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Jim Letourneau's Blog

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The Commodity Bull Lives

Looking back on 2009, it is pretty clear that purveyors of doom-filled commentary were missing out on some major gains. Thursday's year-end print for the S&P TSX Composite Index (TSX) of 11,746 compares well to the year's low of 7480 set back in March. In the kitty phase of the market's recovery there were few market bulls but steady gains off the lows led to a lion-sized dead cat bounce of 57%.

However, over the last decade, the TSX has gained a paltry 40%. This makes for a paltry compound annual rate of return of 3.39%. Factor in the average 2.6% management expense ratio (MER) for equity and balanced funds and there isn't much left in the way of retirement extras for mutual fund investors. Especially when you consider that the majority of Canadian mutual funds underperform the TSX.

The table below from CNBC.com shows commodity price gains (and losses) from the March 2009 low and since the end of 1999.

Commodities performance chart

One takeaway from the above table is that returns on commodities over the last decade have crushed the returns provided by the S&P TSX Composite Index. The commodity bull market lives.

If you want to learn more about investing in commodity related stocks, check out these upcoming conferences and of course my newsletter.


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