General
- Individual commodity prices have historically tended to move together over very long bull and bear cycles. These super-cycles have often lasted a decade or longer. We believe a new bull super-cycle began in 2020.
- Because of its typically low correlation with both stocks and bonds, we believe including an allocation to Commodities in a diversified portfolio should help reduce volatility and mitigate downside risk without sacrificing return.
Oil
- 2023 was a roller coaster for oil prices, as investors weighed supply concerns against the probability of an impending economic recession. Despite the volatility, oil’s long-term potential remains bright. We believe structural supply challenges and supply restraint by OPEC (Organization of the Petroleum Exporting Countries) will continue to drive performance in 2024.
- Moving forward, even the slightest amount of demand recovery should be supportive of oil prices.
Gold
- Gold prices were hampered by U.S. dollar strength and tight Federal Reserve monetary policy early in the year. Both headwinds, however, appear set to lose strength in 2024, which we expect should help gold prices move higher.
REITs (Real Estate Investment Trusts)
- REITs come in all shapes and sizes — a REIT that specializes in data centers differs wildly from a REIT that specializes in malls or office buildings — and returns can vary widely as a result.
- Monitoring the fundamentals, valuations, trends, and performance of these different REIT subsectors can provide opportunities for investors in REITs.