This column was originally published on RealMoney on Jan. 16 at 3:00 p.m. ET. It's being republished as a bonus for TheStreet.com readers. For more information about subscribing to RealMoney, please
However, that correlation may be significantly attributable to the general rising trend in inflation. With the consumer price index up roughly 40% since late '91, some of the price appreciation in both the SPX and CRB Index is owed to the higher cost of just about everything.
With the almost four-year offset, the correlation between the SPX and the CRB Index is a much stronger +0.60 over this period. Is that meaningful or just coincidence? (Or is it what pioneering psychoanalyst Carl Jung would call a "meaningful coincidence?") Perhaps there is some significance in the four-year offset. If so, however, the four- and-a-half-year upside run in commodities through mid-2006 would portend a continuation of the stock market's rise until mid-2010. This is not a definitive refutation of the "falling commodities are bad for stocks" thesis. I offer it not so much because it's valuable on its own, but because an objective look at the history of the CRB Index does not support that thesis and indeed, if anything, shows a slight bias in the data to the contrary.