Investor interest in commodities has surged in recent years, as the lucrative returns and growth potential provided by this corner of the market have successfully attracted even the smallest of investors. And while financial innovation has certainly helped democratize the asset class, investors of all walks should certainly familiarize themselves with the complexities and nuances of this market. In this article, we’ll take a look at seven key terms that all commodity traders should know [for more commodity news and analysis subscribe to our free newsletter]:
The global oil and gas industry is enormous, and serving the endless global appetite for oil and gas has propelled many companies into the realm of the mega-caps. Were they independent entities, the revenues of companies like Exxon Mobil (XOM), BP (BP) and Royal Dutch Shell (RDS.A) would be such that they’d be among the 30-largest countries by GDP. Not surprisingly, that makes them highly significant stocks as well [for more oil and gas news and analysis subscribe to our free newsletter].
Commodity futures markets were originally designed for producers to hedge their risks against unforeseen complications. But as the years went on, more and more retail investors began piling into this asset class, as they enjoyed the diversification benefits offered by hard assets. Now, many long-term buy and hold investors allocate anywhere from 5-20% of their assets to commodity holdings, but that trend may be hitting a roadblock [for more commodity news and analysis subscribe to our free newsletter].
The oil and gas industry has been dramatically expanding over the past few years, particularly in the United States and emerging markets. In fact, the U.S. is expected to overtake Saudi Arabia and Russia to become the world’s largest oil producer by the second half of this decade, according to the International Energy Agency. One of the leading names on the oil front has long been Chevron (CVX), which is one of the largest crude producers in the U.S. [for more oil & gas news subscribe to our free newsletter].
When it comes to investing, we often look to experts and top traders, not just to learn their secrets, but to be inspired by their success. Quotes from top commodity traders and experts in the commodities market can serve to illuminate, invigorate, and motivate our research and trading. Below, we outline 20 of our favorite quotes about the hard-asset industry that all investors should know [for more commodity investing news and analysis subscribe to our free newsletter].
There’s little question that commodities trading is a risky endeavor. From margin calls to extreme volatility, there are countless ways that traders can quickly lose money trading a variety of different instruments. In this article, we’ll take a look at five commodities trading mistakes that traders commonly make and explore the best ways to avoid them [for more commodity news and analysis subscribe to our free newsletter].
Commodity investing has become increasing popular in recent years as the exchange traded world has opened this once elusive asset class wide open. Still, one of the most effective ways to maintain exposure to your favorite hard asset remains through futures contracts. For the average investor, futures are typically too complex; they can be extremely dangerous, hard to understand, and require a specified account just to trade them. As such, many turn to futures-based ETFs and ETNs to gain their desired positions. While these products can be sound investments, investing in the futures yourself remains the most direct and potentially most profitable way to make a play on the commodity space [see also The Ten Commandments of Commodity Investing].