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| So where to place investments when one needs diversification-looking at the element of inflation-long only institutions view commodities as insurance policy in portfolios esp if Yellen gets too wild... as unexpected inflation drives commodities-history is littered with examples-
Passive management would be long only vs the active management meaning the long/shorts...
Ed: I want to take $$ out of stocks before the meltdown comes..where can I park it?
Fred: ja, commodities is getting hedge funds attention..maybe you should check it out-
Ed: No way..I just ate at Chipotle and heard how the farmers are growing toxic food and beating their livestock-you want me to lose my$$ or what?
Fred: Okay...okay...If you don't believe there is going to be more severe weather patterns impacting a growing area either by too much rain or not enough-don't invest in ag, Ed. If you believe the Middle East is going to get themselves sorted out and be the poster child for human rights and passiveness, don't invest in commodities..Now, Ed, if you are like me you have extracted like me where a region has fighting seasons-Arab Spring comes to my mind...
Ed: Alright..alright..I don't want to hear more political stuff...show me what you mean-
Fred: Let me turn on the computer here and we log onto finviz.com...look at oats-oats has become inflationary see..you want to know why? they can't get the oats to us on time.. so price goes up..
Ed: If it's that easy to make money in commodities why are stocks so high?
Fred: No-not really easy, but commodities have supply shocks see and that is when you make money and you know what Ed, when it is political or weather driven shocks it affects other parts to your portfolio....ja, I like it myself-See soys-see how it's all green now..they are in demand 2.The globe can't their hands on enough soys..thing is, soys are fragile to negative supply shocks..Why, Ed, you won't believe me, but the farmers have their own website called NAT and even they are flabbergasted at how soys have continued accelerating, ja. Look here...those same farmers thought corn was DOA...some sold all they had at harvest. But I heard thru their site was a club started up..thanks to some Cargill guy...he nicknamed a group that didn't sell their crops at harvest....the "Weld the Bin Door Shut Club"...
you ought check that site out Eddy...and Eddy..just remember three words on commodities and supply shocks: inevitable... repeatable... identifiable-
You doing the right thing Eddy-that 401k punt into commodities, ja...
(when the US market is up 30% just the past year with 1% growth-unsustainable and everyone knows, ja...)
Good day to you,
Gottlieb
Edited by Gottlieb 2/26/2014 11:38
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as we start losing bears
