A cautionary article in the Economist on investing in commodities. So much money has flowed into commodity investments recently that the dynamic that held in the past no longer exists and those who are counting on it to continue will likely be disappointed.
There have been numerous studies showing how commodity futures in the past would have been fantastic diversifiers to a stock and bond portfolio. In fact commodity futures have also shown significant real returns in the past. Considering that commodities should track to inflation in the long run (almost by definition), one should wonder why there has been a premium on futures in the past, and whether, now that orders of magnitude more money is flowing into them, that premium should stick around.
This entry was posted by David on October 23, 2006 at 10:28 am, and is filed under Investing. Follow any responses to this post through RSS 2.0.Responses are currently closed, but you can trackback from your own site.