The supposed commodity super cycle went from boom to bust so fast that the two pretty much blurred into one another. It was a host of things, including the fragility of the cycle, predicated, as it was, on debt and scarcity owing to years of underinvestment.
All of those things have now gone pfffft, as Satyajit Das points out in a new piece. He argues the cycle is over; it was never very real in the first place; and it’s not coming back soon.
Commodities also proved to be yet another "crowded trade". Investors had created highly correlated positions; for example, simultaneously increasing exposure to equities, resources companies, emerging markets, commodities and corporate credit spreads on mining companies. The trades were essentially the same "bet". Correlation between investments has gone to near one in the [global financial crisis] and the assumption of diversification has proved almost as elusive as the promise of the commodity super cycle.
Mark Twain once described a mine as "a hole in the ground with a liar standing next to it". The end of the commodity price cycle has revealed that standing next to the liar is a crowd of hapless bankers, analysts and investors.