Some thoughts on Commodities--especially oil !

The TSE 300 Index has gone almost straight up since last Spring mainly because the price of a single commodity went up.

But keep in mind that in the commodity world prices can come down just as fast as they went up. Also when the price of any coommdity has a big rise in price the conditions change quite quickly; substitutes are found; marginal properties are brought into production; the higher price sours demand.

Analysts and investors, start to look at commodity stocks in terms of earnings and conclude that the P?E ratio is still reasonable; this is an eroneous and dangerous path to take. Commodity stocks are mainly rated on book value and cash flow.