Commodity Prices and The Problem With Expert Opinions 📈

As part of my job, I talk to a lot of investors and because I’m in Houston, a lot of those conversations involve the energy markets. Towards the end of last year, when I was having conversations with energy experts, I found that they were very bullish for 2023. They were predicting that energy prices would go up, Russia was going to continue to invade Ukraine, supply would be restricted, and a variety of factors were going to combine to increase demand. And because of that, the general thesis was that energy prices would continue to rise faster than the rest of the market. 

See (as just one example): Goldman Sachs Expects a Bumper Year for Commodities in 2023.

Fast forward to the end of May and the commodity index was down about 12% while crude oil was down 13.5% and natural gas was down 48% at a time when the S&P was up roughly 9.7%.   

As I explain in this video, the point here isn’t to pick on commodities.  The goal is simply to highlight why jumping in and out of investments based on current events and expert opinions is not a viable long-term strategy.