Is a commodities fund a good idea now?

[whatchamacallit]

And if so, which?

[Squatch]

1. Absolutely. You should always buy securities when they're near all-time highs.

:eyes:

[whatchamacallit]

3. Two things:

1. These aren't exactly normal times
2. Thanks for not being a dick :sarcasm:

[Squatch]

5. You're welcome.

"1. These aren't exactly normal times"

And "not normal times" call for the abandonment of sound investment principals and frenzied clamoring for artificially expensive commodoties...is that it?

[whatchamacallit]

6. You're inspiring me to invest in pharmaceuticals

Take a fucking chill pill.

[Squatch]

7. Probably a wise decision. At least more wise than the premise of your OP

May I suggest tried-and-true blue chips like J and J?

In any case, good luck with your investment decisions. You might want to enlist the assistance of a trained broker and not solicit the advice of a motley bunch of anonymous internet posters for advice on your financial future.

[whatchamacallit]

8. I'll take your advice to not take your advice

:think:

[Squatch]

9. Good freaking idea!

:thumbsup:

[Warpy]

10. Good try

but bubbles are made by people who look at prices going up and think they're going to go up forever.

I think the real money pulled out of commodities last month when we saw a dip in them across the board. This is a bull trap created by suckers.

[whatchamacallit]

11. Hey gurus, sorry if I asked a stupid question

If I was a sucker I wouldn't bother asking the "good" folks of DU for their opinion. You can go back to your financial expert circle-jerk now.

[Warpy]

12. You can be angry if you want to be

but if we saved you from making a bad decision, it's all good.

[whatchamacallit]

13. Ha, maybe next time you can save me without calling me an asshole

:eyes:

[Warpy]

14. Excuse me?

Please point out exactly where this occurred.

[whatchamacallit]

15. It was implied not stated

If you want people to appreciate the "sagely wisdom" you regularly dispense in this forum, you guys might want to refine your style a bit.

[Warpy]

16. It was neither implied nor stated.

Goodbye.

[whatchamacallit]

17. Later Hot Shot

[YankmeCrankme]

18. You probably won't read this, but...

It was implied when you supported Squatch in his rude condescension of the OP, you did it twice. If you weren't agreeing with what Squatch said you should have responded directly to the original post and not Squatch's nasty posts.

Be a better sport about it when you're wrong.

[lib2DaBone]

25. Wish I would have asked a "stupid" question

Not to worry, they are just trying to save you from making a dumb mistake. I wish I would have asked the same question a few weeks ago. I bought Gold options the day before Good Friday Bear Sterns. hahahahah... that's funny huh? I could have bought a new Lexus instead.... can you say "ouch".

[notesdev]

2. No

the prices are artificially high already, the time to buy commodities has passed.

IMO - attach standard disclaimer here - the most attractive places to look to put money are in those businesses that do well during hard times, steering clear of things that may have unexpected price movements due to government action.

[whatchamacallit]

4. Thanks

:hi:

[idealista]

19. My take...we are in a long term commodity bull market

which has a long way to go, but will have its ups and downs along the way, quite sharp ups and downs. These cycles historically last 10-20 years, and this one started around 2001.

Wall Street does not like commodities to prosper. They like cheap raw materials. Is it any wonder that they keep saying "that's it, that's the top, all down from here" - all the talking heads on CNBC. It could go a lot higher, and for many years. But you don't want to get in right at an intermediate top, lose money, get discouraged, etc. The debasement of the dollar, and all these bailouts are just feeding that debasement, should ensure that prices will continue to rise. Commodity investments might only keep your purchasing power intact in the long run, but that is something, isn't it? To some extent, the run up has been just a return to reasonable prices, after a long period of depressed prices led to underinvestment in the resource sector, discouraged farmers, etc.. If you invest, scale in slowly and look for things that are off their highs, undervalued, "correcting".

I would look at Jim Rogers' funds RJA, RJI, RJN, RJZ, I presonally do not trust the gold and silver ETF's that I have heard of, but like CEF (Central Fund of Canada) which holds gold and silver, energy mutual funds like Icon Energy (ICENX) and Fidelity has funds for oil, natural gas, oil services. I guess energy has had a pretty big runup lately, but the precious metals are off their highs substantially. Ag stocks like fertilizers have been hit a little lately, and I have been nibbling at them. There's an AG ETF called MOO but don't know anything more about it.

Alternative energy is not a commodity of course but it's value is related to fuel prices. PBW is one clean energy fund.

When I first looked at the commodity picture about 3 years ago, it looked like there had been a lot of run-ups already and I wondered if it was too late to get in. At some point it WILL be too late to get in, but I've done very well on most of what I got 3 years ago! I was underwater for awhile on a lot of those things, but now way ahead, so I'm glad I was patient.

Just my opinion from studying this a great deal the last few years and putting my own savings at risk. Do your own research.

[AnneD]

22. I tend to think that we are in a

long term bull market for commodities too. Our dollar is weak and we are competing against the world for supplies and raw materials now. I don't think it has sunk in on WS yet. I think Jim Rogers is spot on.

I don't know about the other person posting-but I would give Warpy the benefit of the doubt. I have never known her to make nasty comments-I think it was taken the wrong way. It is a bit funny but usually we are very close if not identical in our economic outlooks. This is one of the few times we have ever diverged in our opinions. I know her to be a good egg.

I can't recommend anything in particular. outside of a few coins and lots of canned goods-I haven't invested much in the way of commidities in the past. I am doing some reading about ir now.

[On the Road]

20. Personally, I Find it Difficult to Invest

when a rally has been in progress for so long. Although they sometimes go on for years, once a trend has become common knowledge and drawing in nonspecialists, it increases the risks of a top.
For example, you have high-fliers like Saskatchewan Potash Corp (POT), which is currently selling at about 20 times what it worth four years ago:



POT has the feel of a internet stock at all-time high, and I would steer clear of it. If you are going to invest in commodities, I would suggest either:

1) Finding individual firms that are undervalued. There are still some such as Horsehead Holding (ZINC), with a PE of 5 and a PEG of 0.76:



Or 2) rather than commodities, a lot of established companies in other industries are very reasonably priced. Check the numbers on these:

KNL, PHG, CAE, AXP, INTC, TXN, EMC, UNH, KSS, CROX, ORCL

Even companies like Starbucks and Napster are down to realistic value levels now. Good luck investing.

[sbyte]

21. It is a stock pickers market.

Picking stocks is best if you have time to do some research and make informed decisions.
In some cases like life insurance you are limited to mutual funds.
For life insurance i'm in Ghaax, and having a bumpy ride.

More bumpy rides in commodities like precious metals---mto, xra... but good bets.

[gravity]

23. Commodities are likely in a bubble

One sign they are in a bubble is that people who don't normally invest in them are getting into them. They are the hot thing on Wall Street, like real estate was a few years ago, or tech stocks before that. Don't be fooled by the this time is different mantra.

The commodities trend is unsustainable especially with an economic slowdown. Commodities are suppose to go down as a slowing economy decreases demand. The only reason they are up is because people are putting money into it as a hedge against inflation. The ironic thing is that it causes more inflation, making commodities an even more attractive investment.

I would stay out of them because things will eventually get back to normal. The markets aren't healthy, and are fueled by speculation rather than solid fundamentals. Prices might rise in the short run, but it is essentially a ponzi scheme that will eventually fold on itself.

[Art_from_Ark]

30. But it is different this time

For one thing, there are more players in it this time. It's not the mom-and-pop investors who are driving this market-- it's new industrial powerhouses like India and China, and oil sheikdoms with petrodollar windfalls, that have a lot of fiat money to burn and see commodities as far better places to park that money, that are responsible for a large part of the action. Also, there is increasingly intense international competition for mineral resources, but most of the easy-to-find and easy-to-extract minerals have already been dug up. Some low-grade ores are profitable to extract at the current prices, but if these prices decline below a certain threshold, marginal mines will shut down, which will reduce supply.

[On the Road]

24. As Far as Which Funds to Invest In,

I can't recommend specifics, other than warning about leveraged funds, which go up and down faster than the underlying securities and have to be watched closely.

Apparently there are over 500 Exchange Traded Funds and similar instruments, some of which are based on commodities or sectors of the market like health care and biotech. Here are a few:



Several more:

RCI is based on a basket of "35 different commodities ranging from actively traded items like crude oil and gold to less sexy products like tin and wool (the primary wool futures exchange is in Australia). It has 44% of its exposure in energy, 35% in agriculture and 21% in metals."

CGW is a water-based commodities fund. GLD and SLV are gold and silver funds, and apparently there is a copper fund being created. But notice what

this guy says about investing in metals ETFs.

It's worth doing some googling. There are new ETFs being traded all the time, and they can be ordered just like any stock.

[On the Road]

26. Hey Reset Button,

One more reply (been looking over various ETFs myself lately).

Here's a site that tracks various ETFs with some discussion and context. It has an index along the right margin you can use to choose the category you're ineterested in. These funds are multiplying like rabbits, which is good if you like choice.

http://www.etftrends.com/

Categories
Actively Managed
Aerospace & Defense
Agriculture
Asia
Australia
Austria
Belgium
Biotechnology
Bonds
Brazil
Canada
China
Commodities
Conferences
Currency
Current Affairs
Dividends
Eastern Europe
Emerging Markets
Energy
ETF 101
ETF Book
ETF Performance Reports
Europe
Features
Financial
France
Germany
Global
Healthcare
Hong Kong
In the Press
Indexing
India
Infrastructure
Interviews
IPOs
Ireland
Italy
Japan
Large Caps
Latin America
Leisure & Entertainment
Long-Short
Malaysia
Material ETFs
Metals and Mining
Mexico
Microcap
Mid-Caps
Middle East
NASDAQ
Netherlands
New ETFs
Oil
Polls
Precious Metals
Rating Services
Real Estate
Retail and Consumer
Retirement
Russia
S&P 500
Singapore
Small-Caps
Socially Responsible
South Africa
South Korea
Spain
Sweden
Switzerland
Taiwan
Technology
Telecommunications
Thailand
Transportation
Trend Following
Turkey
United Kingdom
Utilities
Water

[whatchamacallit]

27. Thanks ribofunk, I'll reconnoiter

:thumbsup:

[Joanne98]

29. I love ETFs

[aquarius dawning]

28. I'd look at short term energy options that you can keep a close eye on and sell quickly if need be.

Rememeber, if you bought 10 oz of gold at $1,000/oz a month ago, you would have lost about $1,300 by now since it dropped to $872/oz. I almost did that but thought better of it. The speculators can make you or break you.

[Art_from_Ark]

31. You don't lose money until you sell at a loss

If you bought gold at $1000/oz, sure, you would have a paper loss, but it would not be an actual loss unless you sold at the current price. Gold is not something for daytraders-- if you get into gold, you have to have a long-term stragegy in mind, and you should only allocate money that you can afford to sit on for a while.

[whatchamacallit]

32. I'm kicking this cuz the fat lady isn't singing

funds like DBC are still on the go...