Vehicles for Investing: Commodities or Commodity Companies?

by John Stephenson

Vehicles For Investing: Commodities Or Commodity Companies? Splash image

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.

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.

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John Stephenson is a senior vice president and portfolio manager with First Asset Investment Management Inc.


Walter from Texas posted over 3 years ago:

A nice and informative article. It brings practicality to a confusing investment arena. I have been debating how to get some commodity representation into my portfolio and now have a practical method of initiating it.

Richard from Ohio posted over 3 years ago:

I concur with Walter. A half dozen commodity producer ETFs or a link to them would have been helpful to the interested, uninitiated reader.

James from South Carolina posted over 3 years ago:

The article is not esp. helpful since, as mentioned by others, it does not provide info on which ETFs would be most appropriate. There are dozens of commodity ETFs, but which would be the best that actually buy companies rather than futures? Article is a bit cute rather than down to earth.

Lary from Colorado posted over 3 years ago:

The key to most successful commodities investing involves the use of ETF's. The article was sorely lacking in not discussing the available commodity ETF's, their components and performance.

Andrew from Florida posted over 3 years ago:

This is an informative article to say the least. But I would like to finish the book mentioned!

Warren from Tennessee posted over 2 years ago:

Give me a stock or ETF you would recommend.


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R Vasavada from California posted 8 months ago:

Excellent article! I wish one of Schwab experts would pick up on it and talk about specific commodities and their producers. Fllow up with some examples of actual investing in them.

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