Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Jeeez!
Old 09-28-2005, 12:44 PM   #1
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
brewer12345's Avatar
 
Join Date: Mar 2003
Posts: 16,391
Jeeez!

DJ-AIG Commodities index is up almost 4 and a half points right now! Whether we have growth or not, we've definately got inflation. Its only a matter of time until we start seeing all of this trickle down to unit labor costs, or we get tipped into a recession. Not pretty...
__________________

__________________
"There are three kinds of men. The one that learns by reading. The few who learn by observation. The rest have to pee on the electric fence for themselves."



- Will Rogers
brewer12345 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: Jeeez!
Old 09-28-2005, 12:51 PM   #2
Thinks s/he gets paid by the post
wildcat's Avatar
 
Join Date: Feb 2005
Location: Lou-evil
Posts: 2,025
Re: Jeeez!

Do you think the wage cost increases are for real or do you think the 'global' economy will suppress wage growth below the level of material cost increases? China/other emerging markets are supposed to experience increases in labor costs so I imagine it could be a worldwide event.
__________________

__________________
"These walls are kind of funny. First you hate 'em, then you get used to 'em. Enough time passes, gets so you depend on them"
wildcat is offline   Reply With Quote
Re: Jeeez!
Old 09-28-2005, 12:59 PM   #3
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
brewer12345's Avatar
 
Join Date: Mar 2003
Posts: 16,391
Re: Jeeez!

Like it or not, wage markets are imperfectly connected. Yes, you can outsource certain jobs very easily, but there are an awful lot you can't outsource, either because you need feet on the ground or because there aren't enough skilled workers, or for other structural reasons. There are some signs that Chinese and Indian labor are getting bid up by outsourcing efforts. At some point, higher cost of living has to be reflected back into unit labor costs. If higher COL doesn't translate into higher wages, the consumer will eventually get baly squeezed and consumer spending will fall. That would likely trigger a pretty ugly recession.
__________________
"There are three kinds of men. The one that learns by reading. The few who learn by observation. The rest have to pee on the electric fence for themselves."



- Will Rogers
brewer12345 is offline   Reply With Quote
Re: Jeeez!
Old 09-28-2005, 01:02 PM   #4
Thinks s/he gets paid by the post
wildcat's Avatar
 
Join Date: Feb 2005
Location: Lou-evil
Posts: 2,025
Re: Jeeez!

Quote:
If higher COL doesn't translate into higher wages, the consumer will eventually get baly squeezed and consumer spending will fall. That would likely trigger a pretty ugly recession
That would be my concern but to me it is worst case scenario and not very likely.
__________________
"These walls are kind of funny. First you hate 'em, then you get used to 'em. Enough time passes, gets so you depend on them"
wildcat is offline   Reply With Quote
Re: Jeeez!
Old 09-28-2005, 01:03 PM   #5
Moderator Emeritus
laurence's Avatar
 
Join Date: Feb 2005
Location: San Diego
Posts: 5,234
Re: Jeeez!

For the uninitiated, would you go into the DJ-AIG index a bit, or maybe point to a link with an explanation of what it means? Is this a one day move, and is that significant? Or is this a periodic report like the consumer confidence number? Thanks much!

EDIT: DUH! Nevermind. D J stands for Dow Jones, sorry! All coming together now. :P
__________________
laurence is offline   Reply With Quote
Re: Jeeez!
Old 09-28-2005, 01:07 PM   #6
Thinks s/he gets paid by the post
wildcat's Avatar
 
Join Date: Feb 2005
Location: Lou-evil
Posts: 2,025
Re: Jeeez!

It has been moving quite a bit lately but 4 1/2 is pretty big. It is the commodity index (like the S&P except it is commodities) that Pimco uses as a benchmark for the Commodity Real Return MF. So you wanna play it go with the Pimco MF.
__________________
"These walls are kind of funny. First you hate 'em, then you get used to 'em. Enough time passes, gets so you depend on them"
wildcat is offline   Reply With Quote
Re: Jeeez!
Old 09-28-2005, 01:16 PM   #7
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
brewer12345's Avatar
 
Join Date: Mar 2003
Posts: 16,391
Re: Jeeez!

Further to what Wildcat said, the DJAIG index is a useful gauge of commodity inflation because it includes 5 different categories (precious metals, energy, agriculture, indstrials, and livestock) and has all kinds of governors that prevent any one category or commodity from making up too much of the index. The weights are re-set every year, and every quarter things get cut back to within certain limits, IIRC.
__________________
"There are three kinds of men. The one that learns by reading. The few who learn by observation. The rest have to pee on the electric fence for themselves."



- Will Rogers
brewer12345 is offline   Reply With Quote
Re: Jeeez!
Old 09-28-2005, 01:26 PM   #8
Moderator Emeritus
laurence's Avatar
 
Join Date: Feb 2005
Location: San Diego
Posts: 5,234
Re: Jeeez!

ah, excellent, none of that "once we remove the volatile housing, energy, and every other component that actually matters, the core inflation rate of cheap imported electronics is...." . Thanks!
__________________
laurence is offline   Reply With Quote
Re: Jeeez!
Old 09-28-2005, 01:32 PM   #9
Thinks s/he gets paid by the post
wildcat's Avatar
 
Join Date: Feb 2005
Location: Lou-evil
Posts: 2,025
Re: Jeeez!

Quote:
it includes 5 different categories (precious metals, energy, agriculture, indstrials, and livestock) and has all kinds of governors that prevent any one category or commodity from making up too much of the index. The weights are re-set every year, and every quarter things get cut back to within certain limits, IIRC
That is why it is better than most nat resource/commodity funds. Most are too weighted towards energy.
__________________
"These walls are kind of funny. First you hate 'em, then you get used to 'em. Enough time passes, gets so you depend on them"
wildcat is offline   Reply With Quote
Re: Jeeez!
Old 09-29-2005, 03:47 PM   #10
Recycles dryer sheets
 
Join Date: Feb 2005
Posts: 454
Re: Jeeez!

Quote:
Originally Posted by wildcat
So you wanna play it go with the Pimco MF.
Is that a rap lyric?
At least you abbreviated... there might be kids reading
__________________
lazyday is offline   Reply With Quote
Re: Jeeez!
Old 09-29-2005, 04:39 PM   #11
Moderator Emeritus
Martha's Avatar
 
Join Date: Feb 2004
Location: minnesota
Posts: 13,212
Re: Jeeez!

Quote:
Originally Posted by lazyday
Is that a rap lyric?
At least you abbreviated... there might be kids reading
__________________
.


No more lawyer stuff, no more political stuff, so no more CYA

Martha is offline   Reply With Quote
Re: Jeeez!
Old 09-29-2005, 04:49 PM   #12
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Gone4Good's Avatar
 
Join Date: Sep 2005
Posts: 5,381
Re: Jeeez!

Quote:
Originally Posted by wildcat
* So you wanna play it go with the Pimco MF.*
Chasing the hot sector usually ends in

__________________
Retired early, traveling perpetually.
Gone4Good is offline   Reply With Quote
Re: Jeeez!
Old 09-29-2005, 09:21 PM   #13
Thinks s/he gets paid by the post
wildcat's Avatar
 
Join Date: Feb 2005
Location: Lou-evil
Posts: 2,025
Re: Jeeez!

Lazy -

Glad to see you noticed my skills

Quote:
Chasing the hot sector usually ends in
Commodities have been in a bear market for approx 20 years
__________________
"These walls are kind of funny. First you hate 'em, then you get used to 'em. Enough time passes, gets so you depend on them"
wildcat is offline   Reply With Quote
Re: Jeeez!
Old 09-29-2005, 09:24 PM   #14
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Gone4Good's Avatar
 
Join Date: Sep 2005
Posts: 5,381
Re: Jeeez!

Yup. And they're now due for another 20-year stinker.

Bonds pay interest, stocks pay dividends and hopefully grow the capital base, and a lump of gold is pretty much a lump of gold.

Makes a nice paper weight though.

__________________
Retired early, traveling perpetually.
Gone4Good is offline   Reply With Quote
Re: Jeeez!
Old 09-29-2005, 09:37 PM   #15
Thinks s/he gets paid by the post
wildcat's Avatar
 
Join Date: Feb 2005
Location: Lou-evil
Posts: 2,025
Re: Jeeez!

Hmm I just collected a payment from my Pimco Commodity Fund. It holds TIPS as collateral so you do collect payments + net the returns on commodity futures.

The point of holding a commodities fund is diversification.
__________________
"These walls are kind of funny. First you hate 'em, then you get used to 'em. Enough time passes, gets so you depend on them"
wildcat is offline   Reply With Quote
Re: Jeeez!
Old 09-30-2005, 03:33 AM   #16
Thinks s/he gets paid by the post
BUM's Avatar
 
Join Date: Feb 2004
Location: Mid Hudson Valley
Posts: 1,778
Re: Jeeez!

Quote:
Originally Posted by wildcat
Hmm I just collected a payment from my Pimco Commodity Fund.*
Hi wildcat,

I just collected the same dividend...very tasty indeed!

BUM
__________________
In a panamax down by the river.
BUM is offline   Reply With Quote
Re: Jeeez!
Old 09-30-2005, 07:25 AM   #17
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
brewer12345's Avatar
 
Join Date: Mar 2003
Posts: 16,391
Re: Jeeez!

Quote:
Originally Posted by . . . Yrs to Go
Yup.* And they're now due for another 20-year stinker.

Bonds pay interest, stocks pay dividends and hopefully grow the capital base, and a lump of gold is pretty much a lump of gold.*

Makes a nice paper weight though.

That's why I wn PCRDX and not gold coins or bullion. The Pimco funds own TIPS plus long positions in commodity futures, not actual commodities. If you poke around Raddr's site, you will find some very well-written articles that do a good job of explaining the difference and the source of return from this strategy. In a nutshell, you get:

- The return on the collateral (TIPS in this case)
- Whatever the gain/loss on the underlying commodity is
- An "insurance premium" that commodity producers are willing to pay to hedge out their exposure

If you look at the historical record, the DJAIG index is significantly negatively corrrelated with both stock and bond returns. It makes a very nice diversifier.
__________________
"There are three kinds of men. The one that learns by reading. The few who learn by observation. The rest have to pee on the electric fence for themselves."



- Will Rogers
brewer12345 is offline   Reply With Quote
Re: Jeeez!
Old 09-30-2005, 08:01 AM   #18
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Dawg52's Avatar
 
Join Date: Feb 2005
Location: Central MS/Orange Beach, AL
Posts: 7,445
Re: Jeeez!

Jimmy Rogers has been bullish on commodites. Here is his take on it.....
http://www.investment-u.com/ppc/spla...fm?kw=XVVIU282
__________________
Retired 3/31/2007@52
Full time wuss.......
Dawg52 is offline   Reply With Quote
Re: Jeeez!
Old 09-30-2005, 08:14 AM   #19
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
brewer12345's Avatar
 
Join Date: Mar 2003
Posts: 16,391
Re: Jeeez!

Quote:
Originally Posted by DOG51
Jimmy Rogers has been bullish on commodites. Here is his take on it.....
http://www.investment-u.com/ppc/spla...fm?kw=XVVIU282
FWIW, I dont own it because I hae a view on commodities. I own it because it tends to move in the opposite direction of equities and bonds while still having positive long term return potential. It lowers my overall risk without reducing return materially.
__________________
"There are three kinds of men. The one that learns by reading. The few who learn by observation. The rest have to pee on the electric fence for themselves."



- Will Rogers
brewer12345 is offline   Reply With Quote
Re: Jeeez!
Old 09-30-2005, 08:51 AM   #20
Thinks s/he gets paid by the post
 
Join Date: Dec 2002
Posts: 3,875
Re: Jeeez!

Quote:
Originally Posted by DOG51
Jimmy Rogers has been bullish on commodites. Here is his take on it.....
http://www.investment-u.com/ppc/spla...fm?kw=XVVIU282
I assumed he was still living on the royalties from his records.

Just kidding! He is one financial guy I have read.

JG
__________________

__________________
MRGALT2U is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
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


 

 
All times are GMT -6. The time now is 05:54 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.