CONSIDER COMMODITIES
Presented by The Clark Financial Group, LLC
Why are investors looking into commodities? Remember years ago when "invest in soybeans" was just a sitcom wisecrack and kruggerands were being sold in low-budget TV commercials? To a lot of people, that was the image of commodity investing: an exotic, left-field opportunity that wasn�t for the average person. In fact, the individual investor faced hurdles even trying to enter the commodities market.
But with the recent surge in gold, silver and oil prices, all kinds of investors are taking a look at commodities, and finding ways to invest in them through exchange-traded funds, closed-end funds, publicly traded entities, non-publicly traded entities (all regulated and registered), and even mutual funds.
It's a chance to have assets outside the stock market. Commodities like timber and coal, crude oil, commercial real estate and gold, silver, and copper are not correlated to stock market performance. These non-correlated assets have been praised for their potential to add diversity to portfolios. In fact, Ibbotson Associates, the world-renowned financial research firm, noted that including such negatively correlated assets in a portfolio actually improved investment return over time while reducing risk. An Ibbotson study concluded that with just a 10% allocation of these "real" assets, the expected return of even a low-risk portfolio went up to 8.6% from 8.1%.1
In 2006, Ibbotson shared the results of a commissioned study on 35 years of the commodity market. It found that $1 invested across major commodity indexes in January 1970 would have grown to $71.62 by October 2005, while $1 invested in U.S. stocks would have grown to only $42.21 across the same stretch.2
What Yale does, others do. Some big endowments put healthy allocations of commodities in their investment portfolios. Look at the Yale Endowment, which generated a 28% return for fiscal year 2007. Its CIO, David F. Swensen, is allocating 28% of its funds to real estate, timber, oil and gas and other "real assets" for FY 2008, following a similar allocation in FY 2007.3 In recent years, many other endowed institutions have diversified into commodities.
If you would like to learn more about commodity investing, be sure to speak with a qualified financial advisor so that you have knowledge, education and guidance as you explore the possibilities.
Learn more about trading commodities with The Clark Financial Group, LLC.
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The Clark Financial Group, LLC
7300 W 110th St Suite 700
Overland Park, KS 66210
Phone: (800) 797-1979
Email: cclark@brokersXpress.com
Charles Clark is a Representative with brokersXpress, LLC and may be reached at www.clarkfinancial.com, (800) 797-1979, or cclark@brokersxpress.com. Securities offered through: brokersXpress, LLC, Member FINRA/SIPC a Registered Investment Advisor Registered CFTC Introducing Broker/NFA Member 311 W. Monroe Street � Suite 1000 � Chicago, Illinois 60606 www.brokersxpress.com � 888.280.7030
Futures involve substantial risk and are not appropriate for all investors. Please read Risk Disclosure Statement for Futures and Options prior to applying for an account.
These are the views of Peter Montoya, Inc., not the named Representative or Broker/Dealer, and should not be construed as investment advice. Neither the named Representative nor Broker/Dealer give tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. Please consult your Financial Advisor for further information.
Citations: 1 www.smartmoney.com/tradecraft/index.cfm?story=20011105 2 www.pionline.com/apps/pbcs.dll/article?AID=/20060515/PRINTSUB/605150727/1031/TOC 3 www.nytimes.com/2007/09/27/business/27yale.html ex=1348545600&en=d25ce62d9bf197a1&ei=5088&partner=rssnyt&emc=rss
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