Commodity Follow Up

I was away almost all day on Friday participating in an inter-agency drill with the Fire Department. While I was away a ton of comments came in on the post about Jim Rogers recent comments. I’ll try to answer/weigh in on some of this stuff. TomK was first up with a quick look at a couple of the different index (made into ETFs) compositions and notes some big differences. He then offers up a reasonable assessment of what seems like poor returns more often than not (probably true) and some of the downsides to owning this space. Regardless of what you think of TomK’s comment there needs to be an introspective assessment of why you own commodities or why you want to buy commodities in the first place. My reason from the start has been to have a little bit of exposure, like 3% little, in something that will zig when the market zags. I think the easiest way to do this is with gold, this may not be the best way for a given time period, but it seems a little simpler and historically it does go up during external shocks (I don’t think the dip that started on February 27 was an external event). I would expect that if my commodity exposure is doing really well stocks may not be doing so hot. It does seem that the correlation to stocks has been doing some weird things over the year so maybe something has changed; we’ll see after the next external shock. Dismally Dave (http://www.dismally.com/) seems skeptical that a bull market in commodities could last until 2022....

Commodity Follow Up

I was away almost all day on Friday participating in an inter-agency drill with the Fire Department. While I was away a ton of comments came in on the post about Jim Rogers recent comments. I’ll try to answer/weigh in on some of this stuff. TomK was first up with a quick look at a couple of the different index (made into ETFs) compositions and notes some big differences. He then offers up a reasonable assessment of what seems like poor returns more often than not (probably true) and some of the downsides to owning this space. Regardless of what you think of TomK’s comment there needs to be an introspective assessment of why you own commodities or why you want to buy commodities in the first place. My reason from the start has been to have a little bit of exposure, like 3% little, in something that will zig when the market zags. I think the easiest way to do this is with gold, this may not be the best way for a given time period, but it seems a little simpler and historically it does go up during external shocks (I don’t think the dip that started on February 27 was an external event). I would expect that if my commodity exposure is doing really well stocks may not be doing so hot. It does seem that the correlation to stocks has been doing some weird things over the year so maybe something has changed; we’ll see after the next external shock. Dismally Dave (http://www.dismally.com/) seems skeptical that a bull market in commodities could last until 2022....

The Latest From Jim Rogers

FT Alphaville � Blog Archive � The stock is dead, long live commodities – and China This is the latest from Jimmy Rogers. There is nothing very new but it is still a good read. He pounds the table on China with no mention of a potential 30% decline that he said he’d be willing to ride out. I doubt that means he has changed his mind about the potential but still. He also said the commodity bull market could last until...