You don’t hear much about commodity investing these days.
As I talked about last week in this space, long-term commodity futures investing has turned out to be a sucker’s bet, leading generally to long-term losses.
But that doesn’t mean nothing’s going on in the world of commodity futures. In fact, the rapid evolution of commodity futures trading has continued, but it’s happening quietly, in those rarefied circles within which commodity futures talk used to be contained.
I have a story on one of those evolutions on Page 48, in which I discuss the developments of what some of us once knew as FCStone, which then became INTL FCStone, and is now becoming StoneX. It’s a long-time player in the commodity futures markets space and has been gobbling up market share vacated by mainstream investment firms and consolidating smaller focused rivals since 2008. They’re developing digital tools to serve the ag commodities and other commodities businesses, from farmers to marketers to processors to distributors.
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It’s just one of the developments you won’t hear about much in the mainstream financial media because it’s returning to a space for specialists, experts and the experienced.
That reminds me of the early years of the 2000s, before anybody recognized that a commodity boom was on. Most markets had few, but deeply experienced, traders and analysts.
Then famed investor Jim Rogers came out and popularized a little known strand of markets analysis that had found evidence that stock market and commodity market cycles alternated, and a long-term commodity bull market was probably underway.
After initial skepticism and dismissal, commodity prices began roaring and all of a sudden Wall Street investors piled into commodity investing, especially index investing, and began preaching the value of commodities futures investing.
Soon every investing stable was trotting out bold analysis for the future direction of commodities, implying you should invest with them in order to get in on the action.
That phenomenon took a hit in 2008, when commodities collapsed along with equities, and in the aftermath new requirements pushed some of the mainstream phonies out of the commodities space.
Then most of the remaining mainstreamers walked away after the commodities boom ended in 2014, and commodities investing proved to be mainly a way to make inexperienced analysts and traders look like incompetent fools.
It’s quieter out there today, but many of the same people I spoke with pre-2005 are still there, and still know what they’re doing.
Others have retired.
And new analysts and traders are entering without any starry-eyed ideas that the pot at the end of the rainbow has been found, and that they need to leap fast to get their share.
The commodity futures world doesn’t get the attention and headlines it used to.
That’s not necessarily a bad thing.
