Commodities For Dummies, 3rd Edition

Introduction

When I wrote the first edition of Commodities For Dummies, commodities were certainly not a mainstream asset class. With this third edition almost two decades later, commodities have grown into their own legitimate and respected asset class. Trade magazines and financial newsletters frequently include feature-length articles on the topic. Financial TV stations regularly report oil, gold, and copper prices on the crawling ticker. And no global macro money manager can claim continued success without constantly keeping a pulse on commodities. This situation wasn’t true at the beginning of the century, and it’s a testament to the growing importance of commodities in our globalized and globalizing world.

Why are commodities, long regarded as an inferior asset class, quickly moving to the investing mainstream? Good performance. Investors like to reward good performance, and commodities have performed well in recent years. In addition, investors can more easily access these markets: Plenty of new investment vehicles, from exchange-traded funds (ETFs) to master limited partnerships (MLPs), have been introduced to satisfy investor demand.

Commodities are a complex asset class, with many different types of assets and many different vehicles through which to invest. As commodities have been generating more interest, there’s a large demand for a product to help average investors get a grip on the market fundamentals. Commodities as an asset class have been plagued by a lot of ...