In the tutorial handout I have the solution to one of the questions (14i) says both 'commodities offer significant real returns' and 'there is no strong historical evidence for a real return from commodities'. Surely both can't be correct?
yes, this is one of those things that was historically perceived to be true and then eventually the evidence is questioned. The idea is that intuitively commodities should have real returns because they are real assets that should theoretically go up in price along with everything else. Beef goes up in the supermarket, so surely the price of cattle does too? Stands to reason, right? But when people actually started to see if this intuitively obvious idea was in fact true, they found that it was very difficult to find emperical evidence to back it up. It's one of those things that feels like it should be true but we haven't got much evidence for it - whole civilisations are founded on less ;-) Good luck! John
