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 James B. Rogers, author of "Adventure Capitalist" and "Hot Commodities"
JOI: Have commodity prices peaked? If not, where are we in the commodities cycle?
James Rogers (Rogers): The secular bull market has years to go. Who knows [where we are in the cycle]? It depends on if/when we get new supply and/or economic collapse. History would indicate we might be 45–50 percent of the way to the end, but that is just what happened before.
JOI: Which areas of the commodities market do you believe will be most attractive over the next few years?
Rogers: Agriculture.
JOI: Have index investors and other asset allocators been a significant factor driving the increase in commodities prices?
Rogers: They have been "a factor," yes, just as they were in the huge stock bull market of the 1980s and 1990s. "Significant"? No; supply and demand have been terribly out of balance, which is why commodities have risen. Little would have happened had supply and demand not been out of balance.
JOI: How much of the average investor's portfolio should commodities represent?
Rogers: It depends on what they know—anywhere from 0 to 100 percent.
JOI: Are commodity-producing equities a good replacement for commodity futures exposure?
Rogers: The Yale/Wharton study [Gorton and Rouwehorst] showed that commodities themselves have outperformed commodity stocks by 300 percent over the past few decades. A great stock-picker might well outperform commodities, but no one has found her yet.
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