by The Short Side of Long
Chart 1: BRIC resource companies trading below book value right now…
Source: Merrill Lynch & StockCharts (edited by Short Side of Long)
The chart above is constructed with some copy and paste skills between CRB Index from Stock Charts and Merrill Lynch valuation data on BRIC resource companies. Majority of the time, stock investors claim it is difficult to invest into alternative assets like commodities because they do not pay an income nor can they be valued like the stock market.
Well, nothing is perfect but maybe the chart above can help one out in that department. One thing is for sure, commodities look very cheap relative to their peak in 2008 and even more so, especially relative to US equities! Confirming this low valuation is extremely underweight position on Metals & Mining sector by global fund managers. Instead, they are opting to participate in Biotech.
Chart 2: Fund managers extremely underweight Metals & Mining sector
Source: Merrill Lynch
