Just a few short years after the introduction of the first exchange-traded commodity product, there are dozens of options available for investors interested in accessing this asset class that is capable of delivering big returns and meaningful diversification benefits. Most investors are familiar with only the largest and most popular of these products, but those willing to dig a bit deeper will uncover some very intriguing investment opportunities [see also Seven Reasons To Hate Gold As An Investment]. Today we profile the Dow Jones-UBS Commodity Index Total Return ETN (DJCI), a product from UBS that offers broad-based exposure to a basket of futures contracts.
If Jim Rogers has taught us anything, its that agriculture exposure is a must for any investment portfolio. But buying corn or soybean futures and rolling on a steady basis seems impractical for keeping allocations to what might make up 1% of your overall holdings. Beyond futures products, there are a wide variety of equities tied to the agriculture sector, but picking the right one can be tricky business. Enter agribusiness ETFs. Products dedicated to offering exposure to a wide variety of firms tied to the agriculture sector, giving investors an equity spin on their favorite commodities like sugar, cotton, and cocoa [see also Three Things Wall Street Journal Didn’t Tell You About Commodities].
This week saw a lot of volatility in the commodity space, as ping pong news from Europe threw major assets back and forth. One of the best performers on the week was crude oil, which saw its price skyrocket from just above $88/barrel to as high as $94 intraday Tuesday. The fossil fuel took a hit on Wednesday due to increased supplies, but was able to recover and hold firm on its $90/barrel benchmark. Gold was another big mover, as it started off the week flat but soared on Tuesday on news that the European debt talks were not as productive as investors first thought. Though an agreement was finally reached, gold continued its upward climb towards the $1,740/oz. level, appreciating nearly $100 in just five trading sessions [see also Commodity Trading Trends: Crude Oil In Focus].
Matthew Bradbard is the president and founder of MB Wealth, a full service commodity brokerage firm. MB Wealth offers access to commodity markets as well as three different trading packages depending on your investment style. Mr. Bradbard also publishes weekly articles commenting on the state of commodities and how they tie with broader equity markets. Whether you are a seasoned futures trader, or a retail investor looking to hone in on the power of commodities, MB Wealth and Bradbard present themselves as an excellent resource [see also Three Things Wall Street Journal Didn’t Tell You About Commodities].
The recent performance from crude oil has caught a number of investors’ eyes, as the fossil fuel has surged in the past week to break through the $90/barrel level. In fact, since opening around $86 per barrel on October 20th, crude jumped roughly 8.1% as of market close Tuesday. Yesterday, however, markets had other plans for oil, with a major supply increase putting pressure on the asset class. WTI futures took a hit of 2.5%. With crude exhibiting a nice upward trend over the majority of the last week, its dip creates an interesting trading opportunity for those who feel that yesterday’s losses were only a temporary bump in the road [see also Crude Oil Guide: Brent Vs. WTI, What’s The Difference?].
Solar power is an increasingly popular energy source as well as an investment option. The growing industry has led to a rapid adoption by citizens, businesses, and governments to incorporate solar panels on everything from parking meters to bridges. There are a wide variety of panels meant for small homes and businesses as well as entire grids and large buildings. As the industry continues to blossom, the cost of producing the panels has dramatically decreased and over the coming years is predicted to dip even more, perhaps making it a viable alternative to cheaper fossil fuels like crude oil and natural gas [see also Three Things Wall Street Journal Didn’t Tell You About Commodities].
Arguably, the most important commodity in the world today is crude oil. The product and its derivatives made their way into virtually every application of modern life from transportation to plastics. This vital commodity also dominates politics in many parts of the world and ensures that some top producing nations have outsized influence on the world stage. In light of this, many might assume that most investors know everything about the product and how it trades around the globe. However, that is not the case, as there are several misconceptions about the various types of oil and how this commodity is priced [see also USA Oil Reserves: The World’s Largest?].
After enduring a miserable 2010, most investors were pleased to see solar hit the ground running this year, as a number of equities tied to this industry enjoyed double digit gains for several months. But as the year progressed, solar stocks quickly began to reverse their winning ways, dragging them even lower than where many had been at last year. These extreme losses come as a thorn in investors’ side, especially given that solar energy is arguably the fastest growing renewable energy in the world. Last year saw the overall industry grow by nearly 73%, leading to an average annual growth of 39% over the last decade [see also Company Spotlight: First Solar (FSLR)].
Wind power is one of the most prevalent forms of alternative energy in the world, as numerous countries have taken major steps towards weening themselves off of fossil fuels. Currently, wind power amounts to just over 2% of the world’s energy supply, but at current robust growth rates, this figure is predicted to hit 8% by 2018. From the years 2000 to 2010, global wind power capacity has increased from just 17.4 GW to 194.4 GW, representing a 1,017% change, as this budding industry is enjoying exponential growth in a number of developed and emerging markets alike [see also Crude Oil Crushed: Buy or Sell?].