Commodities - Shocked Back to Reality

The graph shows the 1982 Dow Jones Index (blue) and the 1999 Rogers Raw Materials Index (orange).

Jim Rogers identified the impending bull market shift from equities to commodities back in 1998. He set up his own index beginning then, set to 1,000.

The indices are plotted along the current time line of the Rogers Index. The Dow Jones index is 16 years and 3 months behind the Current Time Line. The October 2008 Rogers Index aligns with June 1992 on the Dow Jones Index.

The Rogers Index fell from 5,718 to 3,138 from June 2008 to October 2008. In June 2008 the Rogers Index was advancing at a Compounded Annual Growth Rate (CAGR) of 20.5%. The dramatic 45% sell-off reduced the CAGR to 12.5%. The Dow Jones Index had a CAGR of 15.3% from 1982-2000.

So while the Commodity sell-off was dramatic enough to erase three years of gains, it is still not far off the two-decade return that equities produced. Commodities are known for volatility - and the second-half of their bull market should have some more twists and turns in the road.