Jeremy Grantham is a well-known "bubble-burster"– who has spent decades studying popular delusions and the madness of crowds– with a mean-reversion mindsight. It's therefore shocking that he has declared the multi-year commodity market rally to be in a "paradigm shift" (as opposed to an asset class due for mean reversion.) Admittedly, the timing of this April essay couldn't have been worse….

Without offering any opinion on his arguments, Specs may find the essay interesting– and especially Specs who cut their teeth over the past 100 years with a doctrine that real commodity prices must decline over time.

Ken Drees adds:

Generally, when you hear "paradigm shift" or "this time it's different, it's under bubble froth conditions" or "well on the path of", Grantham is fleshing out the conditions and making the bull case even though we have had a temporary bubble top in 08. This research seems pretty straight forward and understandable based on current conditions.

I wonder what the path of least resist is for oil– seems like most people already stopped crying about 4 dollar gas.


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