Real Asset News Daily Index (RANDI)
The Real Asset News Daily Index (RANDI) is a bespoke/proprietary index of commodities designed to reveal pricing pressure across the critical inputs for production in our modern global economy. This index is an arithmetic average computed daily across X commodities in the following sectors: industrial metals, precious metals, energy, agriculture, and other processed commodities.
Why make a new index?
As long-term investors, we have observed that forecasting future cash flows and finding the appropriate discounted costs of capital is preciously reliant on a good forecast for forward real and nominal interest rates. These are in turn dependent on an accurate estimate of inflation expectations.
Inflation measurements from the government are inherently backward looking. Many of the commonly used commodity indexes are overly dependent on agriculture and energy prices and are therefore subject to higher short-term volatility. Put another way, these indexes typically do not provide a good read on pricing pressures facing manufacturers in the longer term.
After a multi-decade period of disinflation and a full ten years of experimental monetary measures, we believe long-term inflation has troughed and is likely to remain impolitely persistent for much longer than investors or political leaders expect. This has a direct impact on investment decisions. It is our goal to help our readers better inform their decisions going forward.