Stanley Druckenmiller: Why I Prefer Commodities Over Stocks Right Now

Let me tell you something that might shock you. After 40 years of making money primarily in stocks and currencies, after building my reputation as an equity investor, after generating some of the best returns in hedge fund history through stock picking, I am now more interested in commodities than I have been at any point in my career. And I believe that over the next 5 to 10 years, commodities will dramatically outperform stocks in ways that most investors are completely unprepared for.

This is not a minor tactical shift. This is a fundamental change in how I am positioning my portfolio. And when I look at the setup in commodity markets today compared to equity markets, I see one of the most asymmetric opportunities I have encountered since I shorted the British pound in 1992.

The forces driving this opportunity are powerful. They are structural and they are largely being ignored by the mainstream investment community. Today I am going to explain exactly why I prefer commodities over stocks.

Right now I am going to walk you through the analysis that led me to this conclusion. I am going to show you the specific factors that make commodities so attractive and stocks so vulnerable. And I am going to give you a framework for thinking about this that you can apply to your own investment decisions.

But first, let me take you back to a moment that fundamentally shaped how I think about commodity cycles. It was 2001. The dotcom bubble had just burst.

Technology stocks had collapsed. Everyone was focused on the carnage in the NASDAQ. But while everyone was looking at tech, something else was happening that almost nobody was paying attention to.

Commodity prices were beginning a secular bull market that would last for over a decade. Oil was trading at $20 a barrel. It would eventually reach $147.

Copper was at 60 a pound. It would reach over $4. Gold was at $270 an ounce.

It would reach nearly 2,000 agricultural commodities, industrial metals, energy. Everything was beginning a massive move higher. I caught part of this move but not all of it.

And the reason I did not catch all of it was because I was still thinking in the old paradigm. I was still focused primarily on stocks. I recognized that commodities were attractive, but I did not fully appreciate the magnitude of what was happening.

I did not understand that we were entering a new super cycle driven by forces that would persist for years. That experience taught me something important. Commodity cycles are different from stock market cycles.

They are longer, they are more powerful, and they are driven by different forces. When a commodity super cycle begins, it can generate returns that dwarf what stocks produce over the same period. But these cycles are rare.

They happen maybe once or twice in an investing lifetime. And when they happen, you need to recognize them and position accordingly. I believe we are at the beginning of another commodity super cycle right now and the forces driving this cycle are even more powerful than what drove the 2000s.

Let me explain why. The first factor is what I call the great underinvestment. For the past decade, capital investment in commodity production has collapsed.

mining companies, oil and gas producers, agricultural businesses. They have all dramatically reduced their spending on exploration, development, and new production capacity. This underinvestment has created supply constraints that will take years to resolve.

Let me give you some numbers to illustrate the magnitude of this underinvestment. Global exploration spending in the mining industry peaked at around $21 billion in 2012. By 2020, it had fallen to less than $9 billion.

That is a decline of nearly 60%. And the spending that did occur was focused on existing deposits, not finding new ones. The pipeline of new projects has been virtually empty.

The same pattern occurred in oil and gas. After the 2014 oil price collapse, capital expenditure in the industry was slashed by nearly 50%. Shale producers who had been drilling aggressively suddenly faced pressure to generate free cash flow rather than grow production.

The major oil companies shifted their focus to returns rather than reserves. New project approvals dried up. This underinvestment did not happen by accident.

It happened because of a combination of factors. Low commodity prices for most of the 2010s made new projects on economic, environmental, social, and governance pressures made capital allocation to fossil fuels and mining politically difficult. Activist investors pushed companies to return cash to shareholders rather than invest in growth.

And the pandemic disrupted supply chains and delayed projects that were already in the pipeline. The result is that we enter the 2020s with a commodity supply infrastructure that is inadequate for the demand that is coming. And unlike stocks where new supply can be created relatively quickly by issuing shares, commodity supply takes years to develop, a new copper mine takes 7 to 10 years from discovery to production.

A new oil field takes 5 to seven years. This supply response lag means that shortages once they develop persist for extended periods. The second factor driving my preference for commodities is the demand side of the equation.

We are entering a period of structurally higher commodity demand driven by several mega trends that will persist for decades. The first mega trend is the energy transition. The shift from fossil fuels to renewable energy is the largest infrastructure project in human history.

And paradoxically, this green transition requires enormous quantities of commodities. Solar panels require silver, copper, and rare earths. Wind turbines require copper, zinc, and rare earths.

Electric vehicles require lithium, cobalt, nickel, copper, and rare earths. Battery storage requires all of the above, plus manganese and graphite. The numbers are staggering.

An electric vehicle requires four to six times more copper than a conventional vehicle. A single offshore wind turbine requires hundreds of tons of steel, copper, and rare earths. The International Energy Agency estimates that achieving net zero emissions by 2050 would require a six-fold increase in mineral demand from clean energy technologies.

Where is this supply going to come from? Not from current production capacity, not from projects already under development. The supply simply does not exist.

And creating it will take years of investment that has not even begun in many cases. The second mega trend is deg globalization and supply chain restructuring. For the past 30 years, companies optimized supply chains for efficiency.

They sourced materials from wherever was cheapest. They built factories in lowcost countries. They relied on just in time inventory management to minimize working capital.

That model is breaking down. The pandemic exposed its vulnerabilities. Geopolitical tensions between the United States and China are forcing companies to diversify supply chains.

National security concerns are driving reshoring of critical industries. Governments are stockpiling strategic commodities. All of this means more demand for commodities as supply chains are rebuilt and redundancy is added.

New factories require steel, copper, and concrete. New transportation infrastructure requires all of the above plus aluminum and other materials. Inventory rebuilding means higher demand for everything.

This is not a temporary adjustment. This is a structural shift in how the global economy operates. The third mega trend is infrastructure investment in developed economies.

The United States, Europe, Japan, they all have aging infrastructure that has been neglected for decades. Bridges need replacing. Electrical grids need upgrading.

Water systems need repair. Broadband networks need expansion. This deferred maintenance is now being addressed through massive government spending programs.

The Infrastructure Investment and Jobs Act in the United States alone allocates over $1 trillion for infrastructure spending. Europe has similar programs. China continues to invest heavily despite its economic challenges.

All of this spending translates directly into demand for commodities. Steel for bridges, copper for electrical grids, concrete for roads, aluminum for transmission lines. The fourth mega trend is urbanization and developing economies.

Despite the growth of the past few decades, billions of people still live in poverty without access to modern infrastructure. As these populations urbanize and develop, their demand for commodities will increase dramatically. India alone is expected to add 300 million people to its cities over the next 20 years.

Africa will add even more. Each of these new urban residents will require housing, transportation, electricity, and consumer goods, all of which require commodities. Now, let me contrast this commodity setup with what I see in stock markets.

Stocks have been the preferred asset class for most investors over the past decade, and for good reason. Returns have been exceptional. The S&P 500 has more than tripled since the 2012 lows technology.

Stocks have done even better. Investors who stayed fully invested in equities have been richly rewarded. But I believe this period of stock market dominance is ending.

And I see several factors that make stocks vulnerable relative to commodities going forward. The first vulnerability is valuation. Stock market valuations by almost any measure are elevated.

The price toearnings ratio of the S&P 500 is well above historical averages. The cycllically adjusted price toearnings ratio which smooths earnings over 10 years is in the top decile of historical readings. The market capitalization to GDP ratio which Warren Buffett has called the single best measure of valuation is near all-time highs.

These elevated valuations do not mean stocks will crash tomorrow. Markets can stay expensive for extended periods, but they do mean that expected returns from current levels are lower than historical averages. The starting point matters enormously for long-term returns.

And the starting point for stocks right now is expensive. Commodities, by contrast, are cheap. Despite recent gains in some areas, most commodity prices remain well below their inflation, adjusted peaks from previous cycles.

The ratio of commodity prices to stock prices is near multi-deade lows. This is exactly the opposite of what we saw at the beginning of the 2000's commodity super cycle when stocks were expensive after the dotcom bubble and commodities were cheap after years of neglect. The second vulnerability in stocks is concentration.

The S&P 500 is dominated by a handful of meggaap technology companies. The top 10 stocks represent over 30% of the index. The top seven, the so-called magnificent seven, represent an even larger share.

When you buy an S&P 500 index fund, you are not getting diversification across 500 companies. You are making a concentrated bet on a few technology giants. This concentration has been rewarded recently as these companies have outperformed.

But concentration that helps on the way up hurts on the way down. If technology stocks stumble, if regulation increases, if competition intensifies, if growth slows, the entire index gets dragged down and everyone holding passive index funds goes down with it. Commodities offer genuine diversification.

Different commodities are driven by different supply and demand dynamics. Oil moves based on OPEC decisions and economic growth. Copper moves based on infrastructure spending and electrification.

Gold moves based on monetary policy and safe haven demand. Agricultural commodities move based on weather and planning decisions. This diversity means commodity exposure provides genuine portfolio diversification, not the false diversification of an index dominated by a few stocks.

The third vulnerability in stocks is the interest rate environment. For the past 40 years, falling interest rates have been a tailwind for stock prices. Lower rates reduce the discount rate applied to future earnings, which increases present values.

Lower rates make borrowing cheaper, which boosts corporate profits. Lower rates make bonds less attractive, which drives money into stocks. But interest rates cannot fall forever.

They reached zero and even went negative in some countries. Now they are rising. The Federal Reserve has increased rates from near zero to over 5%.

Other central banks have followed. And while rates may come down from current levels, I do not believe we are going back to the zero interest rate world of the 2010s. Higer interest rates are a headwind for stocks.

They increase discount rates, which reduces valuations. They increase borrowing costs, which hurts profits. They make bonds more attractive which competes with stocks for capital.

The easy money environment that supercharged stock returns is over commodities. By contrast often benefit from the conditions that hurt stocks. Inflation which drives central banks to raise rates is typically positive for commodity prices.

Commodities are real assets that maintain purchasing power when paper currencies are being debased. In the 1970s, when inflation raged and stocks went nowhere in real terms, commodities delivered spectacular returns. The fourth vulnerability in stocks is what I call the earnings mirage.

Corporate profit margins have been at historically elevated levels for years. Companies have benefited from globalization, which reduced labor costs. They have benefited from low interest rates, which reduce financing costs.

They have benefited from technology which increased productivity. They have benefited from low commodity prices which reduced input costs. But all of these tailwinds are reversing.

Del globalization is increasing labor costs as supply chains are reshored. Higher interest rates are increasing financing costs. The easy productivity gains from technology may have been captured.

And as I have explained, commodity prices are likely to rise. significantly. When input costs rise and companies cannot fully pass them on to customers, profit margins compress, earnings disappoint, stock prices fall.

I believe we are in the early stages of this margin compression. The earnings that investors are extrapolating forward may prove optimistic. Now, let me talk about specific commodities and why they are attractive.

Not all commodities are created equal. Some have better supply demand fundamentals than others. Some have more compelling secular drivers.

Understanding these differences is essential to positioning a commodity portfolio. Copper is perhaps my favorite commodity right now. Copper is essential to the energy transition.

Every solar panel, every wind turbine, every electric vehicle, every charging station, every grid upgrade requires copper. There is no substitute. You cannot electrify the economy without massive quantities of copper and the supply situation is dire.

Copper org grades have been declining for decades as the easiest deposits have been depleted. New copper discoveries have become increasingly rare. The pipeline of new projects is thin and even projects that are approved face years of permitting construction and ramp up before they produce meaningful supply.

The copper market is already in deficit with demand exceeding supply. This deficit is projected to widen as demand from electrification accelerates while supply struggles to keep up. Some analysts project copper shortages of 10 million tons or more by 2035.

At current prices, this supply gap cannot be filled. Prices must rise dramatically to incentivize the investment needed to develop new supply. Oil and natural gas remain attractive despite the narrative that fossil fuels are dying.

The reality is that the energy transition will take decades. Even under the most aggressive decarbonization scenarios, oil and gas demand remains substantial through 2040 and beyond. The world still runs on hydrocarbons and it will for a long time.

Meanwhile, investment in new oil and gas supply has collapsed. The major oil companies are under pressure to return cash to shareholders rather than invest in growth. Shale producers have exhausted their best drilling locations and face declining well productivity.

OPEC has limited spare capacity. The result is a supply picture that is increasingly tight. Oil prices may not spike to $200 per bar rail, but they are likely to remain elevated well above the levels of the 2010s for an extended period.

Energy companies are generating enormous free cash flow at current prices. They are buying back stock, paying dividends, and strengthening balance sheets. The sector trades at low valuations despite the strong fundamentals.

Gold is another commodity I find attractive, though for different reasons. Gold is not an industrial commodity driven by supply and demand fundamentals. Gold is a monetary asset, a store of value, a hedge against currency debasement and financial system instability.

And the factors that drive gold demand are increasingly favorable. Government debt levels are at historic highs and still growing. Central banks have demonstrated they will print money to address crisis.

Currency debasement is accelerating. Geopolitical tensions are rising. Central banks in emerging markets are diversifying.

reserves away from dollars and into gold. Gold performs best during periods of negative real interest rates when the return on holding cash or bonds is less than inflation. We have just experienced several years of deeply negative real rates.

And while they have improved, I do not expect sustainably positive real rates given the debt levels governments are carrying. This environment is supportive for gold. Agricultural commodities deserve attention as well.

Food is the most essential commodity everyone needs to eat. And the global food system faces increasing challenges from climate change, water scarcity, soil degradation, and population growth. Fertilizer prices spiked in 2022 due to supply disruptions from the Russia Ukraine conflict.

While they have moderated, they remain elevated. Higher fertilizer costs mean higher food production costs, which ultimately mean higher food prices. Meanwhile, extreme weather events are becoming more frequent, creating supply shocks that drive price volatility.

I am not suggesting an apocalyptic food crisis is imminent. But I am suggesting that agricultural commodities deserve a place in a diversified portfolio. They provide inflation protection, diversification from financial assets, and exposure to the essential human need for food.

Let me now talk about how to actually implement a commodity allocation. There are several ways to gain commodity exposure, each with different characteristics. Physical commodities are impractical for most investors.

You cannot store barrels of oil or tons of copper in your garage. Gold and silver are exceptions. You can own physical precious metals and store them in a vault.

For investors who want direct ownership without counterparty risk, physical gold and silver make sense as part of a portfolio. Commodity futures provide direct exposure to commodity prices without physical ownership. But futures have complexities.

Roll costs when contracts expire can erode returns. Contango, where futures prices exceed spot prices, creates a headwind. Futures also require active management and an understanding of the mechanics.

Commodity ETFs provide accessible exposure for most investors. There are ETFs that track broad commodity indexes, specific commodity sectors, or individual commodities. These are easy to buy and sell, require no specialized knowledge, and provide transparent exposure.

The drawback is that some ETFs have tracking error or use futures rather than physical commodities, which introduces the roll cost issue. Commodity producing stocks offer another approach. Mining companies, oil and gas producers, agricultural companies.

These stocks provide exposure to commodity prices while also offering the potential for value creation through operational improvements, cost reduction and capital allocation. The drawback is that stocks have company specific risk separate from commodity prices. A poorly managed mining company can lose money even when copper prices are rising.

May preference is a combination of approaches. Physical gold and silver for a portion of precious metals exposure, diversified commodity ETFs for broad exposure, carefully selected commodity, producing stocks for exposure to specific sectors where I have conviction and can evaluate management quality. The allocation size depends on individual circumstances.

For most investors, commodities should be a meaningful allocation, perhaps 10 to 20% of a portfolio. This is enough to provide diversification benefits and capture potential outperformance, but not so much that a wrong call on commodities devastates the overall portfolio. Let me bring this all together and explain why I believe now is the time to shift toward commodities.

The setup I see today is rare. It happens maybe once or twice in an investing lifetime. The combination of structural underinvestment and supply, secular growth and demand from electrification and infrastructure, expensive stock market valuations and rising interest rates creates an environment where commodities should outperform stocks for an extended period.

This does not mean stocks will crash. This does not mean commodities will go up in a straight line. There will be volatility.

There will be periods when stocks outperform. There will be commodity corrections that shake out weak hands. Investing is never easy and the commodity trade will not be easy.

But the direction is clear to me. The fundamental factors favor commodities over stocks for the next 5 to 10 years. Investors who position for this shift will likely be rewarded.

Investors who remain fully allocated to stocks, especially expensive technology stocks, may be disappointed. I have been wrong before. I may be wrong again.

But the analysis I have shared today reflects my honest assessment of current conditions. It reflects decades of experience studying markets and cycles. And it reflects my willingness to change my approach when the facts change.

The facts have changed. The investment landscape that favored stocks for the past decade is shifting. A new regime is emerging that favors real assets over financial assets.

Commodities over stocks, tangible production over intangible technology. This is why I prefer commodities over stocks right now. Not because I am bearish on the economy, not because I think stocks will collapse, but because the riskreward favors commodities at this point in the cycle, because the supply demand dynamics are compelling, because the valuation gap is wide and because the structural forces driving commodity demand are powerful and persistent, the commodity super cycle is beginning.

The question is not whether it will happen. The question is whether you will be positioned to benefit from it. I intend to be positioned and I wanted to share this analysis with you so you can make your own informed decisions about how to position your portfolio for the years ahead.

This is the most compelling setup I have seen in commodities since the early 2000s. Do not let it pass you by. Let me share some additional insights that I think are important for understanding this opportunity and how to capitalize on it.

The first additional insight concerns timing. Commodity cycles move slowly at first. The early stages can be frustrating.

Prices may be volatile without making clear directional progress. Stocks may continue outperforming, making you question your thesis. This is normal.

It is part of how cycles work. The 2000's commodity super cycle did not announce itself with a bang. Oil crept higher from $20 to $30 to $40 before the broader investment community recognized what was happening.

Copper doubled, then doubled again, and only then did investors start talking about a new commodity era. By the time the trend was obvious to everyone, much of the easy money had been made. I believe we are in the early stages of the current cycle.

The obvious gains are still ahead, but patience is required. The factors I have described take time to play out. Supply constraints tighten gradually.

Demand growth accumulates over years. Price appreciation builds momentum as capital flows into the sector. Do not expect commodities to rocket higher next month.

Do expect commodities to significantly outperform stocks over the next 5 to 10 years. Position accordingly and be patient. The biggest gains come to those who can maintain conviction through the early choppy stages of a new cycle.

The second additional insight concerns the role of inflation in driving this cycle. I mentioned earlier that we may be entering a period of structurally higher inflation. Let me expand on why I believe this and what it means for commodities versus stocks.

For the past 40 years, we lived in a disinflationary world. Globalization suppressed wages by opening labor markets to billions of workers in emerging economies. Technology drove productivity gains that reduced costs.

Central banks gained credibility for maintaining price stability. Commodity prices remained tame due to adequate supply. All of these forces kept inflation low and stable.

Every one of these forces is now reversing. The globalization is increasing labor costs. The easy technology productivity gains may have been captured.

Central banks have demonstrated they will tolerate higher inflation to support employment and growth. And commodity supply is increasingly constrained. I am not predicting runaway inflation.

I am not predicting hyperinflation. But I am predicting that the 2% inflation we got used to in the 2010s is not coming back. 3 to 4% inflation may be the new normal and periodic spikes to five or 6% are likely when supply shocks hit.

This inflationary environment is poison for traditional stock and bond portfolios. Bonds lose purchasing power when inflation exceeds their yield. Stocks face margin pressure when input costs rise faster than prices.

The 6040 portfolio that served investors well for decades may struggle in this new regime. Commodities, by contrast, are the beneficiaries of inflation. They are the input costs that drive inflation in the first place.

When commodity prices rise, commodity investors profit directly. Commodities are the hedge against the purchasing power erosion that threatens traditional portfolios. The third additional insight concerns portfolio construction.

I have argued that commodities should be a meaningful allocation. Let me be more specific about what that means and how to think about it. For most investors, I would suggest a commodity allocation of 15 to 20% of total portfolio.

This is enough to make a meaningful difference if commodities outperform, but not so much that you are making a reckless bet. Diversification still matters. Stocks, bonds, and other assets should still comprise the majority of most portfolios.

Within the commodity allocation, diversification also matters. I would suggest roughly equal exposure to energy, metals, and agriculture with perhaps an overweight to copper and precious metals given their specific drivers. This diversification protects against sector specific risks while maintaining exposure to the broad commodity theme.

The allocation should be funded primarily by reducing exposure to the most vulnerable parts of the stock portfolio. I would reduce exposure to highly valued technology stocks to companies with weak pricing power to businesses dependent on low interest rates. These are the areas most at risk in the environment I am describing.

Reallocating from these areas to commodities improves the overall riskreward of the portfolio. The fourth additional insight concerns the risks to this thesis. I have made a strong case for commodities over stocks, but I could be wrong.

Let me describe the scenarios where this thesis fails. The first risk is a severe recession. If the global economy enters a deep recession, commodity demand would fall sharply.

Prices could drop even with constrained supply. This happened in 2008 when the financial crisis sent oil from 140 $7 to $32 in a matter of months. Recessions are bad for commodities.

The second risk is a technology breakthrough that changes the supplier demand equation. If someone discovers a way to produce copper or lithium cheaply and abundantly, supply constraints would ease. If battery technology evolves to require fewer critical minerals, demand would be lower than projected.

Technology can disrupt commodity markets just as it disrupts other industries. The third risk is that I am wrong about inflation. If central banks successfully return inflation to 2% on a sustained basis, the inflationary tailwind for commodities disappears.

stocks might continue outperforming as they have during previous low inflation periods. The fourth risk is timing. Even if the thesis is ultimately correct, being early can be painful if stocks continue outperforming for another 2 or 3 years before the cycle turns.

Investors in commodities will suffer opportunity cost. Being right eventually is cold comfort if you lose clients or lose conviction before the thesis plays out. I acknowledge these risks.

I have considered them carefully and I still believe the probability weighted expected return favors commodities over stocks from current levels. But investing is not about certainty. It is about probabilities and even high probability bets sometimes fail.

The fifth additional insight concerns what to watch to confirm or refute this thesis. I am not making a set it and forget it recommendation. I am making a conditional recommendation based on my current analysis.

If the facts change, I will change my mind. The signals I am watching include inventory levels in key commodities. If copper inventories start building instead of drawing, that would challenge the supply constraint thesis.

I am watching capital expenditure announcements from mining and energy companies. If investment picks up dramatically, future supply would be better than I expect. I am watching inflation data to see if the structurally higher inflation thesis is confirmed.

I am watching interest rates to see if central banks return to zero or if elevated rates persist. If these signals suggest my thesis is wrong, I will adjust. The goal is not to be right.

The goal is to make money. And making money sometimes requires admitting you were wrong and changing course. I have done this many times in my career.

I will do it again if necessary. The sixth additional insight concerns the psychological challenge of this positioning recommending commodities over stocks goes against the consensus. Most investors are conditioned to view stocks as the primary wealth building asset.

They have been rewarded for this view for the past decade asking them to shift toward commodities feels uncomfortable. This discomfort is actually evidence in favor of the thesis. The best investment opportunities often feel uncomfortable.

They require going against the crowd. They require making a bet that most people think is wrong. If everyone already agreed that commodities would outperform, the opportunity would be arbitrageed away.

I have made uncomfortable bets throughout my career. Shorting the pound in 1992 was uncomfortable. The consensus was that Britain would defend the erm.

Getting long technology in the 1990s was uncomfortable when traditional value investors dominated. These uncomfortable bets generated some of my best returns. The commodity over stocks thesis is uncomfortable.

That is a feature, not a bug. The returns from comfortable positions are already captured in current prices. The returns from uncomfortable positions are still available.

Let me also address the question of how long this cycle might last. Commodity super cycles historically run for 10 to 15 years. The 2000 cycle began around 2001 and ended around 2011 or 2012.

The previous cycle ran through much of the 1970s. These are not short-term trades. They are secular trends that persist through economic cycles and market volatility.

If the current cycle began around 2020, which is my rough estimate, we could be looking at outperformance persisting through 2030 or even beyond. That is a long time, but it is consistent with historical patterns and with the structural forces I've described. Supply constraints take years to resolve.

Demand growth from electrification and infrastructure will persist for decades. These are not factors that will reverse in a year or two. This long duration has implications for how to think about the position.

It is not a trade to put on and take off based on short-term signals. It is a strategic allocation to maintain through volatility. There will be corrections.

There will be periods when stocks rally and commodities lag. The temptation to abandon the position will be strong during these periods. Resist it.

The cycle is long. stay positioned for the duration. Finally, let me share why this matters for the average investor.

I have spent my career managing institutional money, making bets measured in billions of dollars. But the principles apply regardless of portfolio size. A retiree with $500,000 faces the same strategic questions as a pension fund with $5 billion.

Where should capital be allocated for the best risk? adjusted returns over the coming years. The answer, I believe, is that commodities deserve a larger allocation than most investors currently have.

The typical portfolio is heavily weighted towards stocks, especially US stocks, especially technology stocks. This concentration worked brilliantly for the past decade. It is unlikely to work as well for the next decade.

Diversifying into commodities is not about making a speculative bet. It is about improving portfolio balance for the environment we are entering. It is about protecting against inflation.

It is about gaining exposure to sectors with favorable supply demand dynamics. It is about reducing concentration in expensive crowded trades. This is prudent portfolio management.

It is the kind of adjustment that seems obvious in hindsight but feels difficult in the moment. Most investors will not make it. They will stay fully allocated to stocks until it is too late.

They will shift to commodities after most of the gains have occurred. Do not be most investors. The opportunity is here.

The analysis supports it. The timing is favorable. The question is whether you will act on it or let it pass.

I prefer commodities over stocks right now because the fundamental setup favors commodities because valuations favor commodities because the macro environment favors commodities and because most investors are underweight commodities creating room for capital to flow into the sector as the thesis becomes more widely recognized. This is my view. This is my positioning and this is what I wanted to share with you today so you can make your own informed decisions about how to navigate the investment landscape ahead.

The next decade will reward those who adapt to changing conditions. It will punish those who cling to strategies that worked in the past but will not work in the future. Commodities over stocks is the adaptation I am making.

I encourage you to consider whether it makes sense for you as well.