Core Viewpoint - The article emphasizes the strategic role of commodities in hedging against inflation and diversifying risks in the context of increasing global macroeconomic uncertainty. It highlights the need for balanced asset allocation among stocks, bonds, and commodities, focusing on timing, selection, and position sizing [4][5]. Group 1: Timing and Economic Cycles - The Merrill Lynch Investment Clock is a classic framework for timing asset allocation, categorizing the economy into four phases: recovery, overheating, stagflation, and recession [6]. - Commodity performance varies across different economic cycles: during recovery, commodity prices remain low due to slow demand recovery; in overheating, strong demand leads to significant price increases; stagflation sees rising inflation with stagnant growth; and recession results in declining economic growth and rising bond prices [9][10]. - The relationship between risk assets and economic cycles indicates that stocks tend to lead economic changes, while commodities respond more synchronously or with a slight lag [11]. Group 2: Selection of Commodity Types - Commodities play a crucial role in combating inflation, as upstream raw material price fluctuations often exceed those of downstream products, providing a buffer against price increases [29]. - The article notes that inflation is often driven by significant price volatility in energy products, which can impact costs across various industries [30]. - Understanding the causes of inflation is essential: monetary phenomena can lead to nominal price increases, while supply-demand imbalances often result from constrained supply [32]. Group 3: Position Sizing and Risk Control - The volatility characteristics of stocks, bonds, and commodities differ, with commodities generally exhibiting higher volatility. In stable macro environments, these assets often move in different directions, allowing for risk mitigation through diversification [36]. - The article discusses the risks associated with inflationary changes, where rising inflation expectations can lead to a positive correlation between equity and commodity markets, complicating risk management strategies [39]. - It suggests that during periods of high volatility, conservative strategies may involve increasing bond allocations to stabilize the portfolio, while aggressive strategies might increase risk asset positions for higher returns [41]. Group 4: Reflection on Commodity Allocation - The article highlights the challenges of timing in the current economic environment, where traditional indicators may not accurately reflect the economic cycle due to structural changes [46]. - It points out that the demand for real estate-related commodities is being suppressed by high household leverage, and the economy is shifting towards a multi-faceted growth model driven by exports and consumption [48]. - The disparity in wealth distribution is noted as a factor that limits total demand for commodities, as lower-income households have less purchasing power compared to higher-income households [54][55].