Commonly known commodity like oil, rice, cocoa, metals, and gold could be popular again for a while, as happened in case the stock markets around the world to give investors a poor return.
The rapid growth in populous countries like China and India and rising consumption in emerging markets also pushed the need for more oil, more coffee, more meat and more rice.
Commodities offer protection from inflation and chaos. Understandably, commodities are the major needs, anyone can not escape from it; so different from other assets such as stocks and bonds. Commodities also have a "form" so the concept of investment into it more easily understood most people. These are just some of the reasons why commodities are so attractive in the eyes of many investors.
Retail investors can invest into commodities through a variety of products such as commodity sector stocks, indices of commodities for investment, commodity index futures, commodity mutual funds, commodities and managed futures. Equity investments in companies that deal with commodities gives you exposure as you wish without buying commodity-related. But these products also expose you to the stock market turmoil. Derivatives such as managed futures suitable for protection (hedging) with little or no capital.
Most people think of oil right choice for investors who want to reap the benefits of strong economic growth period. But other oil investment products, such as oil futures or stocks of oil companies, need constant and careful supervision. Why? Partly because of the turmoil caused tremendous influence from various sources such as international institutions, politicians, and other interested groups.
Water-related industries, such as those responsible for providing drinking water and waste water processing services, including the world's largest industry. Now, with demand increased manifold, they intend to expand further.
Agricultural commodities-oil fared the same as suffering from the turmoil, considering agriculture including politically sensitive industries, plus the high sensitivity of the needs of food prices. Also, the accumulation of agricultural products commonly done during the inflation of food or a bad season. Therefore, if you need a tool of protection (hedging), agricultural products worth your consideration. Also if you are experienced investors who are willing to face a greater risk for greater potential returns.
Tips for Commodities Investors
1. Total capital, without any income. Since there are no dividends, investors see more stable income than capital growth in commodity investments.
2. The scarcity of commodities will still last long enough. Lack of investment in extraction, production, and transportation of commodities during this-until recently-restriction resulted in inventory, it also increases the price that has never happened before in various markets. Manufacturers recently reversed the trend is minimal investment, so keep in mind: it may take quite a while before supplies could offset the need.
3. Beware of speculators. During this bad reputation arising gejolaknya commodities and many speculators who intend to pursue an aggressive return. When prices in the cash market is lower than the prices in the commodity futures markets, speculation factor could be higher than the underlying needs. Know the risks before investing.
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