Wednesday, December 06, 2006

Investing?? In Commodities?


An interesting case for "investing" directly into commodities from Jim Rogers of Quantum Fund fame, and despite my best efforts, I cannot think of the slightest connection between commodities, Jimbo, and any hot looking woman, so no gratuitous photographs for this post (Hey, what about an aesthetically pleasing lass who has obviously done some commodities investing of her own... who cares if her name isn't Emmanuelle Chriqui. Yeah that works) . :-)
Investing in the Commodities Market

SNIP:
Whenever I mention commodities in public, someone always points out that we now live in a high-tech world where natural resources will never be as valuable as they were when we had a smokestack economy. But if you read your history you’ll discover that technological advances are as old as history itself: The introduction of the sleek and beautiful Yankee clipper ship dazzled the world in the mid-nineteenth century, loaded with cargo, sailing down the trade winds at 20 knots and more, averaging more than 400 miles in 24 hours and able to make it from U.S. ports around Cape Horn to Hong Kong in 80 days; within a decade, the clippers had been replaced by the steamship, no faster but not dependent on wind power; and before long the next big thing in transport had taken over, the railroad, which, of course, was the original Internet - and prices in the commodities market still went up.==>>MORE<<==

I've never thought of commodities as an "investment" vehicle, apart from rare cases such as Crude Oil as we coast down the wrong side of Hubberts Peak. I've always considered them as a trading vehicle... find an opportunity, exploit it, and get the hell out... just like any normal business. I can make an excellent case of commodities over stocks in this regard.

But an investment? An interesting case put forth by Jimbo, but I don't buy it. An investment to me is something you can stash in the bottom drawer (or the scrip, or bill of sale anyway) and forget about for a while, like a Google IPO or those Goldman Sachs shares bought last century.

The long term charts of most commodities don't inspire me to do this, but hey, anything to keep the liquidity up is fine by me.

7 comments:

adam said...

hey, that's my pal, lol.

Avalonian said...

...and I'll bet you have several new "best friends" hehehehe She is gorgeous!

Hey, how big is that Patrick Ewing? He's enormous!!!! At 5'7" those types of guys get me rummaging in the attic for my old 3" "cuban heels" lol

Avalonian said...

Adam,

You'd better get yourself listed listed as Emmanuelle Chriqui "obsessor" like I have here:

http://guiltyobsession.com/emmanuelle-chriqui-home-page/

LOL

You wouldn't believe the hits I'm getting... all interested in commodities right? Riiiiiggght!

:-)

NO DooDahs said...

I wouldn't characterize anything bought in the financial markets as an investment, unless the intention was to never sell; so really only income purchases qualify in my definition. But that's my definition.

Even in the vernacular, where most people say "investment" when I think they really mean "trading with a multi-year horizon," commodity *futures contracts* wouldn't qualify as an investment. Unless you intend to take physical delivery, you have a built-in sale date for every contract! To hold for the long term means rotating out of older contracts and into newer contracts, which is trading IMO.

Pardon my ignorance, if I commit any, but I'm still learning about commodities futures. Think about gold for a moment. If you bought gold in January 1995, in the form of bullion coins from a dealer, and sold today, you would have what looked like a nice profit. Annualized, it would be only about 4% or so after bid/ask. Now, what would have happened if you had instead bought one gold futures contract, and rotated it through for almost twelve years? Back-adjusted, I would think most of your gain went away. Now consider the commissions and slippage for all those trades … Some commodities look like long-term losers for holding the futures over 12 years. Natural gas, anyone?

adam said...

it was absurd how big ewing was. The other couple athletes there look pretty normal sized. And actually seemed relatively normal in my 3 seconds of interaction. Ewing kind of like he seems on TV, lol.

Sloan exactly like on TV. And nice. I better not sign up, I think she goes to all these MV events (her boyfriend is the brother of toddo's fiance).

Avalonian said...

Bill,

Exactly, then there is the contango to have to overcome in many commodities contracts. eg NG right out to Jan' 08

It just doesn't make sense.

Adam,

Yup, better pass on that idea.

But rest assured, we are all fully envious out here. :)

Blogger for peace said...

If you are researching various commodities, you can access Wall Street Journal, zacks, mornignstar etc for free with a netpass from: http://news.congoo.com

Andrew Tobias blogged about this last week, I thought it was a great tip!