big numbers and Jim Rogers

0361--9602--1361--9670
3361--9529--5517--2520

P. 23
I have not sat down and done a study of this phenomenon. In fact, I always used to recommend it as a dissertation topic for ambitious graduate students, but the hard data has been coming in. Banister and an associate actually began their analysis of the commodities and equities markets by asking their clients, “Do commodity-serving companies deserve your capital?” They concluded that, while stocks for most companies went down during a commodity bull market, companies connected to the commodities business – their focus was manufactures of heavy machinery used in agriculture, such as John Deere and Caterpillar - were likely to do quite well. That, too, would be explained by my theory. When oil prices were making record highs in 2004, the stock pickers on CNBC were shaking their heads about how awful the market was – except for oil and other energy – related companies, which, of course, was exactly what happened during the last bear market for stocks (and commodities bull) in the 1970s. While the stock market was going nowhere generally, there were some great success stories among oil and oil service companies.

P.29
The signal that a bull market is over is a series of fundamental changes in the way we live. In 1972, for example, the Club of Rome predicted that the world would soon run out of natural resources. Oil went from $3 a barrel to $34, and the prognosticators were publishing charts with oil prices heading for $100 by the mid-80s. President Jimmy Carter soon had Americans wearing sweaters, turning down their thermostats, buying smaller cars, and cursing OPEC. European nations began using nuclear power plants instead of oil to generated electricity, further decreasing oil demand. And then oil from new deposits discovered in the North Sea and Alaska began to come on line, increasing supply. By 1978, oil production had exceeded demand for the first time in years – a major fundamental shift, which should have signaled the end of the bull market. (Prices, however, continued to rise for two more years, proving that human beings can make markets move in strange ways. The last leg of a bull market always ends in hysteria; the last leg of a bear market always end in panic.) If scientists discover that orange juice causes cancer, the news will not result in a simple correction in the orange juice market; it will be the death of it.
When you see headlines about the discovery of new oil reserves or wind farms popping up outside major cities, when you see new mines coming on line, when you discover that stockpiles of all kinds of commodities are rising, those are fundamental shifts – then it’s time to get your money out of commodities. The bull market will be over.

P.33
To be sure, investing in anything has its risks. A lot of Ph.D.s in economics lost money in the dot-com debacle, too. (On New Year’s Day in 2002, the Wall Street Journal published its annual survey of economists for the upcoming year. Although the economy had been sagging for almost a year, not one of the 55 economists thought that it was in for a serious decline. One hundred percent were wrong – and proof that Ph.D. economists are as prone to mob psychology as the rest of us.)

--- "Hot Commodities", Jim Rogers