Vehicles for Investing: Commodities or Commodity Companies?
The global economic order is rapidly changing—creating tremendous opportunities for commodity investors.
Demand for commodities continues to grow despite the fact that much of the world is still licking its wounds from the global economic collapse of 2008–2009. Western governments have tried to paper over the problem of sluggish consumer demand by implementing stimulus programs intended to jump-start infrastructure spending—for example, the Cash for Clunkers rebate scheme aimed at the beleaguered American car industry. But despite these efforts, the collective credit cards of the U.S. and much of Europe remain completely maxed out.
In this article
- Dumb Luck
- Go Along to Get Along
- Hot Commodities
- Ready to Rock ‘n’ Roll?
- Managing the Future
- Company Man
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The wheezing Western recovery aside, demand for commodities remains strong. Commodities are a big deal, much bigger than most people realize. Primary commodities, such as iron ore and copper, account for 25% of global trade. Supply has been sidelined during the global economic collapse, creating a near perfect storm for investors—a situation that is likely to last for many more years. As the basic feedstock for industrial and urban growth, commodities can be red hot even when stocks and bonds are ice cold. And with their direct link to the drivers of inflation, commodity investments are a heaven-sent hedge against rising prices.
Despite these benefits, commodities tend to be grossly underrepresented in most investment portfolios. To be a total investor is to know something about commodities—especially with a commodity bull market washing up on our shores. Yet commodities are a mystery to many investors: Most haven’t a clue how to begin.
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