Commodity Indexing May Be Futile

Index investing in the commodities market hasn’t done so well, according to an article in The Wall Street Journal. The article cites data from Sam Stovall, chief investment strategist at CFRA Research, who said that since January 1970, investors who held the S&P 500 for at least 12 years would “always have had positive returns including dividends.” Commodity indexes, however, have not provided that type of return, says PNC investment strategist Amanda Agati, who argues… Read More

Oil Hedge Funds Struggling

Some of the biggest commodity hedge funds are shutting down despite a rally in raw materials during the past year, according to a recent article in The Wall Street Journal.   In 2017, the article reports, “closures of commodities hedge funds outnumbered launches for the first time in data going back to 2000 ” (data from Eurekahedge) and the trend has continued this year. Fund managers and traders say it’s happening because “investors who were… Read More

Big Oil and Big Tech Offer Different Opportunities for Investors

“There are two great times to make money in stock markets,” according to a recent article in The Wall Street Journal: “the post-crash rebound and the end-of-cycle excess. Oil and technology fit the pattern perfectly in the past two years.” But the sectors offer different opportunities for investors. Since January 2016, when oil prices hit a low, both the global oil and tech sectors have returned more than 80% (including dividends), “beating the wider market’s 53%… Read More

5 Commodity Picks for an Inflationary Environment

Along with its recent rate increase, the Fed has upgraded its growth and inflation forecasts—and this could bode well for commodity stocks, writes Validea CEO John Reese in in his article this week for Nasdaq. Reese cites a tighter labor market, stabilizing oil prices and slowing appreciation of the U.S. dollar as potential contributors to inflation, and cites AAII Journal data pointing to a strong outlook for commodity stocks: He identifies five commodity stocks worth… Read More

PIMCO: The Case for Commodities

The commodities boom that occurred in the late 90s and much of the 2000s may be over, but PIMCO thinks that commodities are still a very worthwhile investment going forward. “While we agree that future price appreciation won’t likely mirror the commodity ‘supercycle’ of double-digit annual growth from the late 1990s until the 2008 financial crisis, we do not believe this should necessarily imply a negative view on commodity returns,” PIMCO’s Nicholas Johnson and Greg… Read More

Grantham Likes Commodities

Commodity prices are headed higher over the long term, Jeremy Grantham says, and investors would be wise to make sure they are exposed to them — though not through futures contracts. “Risks abound, as always, in commodity investing. Despite them, Grantham advises, you should start getting in, ‘but keep a lot of dry powder,’” reports Forbes’ William Baldwin. “If there’s a crash, double up. If there’s no crash, add gradually to your positions over the… Read More