Agricultural Commodities Revisited

For the past few years our firm has been systematically overweighting commodities as a secular asset allocation decision. More recently we have trimmed our energy exposure and increased our exposure to agricultural commodities. The last time I wrote about this shift was back on December 5th. Since then our core agricultural commodity holding is up over 20% and is up 13% already in 2008, providing a great counterweight to falling equity prices:


In an environment of falling real interest rates and rising inflation owning "real assets" is absolutely critical. We feel that even after the recent run up in food prices this trend still has some legs. If you are looking for a place to park money that you've pulled out of equities this area deserves a look.