NEW YORK ( TheStreet) -- It's been several years since commodities ruled the market roost, but, according to a new poll of users of TheStreet, commodities will outperform equities in 2010. Commodity returns were dominant in 2007, but those outsized gains gave way to the commodity bubble of 2008 -- and, ever since, equity markets have outshined commodities. In 2009, the S&P 500 Index had a great run, up 24%. Still, over the second half of the year, commodities rebounded too. The rebound has led to predictions from some market experts that commodities will beat equities in 2010 after a three-year hiatus. Goldman Sachs ( GS), for one, is predicting that the flagship S&P/GSCI commodities index will rise 17.5% in 2010. Goldman predicts that the GSCI sub-sectors of energy (25%) and metals (15%) will lead returns for the commodities index this year. Given all this, we asked TheStreet readers: Will 2010 be another year to play a broad commodities rebound, or will the smart investor have to choose carefully among commodities to pull profits in 2010? The question for investors can be placed in simple exchange-traded fund investing terms. Which is the better 2010 bet, the SPDR S&P 500 ( SPY) or the iShares S&P GSCI Commodity-Index Trust ( GSG)? Furthermore, if Goldman Sach's energy outperformance call is correct, is 2010 the year to invest in the SPDR Energy Select Sector ( XLE)?
The results were illuminating: While survey takers broadly agreed that commodities will outperform equities -- only 4% of survey respondents said equities will be a better 2010 play -- the real survey surprise was that investors see recent commodity slow-grower agriculture as the sleeper pick for 2010. While 35% of survey takers said commodities will outperform equities, the farm was virtually on its heels in the survey, with 33% of survey takers betting that agriculture will be the smartest pick for commodities investors in 2010. In the first four trading days of 2010, energy was still the winner among S&P/GSCI index sub-sectors, with a gain over 4%. Agriculture, however, was up close to 1.3% to start the week. Agriculture underperformed the other commodities sub-sectors last year -- with the exception of livestock -- with an annualized gain of 3.8%. Over the past three- and five-year periods, through Jan. 7, though, the S&P GSCI agriculture sub-sector has fared better than energy. While energy was down 9% in the past three-year period, agriculture was only down 1.8%. While energy was down 6.3% over the past five years, agriculture managed a 1.9% gain. What's more, the International Monetary Fund is predicting a 3.1% global expansion in 2010, which will push food prices higher -- and food commodities have already been pushing higher in recent months. Societe Generale is predicting an 11% spike for the corn bushel average price in 2010. Only precious metals have outshined commodities in one-year, three-year, and five-year periods. Yet metals weren't nearly as popular as agriculture in the survey, garnering only 16% of the votes for best commodity play in 2010.
The commodities situation in 2009 was a rising-tide-lifts-all-boats story. It may have seemed like the only commodity that existed for investors was gold, which kept pushing higher and higher, but the general commodities recovery has included industrial metals and agriculture. The only sub-sector of the S&P GSCI that had negative returns last year was livestock, and even livestock showed a quarterly positive return of 3% in the fourth quarter of 2009. In the end, it looks like playing the energy or broad commodity ETFs may not be the best bet. If you're a bull on agriculture, like our survey takers, you may have to look to the handful of agriculture-focused ETFs, such as the PowerShares DB Agriculture ETF ( DBA). The PowerShares DBA ETF was up more than 1% in 2010's first four trading days: in other words, rev up that tractor and get ready to reap the soy. -- Reported by Eric Rosenbaum in New York. >>See our new stock quote page. Follow TheStreet.com on Twitter and become a fan on Facebook.