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The Masters Hypothesis is the assertion that large investment inflows into long-only commodity index funds pushed prices far above fundamental value. In particular, the architect of the hypothesis—Michael Masters—suggests that long-only index funds were the cause of a massive increase in commodity prices that culminated in mid-2008. Since that time, there has been a veritable explosion in empirical research on commodity market bubbles and the Masters Hypothesis. In this research we carefully dissect the typology of this literature with particular care given to the distinction between financialization impacts and actual bubble impacts. After carefully defining the characteristics of a Masters-like bubble, simple empirical tests are conducted on the 12 agricultural markets included in the CFTC’s Supplemental Commitments of Traders data base. Price behavior consistent with the Masters Hypothesis is surprisingly difficult to find in the data. This is an important finding given the on-going policy debate and regulations proposed to limit speculative positions in these markets.


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