Why are commodities futures the best investments for high net worth people?
February 25th, 2009
Captain Kid asked:
I looked at the forbes list today, and the ones that werent internet boom people, in some shape or form traded commodities. Looks like they are a great financial instrument to make big gains, and i guess to also lose big.
HARTOG
I looked at the forbes list today, and the ones that werent internet boom people, in some shape or form traded commodities. Looks like they are a great financial instrument to make big gains, and i guess to also lose big.
HARTOG
They can make big gains, but historically they underperform stocks. Their allure is that they are not correlated with stocks, meaning that they maintain their value when stocks go down, and may even go up when stocks go down, as people sell stocks and buy commodities for inflation protection. Their value is in their diversification benefits, not in their total return.
For the margin it leverage your investment example let say the commodity is 700 the december delivery of wheat for 700 the december delivery of wheat is 700.
The wheat for the december delivery of wheat goes up to sell and make cereal you already paid.