Commodities for Every Portfolio: How You Can Profit from the Long-Term Commodity Boom

Chapter 4

Deciding What Is Right for You: Futures, Stocks, Mutual Funds, and Exchange-Traded Funds

A little knowledge that acts is worth infinitely more than much knowledge that is idle.

—Khalil Gibran

At this point, you should have a great deal more knowledge about the current bull market in commodities, the general makeup of the commodity futures markets, and the distinct advantages that commodity futures can add to your typical stock and bond portfolio. For some of you, all of this information was just a reaffirmation of what you already knew. For others, most of this information was surprisingly eye-opening.

Whatever your reaction to the first part of the book, it should be clear that understanding the commodity markets is only the first step in the investment process. The second step is actually participating in these markets. And the final and most important step is profiting from it all.

Fortunately, there is still ample time to participate and profit from this long-term commodity boom. Developing economies are far from being developed, the consumer-driven demand for commodities is steadily increasing, and supply constraints will only intensify over the next several years. In addition to all of these factors, participating in this commodity boom has never been easier. Besides futures, investors can profit by investing in stocks, mutual funds, exchange-traded funds (ETFs), and even commodity currencies.

This part of the book focuses on the different ways that you can participate ...