Over the next 10 years what do you think will do best, equities or commodities ?

jon3001

jamesd wrote: »

You can get leverage that way but I don't think that it compares well to the leverage of a company growing its business with share prices that reflect many years of expected profit.

Please do provide data that you think proves me wrong.

What are you asking for exactly? Some data that commodity returns can compare well to those of equities? There are well published indices that you can track using ETCs.

I use DJ-AIG 3 Month Forward total return index. Here's the historical data going back to 1991: (2nd tab)
http://www.djindexes.com/mdsidx/downloads/xlspages/aigci/djaig_fwd_3MSS_full_hist.xls

At 2/1/1991 the index was 100. At 3/3/2008 the index was 798.027. I make that an annualised compound gain of over 12%. Not bad, surely?

purch

[FONT=Arial, Helvetica, sans-serif]This article I saw on Bloomberg written by William Bi and Feiwen Rong covers the potential demand which China could exert on the soft commodity markets.[/FONT]
[FONT=Arial, Helvetica, sans-serif][/FONT]
[FONT=Arial, Helvetica, sans-serif]Higher imports, aimed at reining in 11-year high inflation, may further support a rally in global prices of many agricultural commodities to records, raising costs for food companies, including Kellogg Co., the largest U.S. cereal maker, and PT Indofood Sukses Makmur, the world's biggest instant-noodle maker. [/FONT]
[FONT=Arial, Helvetica, sans-serif]China will have ``no problem'' meeting its demand for grains and vegetable oils, Nie Zhenbang, director of the State Grain Administration, told reporters at the National People's Congress which opened in Beijing today.

The government will ``diligently implement'' temporary price-control measures on basic items, the NDRC statement said. China's largest producers and sellers of staple foods must consult authorities before raising prices by set limits, the commission said Jan. 16.[/FONT]
[FONT=Arial, Helvetica, sans-serif]Grain Limits[/FONT]
[FONT=Arial, Helvetica, sans-serif]China's Premier Wen Jiabao called for a halt to ``reckless expansion'' of corn-processing capacity in his report to the parliament. He was referring to use of corn for producing sugar, starch and biofuel.

``We must strictly control industrial use of grain and grain exports,'' Wen said.

The Ministry of Finance pledged to increase government funding to support agricultural production by 44.2 billion yuan ($6.2 billion) from last year, or 17 percent.[/FONT]
[FONT=Arial, Helvetica, sans-serif]Moreover, tax ``leverage'' will be used to support production of grain, vegetable oil, meat, dairy and vegetables, while imports and the sales of state reserves will help to stabilize supplies and prices, the ministry said.

Soybean import tariffs will stay at a reduced level until the end of September, it said in a separate statement on its Web site. The tariffs had previously been set at 1 percent until March 31, compared with 3 percent before Oct. 1[/FONT]

wombat42_2

Please someone explain how forward ETFs seem to have suddenly fallen behind ordinary ETFs ?
http://www.etfsecurities.com/en/securities/etfs_performance.asp

jon3001

wombat42 wrote: »

Please someone explain how forward ETFs seem to have suddenly fallen behind ordinary ETFs ?
http://www.etfsecurities.com/en/securities/etfs_performance.asp

Are you interested in performance over the next 10 years or next 10 weeks?

Short answer: I don't know - ask a trader. It's all supply/demand driven. Have you read anything about tight supply/demand conditions over the next few months that might ease off thereafter?

purch

Please someone explain how forward ETFs seem to have suddenly fallen behind ordinary ETFs ?

The shape of the curve in most commodities has shifted, especially as more speculative positions are built.

The ETF's are a derivative of Index, which is a derivative of the Futures market.

Things change.................rapidly in the Commodity Market.

jon3001

You have an interest in agriculture atm. I don't usually keep an eye on these things since I'm investing in a broad index for the long run. However the current curve of wheat futures may be of interest:

http://www.cbot.com/cbot/pub/page/0,3181,1284,00.html

08Mar 1096.0
08May 1105.0
08Jul 1047.0
08Sep 1059.4

So you have steep backwardation between May/Jul and slight contango between Jul/Sep. I've no real experience studying the movements of these contracts though and this could even be a normal seasonal state of affairs.

purch

forward ETFs seem to have suddenly fallen behind ordinary ETFs ?

I think people are looking at ETF's in a totally a*3e about face way.

You can't look at a Commodity ETF in the same way you would a Managed Fund. The historical performance of a certain ETF should be irrelevant to your planning and research.

It is the historical performance of the underlying Index, and if needs be the underlying Futures market that matters, and if you don't understand how the underlying Futures market works, then you will struggle to understand how the underlying Index works, and you will have no hope of understanding how the ETF works.

You need to understand how the Futures market is structured and how it works, what delivery is and means, how arbitrage works..........there is a whole encyclopedia of stuff that affects and drives Commodity Futures, and understanding at least some of it should be the target of anyone fiddling about in Commodity ETF's

jon3001

purch wrote: »

I think people are looking at ETF's in a totally a*3e about face way.

You can't look at a Commodity ETF in the same way you would a Managed Fund. The historical performance of a certain ETF should be irrelevant to your planning and research.

It is the historical performance of the underlying Index, and if needs be the underlying Futures market that matters, and if you don't understand how the underlying Futures market works, then you will struggle to understand how the underlying Index works, and you will have no hope of understanding how the ETF works.

You need to understand how the Futures market is structured and how it works, what delivery is and means, how arbitrage works..........there is a whole encyclopedia of stuff that affects and drives Commodity Futures, and understanding at least some of it should be the target of anyone fiddling about in Commodity ETF's

Well - I'm making do with having read Jim Roger's 'Hot Commodities', the relevant sections in Roger Gibsons 'Asset Allocation' (4th ed) together with some Internet research on futures contracts and historical data. A little bit of knowledge can be a dangerous thing!

As a long-term investor who's looking for broad market exposure I'm not overly interested in month-to-month short term movements of individual contract prices. Just as an investor in a FTSE-AllShare index tracker probably wouldn't care what Vodaphone's share price did last week.

But please - if anyone's getting involved in this sector and looking to invest thousands of pounds then invest at least another six quid so you know what on earth it is you're actually buying.

aztec21

jon3001 wrote: »

Well - I'm making do with having read Jim Roger's 'Hot Commodities', the relevant sections in Roger Gibsons 'Asset Allocation' (4th ed) together with some Internet research on futures contracts and historical data. A little bit of knowledge can be a dangerous thing!

As a long-term investor who's looking for broad market exposure I'm not overly interested in month-to-month short term movements of individual contract prices. Just as an investor in a FTSE-AllShare index tracker probably wouldn't care what Vodaphone's share price did last week.

But please - if anyone's getting involved in this sector and looking to invest thousands of pounds then invest at least another six quid so you know what on earth it is you're actually buying.

Couldn't agree with you more.

wombat42_2

jon3001 wrote: »

Well - I'm making do with having read Jim Roger's 'Hot Commodities', the relevant sections in Roger Gibsons 'Asset Allocation' (4th ed) together with some Internet research on futures contracts and historical data. A little bit of knowledge can be a dangerous thing!

As a long-term investor who's looking for broad market exposure I'm not overly interested in month-to-month short term movements of individual contract prices. Just as an investor in a FTSE-AllShare index tracker probably wouldn't care what Vodaphone's share price did last week.

But please - if anyone's getting involved in this sector and looking to invest thousands of pounds then invest at least another six quid so you know what on earth it is you're actually buying.

I have ordered Jim Rogers book. According to the latest internet reports Rogers is particularly keen at present on agri as agri has only just started a growth cycle while metals and energy are 4 years into a growth cycle.

Does Rogers mention and recommend FORWARD etfs ?