On the web and cable business TV there has been generally a lot of talk on the issue of the commodity supercycle. When you Google the item you get many reports pro and con. The balance of opinion does suggest that commodities are due for a pullback or worse. I don't think anybody knows for sure including me. If the commodity cycle is ending and rolling over it should happen over a relatively long period of time (read: years).
Just for reference here is a chart of the TSX going back a couple of years:
As you can see the TSX peaked out over 14,000 almost 2 years ago. It is currently around 12,500. So far that is about a 10% decline. The TSX has some 237 companies within the index according to their web-site. I am not ready to get into the commodity breakout in the index - suffice to say commodities have a high weighting in the TSX. My rule of thumb has been that commodities and financials make up 75% of the index.
I tend to agree with the folks that think the commodity supercycle is rolling over. This is based on the research that I have seen but also on anecdotal evidence (empty chinese cities). In the last 2-3 years I have been investing more in the US. If commodities are heading lower the CDN dollar should fall over time (many years). There should be a downward bias for the CDN dollar all other things being equal.
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