Chapter 6
Making a Splash: Investing in Liquid Commodity Instruments
IN THIS CHAPTER
Figuring out how to invest through indexes
Examining the index structure
Evaluating the features of the five major indexes
Choosing the right index for you
Indexes, sometimes also referred to as liquid investing instruments, are useful tools in the world of investing. If investing were similar to driving a car, the index would be the equivalent of the speedometer — it tells you how fast the car (or the market) is going. Indexes exist for all sorts of assets. The two most well-known indexes track the top 30 blue-chip companies in the United States (the Dow Jones Industrial Average) and the 500 largest companies (the S&P 500), but plenty of others await investors, too.
If you want to measure the performance of commodities, you also have at your disposal indexes that track baskets of commodities. These commodity indexes can be useful for two reasons. First, you can use them as market indicators to help you gauge where the commodity markets are trading as a whole. Second, because most indexes are tradable ...
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