furious rally” for commodities into the close of 2017, he adds. That gauge for commodities and related ETFs
has been adding to its advance this week, as shown in the chart below.
If this corner of the financial universe delivers a third annual gain in a row in 2018, big investors will notice, according to Brown.
“That’s about the point where you see asset allocators begin to show some interest again. It’s been a while,” he writes.