Join Early Retirement Today
Reply
 
Thread Tools Display Modes
Commodity investment
Old 12-11-2006, 03:50 AM   #1
Dryer sheet wannabe
 
Join Date: Sep 2006
Posts: 13
Commodity investment

Dear My friends:
I am curious whether you put "commodity funds or ETF" in your investment portfolio. Currently it is "0" in my portfolio. I need your advise to know whether it is worth to add some in portfolio due to uncorrelated to equities.
How much is suggested to add in? If there are books or articles suggested, it would be more appreciated. :P

Dasinsin
dasinsin is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Re: Commodity investment
Old 12-11-2006, 04:28 AM   #2
Thinks s/he gets paid by the post
2B's Avatar
 
Join Date: Mar 2006
Location: Houston
Posts: 4,337
Re: Commodity investment

If you invest in the typical index funds discussed here -- large caps, small caps, total market and international. You already have a component for commodities in that oil, mining and agricultural companies are in those indexes. If your question is "does anyone overweight commodities," my answer is no but I'm sure some people have energy or precious metal funds.
__________________
The object of life is not to be on the side of the majority, but to escape finding oneself in the ranks of the insane -- Marcus Aurelius
2B is offline   Reply With Quote
Re: Commodity investment
Old 12-11-2006, 07:31 AM   #3
Recycles dryer sheets
 
Join Date: Jun 2002
Posts: 376
Re: Commodity investment

Dasinsin,

Here are a few sites you might checkout:

http://www.altruistfa.com/readingroo...tm#Commodities

http://raddr-pages.com/research/CommodityFutures.htm

I have ~10% allocated to the Pimco commodities futures fund PCRIX in our equity-heavy portfolio

Cb
Cb is offline   Reply With Quote
Re: Commodity investment
Old 12-11-2006, 05:22 PM   #4
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jul 2005
Posts: 6,115
Re: Commodity investment

i use gsg, pcrdx and dbc switching among them from time to time
mathjak107 is offline   Reply With Quote
Re: Commodity investment
Old 12-11-2006, 05:38 PM   #5
Full time employment: Posting here.
Patrick's Avatar
 
Join Date: Mar 2005
Location: Northern, Florida
Posts: 925
Re: Commodity investment

"Work Less, Live More" suggests 4% in commodities for the "cornucopia" portfolio.
__________________
Retired in 2006 at age 49.

"Who among us is smart enough to learn from the mistakes of others?" - Voltaire
Patrick is offline   Reply With Quote
Re: Commodity investment
Old 12-11-2006, 07:36 PM   #6
Thinks s/he gets paid by the post
Spanky's Avatar
 
Join Date: Dec 2004
Location: Minneapolis
Posts: 4,455
Re: Commodity investment

My commodity fund, PCRIX, is 1.8% of my portfolio. The YTD is only 5%.
__________________
May we live in peace and harmony and be free from all human sufferings.
Spanky is offline   Reply With Quote
Re: Commodity investment
Old 12-11-2006, 07:49 PM   #7
Full time employment: Posting here.
Alex's Avatar
 
Join Date: May 2006
Posts: 696
Re: Commodity investment

Personally, I don't think you need it.
__________________
Oh, you hate your job? Why didn't you say so? There's a support group for that. It's called EVERYBODY, and they meet at the bar.--Drew Carey
Alex is offline   Reply With Quote
Re: Commodity investment
Old 12-12-2006, 02:35 AM   #8
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jul 2005
Posts: 6,115
Re: Commodity investment

i agree you probley dont need it but non the less i like it because it adds a little excitement to my portfolio. im probley about 3-4% in commodities plus i call it my gas rebate program.

never forget we are only 1 geo, political or storm away from 4.00 gas again. at least i get something back as it rises.
mathjak107 is offline   Reply With Quote
Re: Commodity investment
Old 12-12-2006, 05:32 AM   #9
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Mar 2003
Posts: 18,085
Re: Commodity investment

Adding 5 to 10% of PCRIX or DJP is almost a no-brainer to any bond and equity portfolio, IMO. Go read the research.
__________________
"All animals are equal, but some animals are more equal than others."

- George Orwell

Ezekiel 23:20
brewer12345 is offline   Reply With Quote
Re: Commodity investment
Old 12-12-2006, 05:52 AM   #10
Thinks s/he gets paid by the post
 
Join Date: Jul 2005
Posts: 2,375
Re: Commodity investment

I'm in DBC - Powershares Deutsche Bank Commodity Index Tracking Fund - it's an ETF

Tracks light sweet crude, heating oil, aluminum, corn, wheat and gold
Danny is offline   Reply With Quote
Re: Commodity investment
Old 12-12-2006, 05:57 AM   #11
Dryer sheet wannabe
 
Join Date: Nov 2005
Posts: 12
Re: Commodity investment

4% CRSOX
frb53 is offline   Reply With Quote
Re: Commodity investment
Old 12-12-2006, 06:33 AM   #12
Moderator
simple girl's Avatar
 
Join Date: Sep 2006
Posts: 4,029
Re: Commodity investment

OK, can someone educate me here? I'm not well versed in commodities.

What is the difference between a fund like PCRIX and PRNEX (T. Rowe Price New Era). Both are listed as specialty-nat resources. Does that make PRNEX a commodity fund
__________________
simple girl
less stuff, more time

(55, married; Mr. Simple Girl, 59. FIRED 12/31/19!)
simple girl is offline   Reply With Quote
Re: Commodity investment
Old 12-12-2006, 06:51 AM   #13
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Mar 2003
Posts: 18,085
Re: Commodity investment

Quote:
Originally Posted by simple girl
OK, can someone educate me here? I'm not well versed in commodities.

What is the difference between a fund like PCRIX and PRNEX (T. Rowe Price New Era). Both are listed as specialty-nat resources. Does that make PRNEX a commodity fund
PRNEx invests in stocks of companies that produce natural resources. PCRIX invests directly in the commodities themselves via commodity futres contracts. I think PCRIX is a much better way to go.
__________________
"All animals are equal, but some animals are more equal than others."

- George Orwell

Ezekiel 23:20
brewer12345 is offline   Reply With Quote
Re: Commodity investment
Old 12-12-2006, 06:56 AM   #14
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: May 2005
Location: Lawn chair in Texas
Posts: 14,183
Re: Commodity investment

~5% of port in PCRIX.
__________________
Have Funds, Will Retire

...not doing anything of true substance...
HFWR is offline   Reply With Quote
Re: Commodity investment
Old 12-12-2006, 08:42 AM   #15
Moderator
simple girl's Avatar
 
Join Date: Sep 2006
Posts: 4,029
Re: Commodity investment

Quote:
Originally Posted by brewer12345
PRNEx invests in stocks of companies that produce natural resources. PCRIX invests directly in the commodities themselves via commodity futres contracts. I think PCRIX is a much better way to go.
Thanks brewer. Can you explain why you think PCRIX is a better way to go?
__________________
simple girl
less stuff, more time

(55, married; Mr. Simple Girl, 59. FIRED 12/31/19!)
simple girl is offline   Reply With Quote
Re: Commodity investment
Old 12-12-2006, 08:54 AM   #16
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Mar 2003
Posts: 18,085
Re: Commodity investment

Quote:
Originally Posted by simple girl
Thanks brewer. Can you explain why you think PCRIX is a better way to go?
PCRIX (or DJP for taxable accounts) is better for a couple of reasons:

- Nat resource companies can hedge out commodity exposure, lever up, do stupid acquisitions,and go BK. This is not an issue with PCRIX/DJP because they just have long commodity futures exposure.
- In a market crash or runaway inflation scenario, nat res stocks can crash with all the other stocks. Commodities traded on the futures markets don't have these issues.

There are other reasons that are very technical, but the above is the main reasons. Commodity exposures help offset inflation, which you are at risk of by owning stocks and bonds, and they offset the risk without introducing the potential pitfalls of nat res stocks.
__________________
"All animals are equal, but some animals are more equal than others."

- George Orwell

Ezekiel 23:20
brewer12345 is offline   Reply With Quote
Re: Commodity investment
Old 12-22-2006, 09:55 AM   #17
Thinks s/he gets paid by the post
 
Join Date: Aug 2004
Location: Houston
Posts: 1,448
Re: Commodity investment

Brewer, how is DJP affected by FX changes in the value of the dollar? That is to say, does it offer any protection against a declining USD? I assume the foward contracts in DJP are dollar-denominated. If we assume everything else stays constant but the value of the dollar drops, the price of a global commodity expressed in USD is going to rise, so you would see an increase in the value of DJP. Is that logic right?
soupcxan is offline   Reply With Quote
Re: Commodity investment
Old 12-22-2006, 10:02 AM   #18
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Mar 2003
Posts: 18,085
Re: Commodity investment

Quote:
Originally Posted by soupcxan
If we assume everything else stays constant but the value of the dollar drops, the price of a global commodity expressed in USD is going to rise, so you would see an increase in the value of DJP. Is that logic right?
Correct. If you compare the price of gold in USD and JPY over the last 5 years, you get a very, very different picture.
__________________
"All animals are equal, but some animals are more equal than others."

- George Orwell

Ezekiel 23:20
brewer12345 is offline   Reply With Quote
Re: Commodity investment
Old 12-22-2006, 11:52 AM   #19
Thinks s/he gets paid by the post
 
Join Date: Aug 2004
Location: Houston
Posts: 1,448
Re: Commodity investment

Given your response, could I be taking on too much FX risk by holding 10% of an unhedged foreign bond fund (begbx) plus 10% of DJP? Where do you cross the line from efficient portfolio diversification into over-weighting/speculation?
soupcxan is offline   Reply With Quote
Re: Commodity investment
Old 12-22-2006, 11:56 AM   #20
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Mar 2003
Posts: 18,085
Re: Commodity investment

Quote:
Originally Posted by soupcxan
Given your response, could I be taking on too much FX risk by holding 10% of an unhedged foreign bond fund (begbx) plus 10% of DJP? Where do you cross the line from efficient portfolio diversification into over-weighting/speculation?
I wouldn't think it'd be too much currency risk, considering how much stuff we import into this country.
__________________
"All animals are equal, but some animals are more equal than others."

- George Orwell

Ezekiel 23:20
brewer12345 is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Who uses an investment advisor to help? mickeyd FIRE and Money 8 02-25-2007 06:28 PM
Investment cost basis justification for taxes Delawaredave FIRE and Money 8 01-07-2007 08:21 PM
Re-Thinking investment strategy Bimmerbill Young Dreamers 10 06-07-2006 11:43 AM
Looking for opinions on this Unit Investment Trust Dude FIRE and Money 15 03-07-2006 10:37 AM

» Quick Links

 
All times are GMT -6. The time now is 11:41 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2024, vBulletin Solutions, Inc.