High-Powered Investing All-in-One For Dummies, 2nd Edition

Chapter 1

Getting an Overview of Commodities

In This Chapter

Distinguishing commodities from other investment options

Identifying classes of commodities

Understanding and managing risks specific to commodities

In the years since the first edition of this book, 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.

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 as an asset class have been plagued by a lot of misinformation, and it's sometimes difficult to separate ...