All good points; in the short term bonds can be very effective investments. However, I spent my working life in oil and mining, and have developed my own investing methods which have worked for me and are in large part the reason I am now ER'd.
My basic premise is that I invest in assets, and keep a very light weighting in what I call IOU's, such as bonds or CD's. I will keep about two - three years of liquidity in my accounts, but thats not what I consider working money, that's money that I have already harvested to live on. I had this premise for asset based investing since the 1970's, though I would confine my investing exclusively to oil and mining companies. It seems to work, at least for me.
The Commodity funds do have gold, but the main driver in these funds are the industrial commodities, including oil, which are so basic to any economy that it is as close a real metric of value for my purposes. It is impossible for any government to "print more oil or copper" and dilute its intrinsic value, though each government can and does over produce its domestic resources, which is the source of the cyclical nature of the natural resources market.
I refered earlier to my distain for gold promoters in the context of those that advocate owning gold as a form of currency surrogate. Gold is still a vital industrial metal (theres gold and silver circuitry inside your computer) and at that level of market derives its value based on economic utility rather than arbitrary price transfers.
The fiat currencies may present a challenge to global equities, but these companies can do the curency hedging for me as an investor, and they will do that and more to preserve asset value, including inventory controls, marketing adjustments and so on. Those that do not perform this type of asset preservation well will under perform and drop out of most rationally manged portfolios. So your point of currencies impacting some businesses is a valid one, but any fund manager is going to sell this business out of the mix and replace it with one that is going to make the numbers work. I liken the funds to small darwininan engines, sorting out what works and what fails so that I can enjoy my tropical umbrella drink by the pool without much commercial concern. In my opinion, based on my research, any well managed multinational, such as P&G or Coke, will move to prevent loss from a declining currency by price and market strategies in a much more effective mark to market than a government issueing its debt.
Finally, in a period of currency debasment, I want to own assets with intrinsic value, including real property, base metals, oil, and proven global business models, rather than financial instruments. These build and maintain the values that currencies attempt to passively measure. Its an Adam Smith thing....
This is what works for me, and seems to be as currency (and for that matter, country risk) nuetral as possible without forcing me into becoming a pit trader in the FOREX market. 8)
My basic premise is that I invest in assets, and keep a very light weighting in what I call IOU's, such as bonds or CD's. I will keep about two - three years of liquidity in my accounts, but thats not what I consider working money, that's money that I have already harvested to live on. I had this premise for asset based investing since the 1970's, though I would confine my investing exclusively to oil and mining companies. It seems to work, at least for me.
The Commodity funds do have gold, but the main driver in these funds are the industrial commodities, including oil, which are so basic to any economy that it is as close a real metric of value for my purposes. It is impossible for any government to "print more oil or copper" and dilute its intrinsic value, though each government can and does over produce its domestic resources, which is the source of the cyclical nature of the natural resources market.
I refered earlier to my distain for gold promoters in the context of those that advocate owning gold as a form of currency surrogate. Gold is still a vital industrial metal (theres gold and silver circuitry inside your computer) and at that level of market derives its value based on economic utility rather than arbitrary price transfers.
The fiat currencies may present a challenge to global equities, but these companies can do the curency hedging for me as an investor, and they will do that and more to preserve asset value, including inventory controls, marketing adjustments and so on. Those that do not perform this type of asset preservation well will under perform and drop out of most rationally manged portfolios. So your point of currencies impacting some businesses is a valid one, but any fund manager is going to sell this business out of the mix and replace it with one that is going to make the numbers work. I liken the funds to small darwininan engines, sorting out what works and what fails so that I can enjoy my tropical umbrella drink by the pool without much commercial concern. In my opinion, based on my research, any well managed multinational, such as P&G or Coke, will move to prevent loss from a declining currency by price and market strategies in a much more effective mark to market than a government issueing its debt.
Finally, in a period of currency debasment, I want to own assets with intrinsic value, including real property, base metals, oil, and proven global business models, rather than financial instruments. These build and maintain the values that currencies attempt to passively measure. Its an Adam Smith thing....
This is what works for me, and seems to be as currency (and for that matter, country risk) nuetral as possible without forcing me into becoming a pit trader in the FOREX market. 8)
