45 of 53 people found the following review helpful:
1.0 out of 5 stars
Should be retitled "Commodities Bear", August 27, 2006
This review is from: Commodities Rising: The Reality Behind the Hype and How To Really Profit in the Commodities Market (Hardcover)
This guy completely rebuffs Jim Rogers' thesis of a new bull market in commodities. Someone is very wrong here and I'll put my money on Rogers being right. Given his assocation with Goldman Sachs, who many believe is now a quasi-government operation, used in order to "manage" the price of everything from the S&P index to the gold price, this book is a disinformation project masquerading as a "rational" and evenhanded analysis of the commodities markets. Much of the information on the growing demand for commodities in China is presented in such a way as to make the reader believe that becauase the average Chinese worker makes less than $2 a day, that, demand for raw materials in China is overstated. He assumes that it would be the average Chinese citizen as the ultimate consumer of these raw materials, and therefore, he says , since they cannot afford to buy " a copper plated" frying pan on $2 a day, that demand for copper would be overstated. The fact of the matter is that the Chinese, have committed to massive PUBLIC infrastructure projects for the next 20 years, that will require huge amounts of raw materials, most of which will need to be imported as China has a very limited amount of raw materials domestically. The author argues that China is becoming a net EXPORTER of raw materials!!! This is simply not true. China is now scavaging the globe trying to buy up whole raw material companies, in Canada, the US, Australia and Africa to meet their projected needs for the next 20 years. One recent example of this was their bid for Unocal, which was subsequently rejected via defacto veto by the Bush administration.
In addition, the US FED and CB's, because of the massive public and private debt obligations will be forced to massively inflate over the next 10 tears or so, or they will suffer a deflationary worldwide depression; therefore, the only prescription will be for continued worldwide growth with relatively high inflation. This fact alone should carry most commodities to multi-year highs, not to mention overall macroeconomic supply and demand.
This author argues that worldwide commodity supplies are catching up with demand, and that may be somewhat true on a short term basis, however, and a macro long term basis , there is no way supplies can meet demand based upon at leat 2 billion NEW consumers who are slated to enter the global middle class in the next 20 years.Even though raw materials may be a smaller component of overall production in the 21st century, there are a fixed amount of raw materials, which at best can be exracted on a linear basis. while worldwide demand will increase geometrically.
I would advise any reader of this book to read Jim Rogers' book and think for themselves.
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12 of 13 people found the following review helpful:
4.0 out of 5 stars
Excellent Discussion, Not-so-terrific investment ideas (4.5*), August 17, 2006
This review is from: Commodities Rising: The Reality Behind the Hype and How To Really Profit in the Commodities Market (Hardcover)
In a very pithy, interesting discussion, the author discusses the various aspects of commodities, focusing significantly to dismiss some of the "hype" associated with it. The author reinforces the diversification and hedging benefits of commodities, the need to treat it as a separate asset class and asserts that a lot of money can be made, if done correctly. Point taken. However, the book doesn't really directly address the second portion of the title (how to profit..). No specific investment vehicles or companies or trading strategies are discussed in detail. Limited mention of ETFs and mutual funds is mentioned (no specifics though). Perhaps, the question was supposed to abstract and the discussions at a fairly-high level. If that is the intent, the author succeeds in that (that minor issue takes away 0.5 star from this book!). If you are looking for an excellent discussion on commodities and an intelligent discussion on what the future may hold for it, this is a good book; however, if you are looking for specific recommendations, this book will disappoint you.
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3 of 3 people found the following review helpful:
4.0 out of 5 stars
commodities, March 21, 2008
This review is from: Commodities Rising: The Reality Behind the Hype and How To Really Profit in the Commodities Market (Hardcover)
I noticed this book on the shelf at the local bookstore and bought it. It seems surprising that for a book I found right at the bookstore, and on a currently hot topic, it only currently ranks in about the 400,000 range.
The fact that Mr. Christian frequently appears on financialsense.com news hour certainly contributed toward my interest in the book, since I consider financialsense the world's premiere source for informed business news and analysis. (although I haven't developed any strong feelings one way or another about Mr. Christian's commentary to-date.)
As another reviewer pointed out, the book is comparatively bearish compared to most commentary from those involved with commodities. (establishment "bubblevision" commentators who aren't personally involved in commodities tend to be much more pessimistic about them, of course. By the way, I just read Fleckenstein's book on Alan Greenspan and I highly recommend it. He indicates in there that he was the originator of the term "bubblevision". A man far ahead of his time!)
Now, back to the book. I would say it is not bearish, but rather neutral during a time when most in the field are highly bullish. So compared to the prevailing mood he looks bearish.
Certainly in the time since his book came out commodities have far outpaced his expectations.
I would guess that a couple of his mistakes were:
1). Not anticipating the huge runup in petroleum prices, he was unaware of the dampening effect that high energy costs would have on economic viability of new and/or expanded mining operations.
2). He doesn't seem to have been very cognizant of the inflationary impact that monetary expansion would have on commodities prices.
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That being said, the tone of his book is one of him having been astute in the last couple decades in carefully assessing supply and demand trends, allowing him to accurately assess trends in commodities prices. I don't have independent knowledge of this stuff to judge how valid that is, but his assertions strike me as largely credible.
One thing he puts a lot of emphasis on is the shoddy nature of much of the analysis that is performed on commodities- particularly as it relates to inaccurate and incomplete assessment of supply and demand. He points out a number of flaws in some analyses, such as not accounting for all sources of supply such as recycled material, sales from stockpiles, etc., as well as double-counting of material that moves back and forth across national boundaries at different points in the process.
Overall I found his book a worthwhile contribution, and considering his long and extensive career analyzing commodities, I am inclined to believe that for the most part he knows what he is talking about.
The most useful thing I got out of the book is a feeling that I need to view the "facts" provided in analyses and commentary about commodities with a healthy dose of skepticism.
I don't know that his book will trigger any change in my investment philosophy, however. I am heavily invested in:
1). large oil companies. As a value investor I usually invest in very small companies, because value criteria usually show those as being far better bargains than the big companies. But in the oil business that is not true, you find large oil companies like Conoco selling at PE's of 6-8 and enterprise value to BOE ratios of 12 or so and you won't find any better bargains among the small fossil fuel companies.
2). Junior gold exploration companies who have established that they have substantial high-grade gold deposit(s) on their property in politically low-risk jurisdictions (primarily eastern Canada), and which sell at attractive price to gold in the ground ratios (typically $10-50 dollar per ounce of gold) There has been much commentary about how absurdly cheap the junior mineral exploration companies currently are relative to larger mining companies and the commodity prices themselves.
As another reviewer pointed out, this book primarily discusses the commodities themselves, and does not delve into actual investment alternatives or approaches. That was fine for me because the former was more what I was looking to learn about from this book.
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