Excluding food and energy, the CPI rose 0.2% to a year-over-year rate of 1.1% in February, so say the stats published by the US government. My family buys a lot of food & gas! But I digress. By manipulating what is included in the calculation, our government has gone to great lengths to convince us that inflation is virtually non-existent. However, just in case the price of "things" you regularly purchase, like gas, does end up increasing…you can do something about it.
Let's say you drive 10,000 miles per year and your vehicle gets 15 mpg. Let’s also assume that gas prices are $3/gallon. This means you will need to stockpile $2,000 worth of gas to get you through the next 12 months. Since zoning laws frown upon the idea of installing gas tanks in our backyards, how can we hedge against the risk of further increases in gasoline prices?
It is no secret that I am a fan of ETFs (exchange traded funds) because of their low cost and transparency. In addition to many other commodities, there is an ETF for gas – UGA. If we were to invest $2000 in shares of UGA (approx. 40 shares), we could effectively hedge the price of gas for one year! If gas prices move toward $4 - $5 per gallon the appreciation of UGA will help offset your costs.
If your spouse and teenagers also drive 10,000 miles per year, you will want to adjust the calculation to reflect that. Also, depending upon the type of account you use, the long-term capital gains rate of 15% would reduce the effect of the hedge. Something to consider as we pay our Spring break bills and look forward to summer vacations…
Cost breakdown of a gallon of gas:
Crude Oil: 67%
Taxes (Avg.): 13%
Refining Costs: 11%
Marketing/Transport: 9%
Source: US Dept. of Energy
Securities and Investment Advisory services offered through NBC Securities, Inc., member FINRA and SIPC. Investment products 1) are not FDIC insured, 2) not guaranteed by any bank and 3) may lose value including a possible loss of principal invested. NBC Securities, does not provide legal or tax advice. Recipients should consult with their own legal or tax professional prior to making any decision with a legal or tax consequence.
This is not an offer to sell or buy any securities products, nor should it be construed as investment advice or investment recommendations.
Wednesday, March 23, 2011
Wednesday, March 9, 2011
Implications of Age Differences Across the World
One of the many challenges facing the global economy is the implications of aging populations in developed countries and young growing populations in emerging countries. Several emerging markets are experiencing a manifestation of this today as much of the political unrest has been ignited by youth movements. The impetus may vary but at the core of most of the recent unrest is unemployment, inequalities perpetuated by a minority ruling party and rising food prices, or some combination of all the above.
Meanwhile, developed countries faced with aging populations, are facing smaller work forces, shrinking tax bases and strained social security systems. We are seeing the effects of this at work in Wisconsin…
This century, it's going to be more important than ever to understand the dynamics of age distributions in populations and how this will affect key socioeconomic issues across global markets. The CIA World Factbook: Median Age, provides the median age of most countries. Within the developed countries, the average median age is 40.83. Interestingly, we American’s are doing a good job replacing ourselves as we have a median age of 36.8; the lowest median age out of the top ten countries in the ACWI (MSCI All Country World Index). The two countries with the highest median ages, are two of the most industrialized; Germany at 44.3 and Japan at 44.6. In fact, Japan’s median age is well above any of its neighbors within the Asia-Pacific region. Within emerging markets, the average median age is 30.92. South Korea and Russia have the highest median ages – in the upper thirties while Brazil has a median age of 28.9. The lowest median age in the top ten emerging markets is South Africa at 24.7. In fact, low median ages are quite prevalent in Africa with Uganda at 15 and Egypt at 24.
Most economists believe that China and India are the two main challengers for economic supremacy in the 21st century, yet there are major differences in their demographic makeup; China currently has a median age of 35.2 while India has a median age of 25.9.
What does all this mean for the future? Lower median ages point towards larger future working-age populations and the likelihood of increasing demand for raw materials and agricultural products within emerging markets. On the other hand, a larger youthful population could lead to unrest, similar to what is happening in the Middle East and Northern Africa in recent weeks. So, to ensure some degree of stability it is incumbent on developing countries to provide at a minimum, the perception of equality, and to also enable their citizen’s to pursue meaningful and productive employment so that they can maintain purchasing power in an economic environment with rising prices due to increased demand.
Bottom line, farming may once again be a lucrative way to make a living!
Securities and Investment Advisory services offered through NBC Securities, Inc., member FINRA and SIPC. Investment products 1) are not FDIC insured, 2) not guaranteed by any bank and 3) may lose value including a possible loss of principal invested. NBC Securities, does not provide legal or tax advice. Recipients should consult with their own legal or tax professional prior to making any decision with a legal or tax consequence.
This is not an offer to sell or buy any securities products, nor should it be construed as investment advice or investment recommendations.
Meanwhile, developed countries faced with aging populations, are facing smaller work forces, shrinking tax bases and strained social security systems. We are seeing the effects of this at work in Wisconsin…
This century, it's going to be more important than ever to understand the dynamics of age distributions in populations and how this will affect key socioeconomic issues across global markets. The CIA World Factbook: Median Age, provides the median age of most countries. Within the developed countries, the average median age is 40.83. Interestingly, we American’s are doing a good job replacing ourselves as we have a median age of 36.8; the lowest median age out of the top ten countries in the ACWI (MSCI All Country World Index). The two countries with the highest median ages, are two of the most industrialized; Germany at 44.3 and Japan at 44.6. In fact, Japan’s median age is well above any of its neighbors within the Asia-Pacific region. Within emerging markets, the average median age is 30.92. South Korea and Russia have the highest median ages – in the upper thirties while Brazil has a median age of 28.9. The lowest median age in the top ten emerging markets is South Africa at 24.7. In fact, low median ages are quite prevalent in Africa with Uganda at 15 and Egypt at 24.
Most economists believe that China and India are the two main challengers for economic supremacy in the 21st century, yet there are major differences in their demographic makeup; China currently has a median age of 35.2 while India has a median age of 25.9.
What does all this mean for the future? Lower median ages point towards larger future working-age populations and the likelihood of increasing demand for raw materials and agricultural products within emerging markets. On the other hand, a larger youthful population could lead to unrest, similar to what is happening in the Middle East and Northern Africa in recent weeks. So, to ensure some degree of stability it is incumbent on developing countries to provide at a minimum, the perception of equality, and to also enable their citizen’s to pursue meaningful and productive employment so that they can maintain purchasing power in an economic environment with rising prices due to increased demand.
Bottom line, farming may once again be a lucrative way to make a living!
Securities and Investment Advisory services offered through NBC Securities, Inc., member FINRA and SIPC. Investment products 1) are not FDIC insured, 2) not guaranteed by any bank and 3) may lose value including a possible loss of principal invested. NBC Securities, does not provide legal or tax advice. Recipients should consult with their own legal or tax professional prior to making any decision with a legal or tax consequence.
This is not an offer to sell or buy any securities products, nor should it be construed as investment advice or investment recommendations.
Friday, February 11, 2011
Commodity prices are heading up
Egypt is experiencing mass demonstrations with protestors calling for a regime change and improved employment opportunities, i.e. a better quality of life. The results of this development within the most populous Arab country are as yet unknown, but the turmoil has concerned Egypt’s neighbors and trickled over into commodity markets.
What is to blame – Hosni Mubarak’s authoritarian regime or some other factor? Since I am a “Financial Advisor” I will stick with what I know. The dollar is the most important currency in the world and the Federal Reserve controls the value of the dollar by setting interest rates and controlling money supply. When the Fed prints too many dollars, price inflation results and often shows up in commodity prices first. When loose monetary policy lifts energy commodities, oil exporters typically benefit. Egypt is an oil producer and refiner, so rising energy prices should be slightly positive for their economy.
Likewise, when loose monetary policy lifts food commodities, food growers and exporters typically benefit. Egypt is a food importer; according to the Egyptian Agricultural Minister, the country imports 40% of its food. So, rising food prices are negative for the nation’s economy.
In the second-half of 2010, the Goldman Sachs Agricultural Index climbed 66%, the steepest increase for any 6-month period since 1974. Recently, there have been several instances where third world governments lifted subsidies on food & fuel and then, because of mass protests and discontent they, at least partially, re-instated the subsidies. In other words, the impact of a declining dollar and rising food prices has been detrimental to the average standard of living in Egypt and, in many other parts of the third world, where you can add rising energy costs to the mix.
Not helping this global situation is the fact that by 2010 the percentage of US corn production devoted to the production of ethanol was 39.4%, or nearly five billion bushels out of total U.S. production of 12.45 billion bushels, add to that the droughts last summer in Russia and Australia and then the floods and typhoon - again in Australia.
Portfolios under my advisement have maintained exposure to metal commodities for several months and recently (pre-Egypt) added broad agricultural commodity exposure. Agricultural commodities stand to benefit from a plethora of dollars, rising global demand and misguided policies.
Confidentiality Notice: The information in this e-mail message, including any attachments thereto, is intended to be confidential and is for the use of the individual or entity named above. If the reader of this message is not the intended recipient, you are hereby notified that retention, dissemination, distribution, or copying of this message is strictly prohibited. If you receive this message in error, please notify the sender and delete the material immediately. Thank you.
Securities and Investment Advisory services offered through NBC Securities, Inc., Member FINRA and SIPC. Investment products 1) are not FDIC insured, 2) not guaranteed by any bank and 3) may lose value including a possible loss of principal invested. NBC Securities does not provide legal or tax advice. Recipients should consult with their own legal or tax professional prior to making any decision with a legal or tax consequence.
This is not an offer to sell or buy any securities products, nor should it be construed as investment advice or investment recommendations.
What is to blame – Hosni Mubarak’s authoritarian regime or some other factor? Since I am a “Financial Advisor” I will stick with what I know. The dollar is the most important currency in the world and the Federal Reserve controls the value of the dollar by setting interest rates and controlling money supply. When the Fed prints too many dollars, price inflation results and often shows up in commodity prices first. When loose monetary policy lifts energy commodities, oil exporters typically benefit. Egypt is an oil producer and refiner, so rising energy prices should be slightly positive for their economy.
Likewise, when loose monetary policy lifts food commodities, food growers and exporters typically benefit. Egypt is a food importer; according to the Egyptian Agricultural Minister, the country imports 40% of its food. So, rising food prices are negative for the nation’s economy.
In the second-half of 2010, the Goldman Sachs Agricultural Index climbed 66%, the steepest increase for any 6-month period since 1974. Recently, there have been several instances where third world governments lifted subsidies on food & fuel and then, because of mass protests and discontent they, at least partially, re-instated the subsidies. In other words, the impact of a declining dollar and rising food prices has been detrimental to the average standard of living in Egypt and, in many other parts of the third world, where you can add rising energy costs to the mix.
Not helping this global situation is the fact that by 2010 the percentage of US corn production devoted to the production of ethanol was 39.4%, or nearly five billion bushels out of total U.S. production of 12.45 billion bushels, add to that the droughts last summer in Russia and Australia and then the floods and typhoon - again in Australia.
Portfolios under my advisement have maintained exposure to metal commodities for several months and recently (pre-Egypt) added broad agricultural commodity exposure. Agricultural commodities stand to benefit from a plethora of dollars, rising global demand and misguided policies.
Confidentiality Notice: The information in this e-mail message, including any attachments thereto, is intended to be confidential and is for the use of the individual or entity named above. If the reader of this message is not the intended recipient, you are hereby notified that retention, dissemination, distribution, or copying of this message is strictly prohibited. If you receive this message in error, please notify the sender and delete the material immediately. Thank you.
Securities and Investment Advisory services offered through NBC Securities, Inc., Member FINRA and SIPC. Investment products 1) are not FDIC insured, 2) not guaranteed by any bank and 3) may lose value including a possible loss of principal invested. NBC Securities does not provide legal or tax advice. Recipients should consult with their own legal or tax professional prior to making any decision with a legal or tax consequence.
This is not an offer to sell or buy any securities products, nor should it be construed as investment advice or investment recommendations.
Wednesday, February 2, 2011
Rip van Winkle
Had you laid down to take an extended nap 2 1/2 years ago and recently woken, you would have noticed very little change on the surface of the stock market. The DJIA hit a high of 12,000 in June of 2008 and just the other day managed, for the first time since, to exceed that benchmark. Since June 2008 however, we experienced a wild ride with the Dow falling 45% only to turn around and gain 85%.
I have fielded several inquiries regarding the market’s round-trip and how it does or does not translate into portfolio performance. Let’s use C (Citigroup) as an example: C hit a (recent) high of $23 in October 2008 and then plummeted to $1 by March 2009 – sustaining a loss of over 90%!
Now, for those with the intestinal fortitude to buy C at $1, there were, in hindsight, rewards to be reaped as C is now trading close to $5 – a 500% return…However, those that rode it down from $23 are still sitting on a loss of 85%. Not to speak of the poor souls who paid $57 a share in December 2006…
The disciplined approach to investing that I bring to the table strives to exit the market, a sector or security, in the very early stages of a decline. Assuming success in this endeavor, this action will preclude us from owning a security at ‘the bottom’. After a decline, when demand is returning, we strive to invest in sectors that are exhibiting positive strength versus the broad market. We select sectors as opposed to individual companies because of an important study by Benjamin F. King, titled “The Latent Statistical Structure of Securities Price Changes”, which concluded that “Market and sector forces typically cause 80% of the price movement in a stock while company fundamentals usually account for less than 20% of a stock’s price movement.” Investing in sectors as opposed to individual companies helps shelter us from unfortunate situations like Exxon-Valdez & BP’s oil well.
On an uplifting note, 19 out of the 30 Dow members recently closed above their June '08 levels. On a more somber note, 6 of the worst performing stocks are still sitting on double digit losses. Home Depot, Inc. (HD) was the best of the best as it rose approximately 45% since June 2008 however, one can easily argue that a lot of HD’s outperformance was due to the fact that Building stocks had already declined substantially from the April 2006 high; the DWA Building Sector had already declined over -45% by June ‘08.
Bottom line, the DJIA recently hit 12,000 again after 2 1/2 years and during the aforementioned time period, net of dividends, the DJIA returned 1.4%, the S&P 500 lost 2.33% and EFA (Europe, Far East & Asia) lost 14.45%.
Securities and Investment Advisory services offered through NBC Securities, Inc., member FINRA and SIPC. Investment products 1) are not FDIC insured, 2) not guaranteed by any bank and 3) may lose value including a possible loss of principal invested. NBC Securities, does not provide legal or tax advice. Recipients should consult with their own legal or tax professional prior to making any decision with a legal or tax consequence.
This is not an offer to sell or buy any securities products, nor should it be construed as investment advice or investment recommendations.
I have fielded several inquiries regarding the market’s round-trip and how it does or does not translate into portfolio performance. Let’s use C (Citigroup) as an example: C hit a (recent) high of $23 in October 2008 and then plummeted to $1 by March 2009 – sustaining a loss of over 90%!
Now, for those with the intestinal fortitude to buy C at $1, there were, in hindsight, rewards to be reaped as C is now trading close to $5 – a 500% return…However, those that rode it down from $23 are still sitting on a loss of 85%. Not to speak of the poor souls who paid $57 a share in December 2006…
The disciplined approach to investing that I bring to the table strives to exit the market, a sector or security, in the very early stages of a decline. Assuming success in this endeavor, this action will preclude us from owning a security at ‘the bottom’. After a decline, when demand is returning, we strive to invest in sectors that are exhibiting positive strength versus the broad market. We select sectors as opposed to individual companies because of an important study by Benjamin F. King, titled “The Latent Statistical Structure of Securities Price Changes”, which concluded that “Market and sector forces typically cause 80% of the price movement in a stock while company fundamentals usually account for less than 20% of a stock’s price movement.” Investing in sectors as opposed to individual companies helps shelter us from unfortunate situations like Exxon-Valdez & BP’s oil well.
On an uplifting note, 19 out of the 30 Dow members recently closed above their June '08 levels. On a more somber note, 6 of the worst performing stocks are still sitting on double digit losses. Home Depot, Inc. (HD) was the best of the best as it rose approximately 45% since June 2008 however, one can easily argue that a lot of HD’s outperformance was due to the fact that Building stocks had already declined substantially from the April 2006 high; the DWA Building Sector had already declined over -45% by June ‘08.
Bottom line, the DJIA recently hit 12,000 again after 2 1/2 years and during the aforementioned time period, net of dividends, the DJIA returned 1.4%, the S&P 500 lost 2.33% and EFA (Europe, Far East & Asia) lost 14.45%.
Securities and Investment Advisory services offered through NBC Securities, Inc., member FINRA and SIPC. Investment products 1) are not FDIC insured, 2) not guaranteed by any bank and 3) may lose value including a possible loss of principal invested. NBC Securities, does not provide legal or tax advice. Recipients should consult with their own legal or tax professional prior to making any decision with a legal or tax consequence.
This is not an offer to sell or buy any securities products, nor should it be construed as investment advice or investment recommendations.
Thursday, January 20, 2011
Obsolescence
Several years ago my wife and I considered a Portuguese Water Dog (PWD) for a family pet. Unfortunately, a breeder informed us that Catherine (then, age 3) was too young to be able to effectively discipline the dog. Even though we did not get a PWD, I uncovered some very interesting information while researching the breed. Years ago, PWDs were paid the equivalent of a man’s wages for the work that they performed. Since a PWD can swim underwater they were utilized aboard ships to retrieve ‘overboard’ items, round up broken nets and swim messages between ships. Unfortunately, the breed became obsolete and was almost lost after technology (electronics) was introduced aboard vessels.
I write to tell you this not because we considered a PWD before Obama but as an intro to an observation regarding technology, obsolescence and US manufacturing.
US manufacturing has been declining in terms of its share of overall US employment since the late 1970s. During the past decade, the number of workers employed by manufacturing has fallen from 17.3 million in 1999 to 11.7 million last year, according to the Labor Department. However, according to the US-China Business Council “the US share of global manufacturing is just over 22% - the same as it was in 1995.” In fact, according to the Bureau of Labor Statistics, “the US led the world with its 7.7% gain in manufacturing productivity in 2008-2009.”
What has declined in not manufacturing output - but manufacturing employment. The primary reason behind this is major gains in productivity; productivity advances achieved primarily through the use of technology. US companies that have survived as competitive global manufacturers have shifted from low-skill manufacturing jobs to those requiring higher skill sets, employing those with the knowledge to handle new technologies.
To reverse this decline in manufacturing employment Obama has vowed to "do every single thing we can to hasten our economic recovery and get our people back to work." and last year signed "The Manufacturing Enhancement Act of 2010 (to) create jobs, help American companies compete, and strengthen manufacturing as a key driver of our economic recovery.” Despite a number of initiatives the administration has undertaken, the job market remains sluggish. In fact, the unemployment rate has stayed flat at a near record high of 9.5 percent. Is unfair foreign competition to blame? Or is there more to the story?
One can well argue that unemployment benefits incent people not to look for work, but we will save this for another discussion.
Unfortunately the gains in manufacturing productivity have been lost on the current administration. Instead of trying to create low paying manufacturing jobs, the focus in my opinion, needs to be on educating workers and soon-to-be workers so they can handle the higher skilled jobs upon graduation, and not on competing with low wage countries for low paying manufacturing jobs. We are pursuing policies which will make some of our work force obsolete sooner or later, just like the PWD years ago.
Securities and Investment Advisory services offered through NBC Securities, Inc., member FINRA and SIPC. Investment products 1) are not FDIC insured, 2) not guaranteed by any bank and 3) may lose value including a possible loss of principal invested. NBC Securities, does not provide legal or tax advice. Recipients should consult with their own legal or tax professional prior to making any decision with a legal or tax consequence.
This is not an offer to sell or buy any securities products, nor should it be construed as investment advice or investment recommendations.
I write to tell you this not because we considered a PWD before Obama but as an intro to an observation regarding technology, obsolescence and US manufacturing.
US manufacturing has been declining in terms of its share of overall US employment since the late 1970s. During the past decade, the number of workers employed by manufacturing has fallen from 17.3 million in 1999 to 11.7 million last year, according to the Labor Department. However, according to the US-China Business Council “the US share of global manufacturing is just over 22% - the same as it was in 1995.” In fact, according to the Bureau of Labor Statistics, “the US led the world with its 7.7% gain in manufacturing productivity in 2008-2009.”
What has declined in not manufacturing output - but manufacturing employment. The primary reason behind this is major gains in productivity; productivity advances achieved primarily through the use of technology. US companies that have survived as competitive global manufacturers have shifted from low-skill manufacturing jobs to those requiring higher skill sets, employing those with the knowledge to handle new technologies.
To reverse this decline in manufacturing employment Obama has vowed to "do every single thing we can to hasten our economic recovery and get our people back to work." and last year signed "The Manufacturing Enhancement Act of 2010 (to) create jobs, help American companies compete, and strengthen manufacturing as a key driver of our economic recovery.” Despite a number of initiatives the administration has undertaken, the job market remains sluggish. In fact, the unemployment rate has stayed flat at a near record high of 9.5 percent. Is unfair foreign competition to blame? Or is there more to the story?
One can well argue that unemployment benefits incent people not to look for work, but we will save this for another discussion.
Unfortunately the gains in manufacturing productivity have been lost on the current administration. Instead of trying to create low paying manufacturing jobs, the focus in my opinion, needs to be on educating workers and soon-to-be workers so they can handle the higher skilled jobs upon graduation, and not on competing with low wage countries for low paying manufacturing jobs. We are pursuing policies which will make some of our work force obsolete sooner or later, just like the PWD years ago.
Securities and Investment Advisory services offered through NBC Securities, Inc., member FINRA and SIPC. Investment products 1) are not FDIC insured, 2) not guaranteed by any bank and 3) may lose value including a possible loss of principal invested. NBC Securities, does not provide legal or tax advice. Recipients should consult with their own legal or tax professional prior to making any decision with a legal or tax consequence.
This is not an offer to sell or buy any securities products, nor should it be construed as investment advice or investment recommendations.
Thursday, January 6, 2011
Year-End Reflections
A wave of sovereign debt dilemmas, an earth quake in Chile, a Gulf oil rig explosion, a "flash" crash, a Gold rally, sovereign debt aftershocks, a mid-term election and then another debt debacle in Europe; the year of 2010 is behind us, thank goodness. If we were looking at a snapshot of the market taken at the beginning of the year, and another taken today, we would be hard pressed to find many significant changes. 3 out of every 4 stocks listed on the NYSE entered 2010 in a positive trend, and about as many will exit the year trending higher. Within the 40US economic sectors, 5 of the top 10 sectors at the beginning of the year are among the top 10 as we exit the year. 6 of the bottom 10 sectors entering 2010 are among the bottom 10 exiting 2010 as well. Had we not lived through 2010 we might come to the conclusion that very little change actually came to pass during the past 12 months. By comparison to 2008 & 2009 the past year could arguably be described as mild. It has been one of those years where when the dust settles, all the major domestic equity indexes will have had positive returns, with double-digit returns for the equity markets.
Despite all that has occurred on the surface of the market the words "what is, is" comes to mind as the leadership within the market has a very similar complexion to that of a year ago. The primary market indicator remains positive, albeit in overbought territory. Despite an exhale in the market since a peak in early November, trends remain positive. Certainly these things can change, and at some point they certainly will, but for now we see a market that remains generally strong longer-term but far less overbought near-term than we were just a few weeks ago.
Both domestic and international equities remain emphasized. Large caps have been out-of-favor relative to mid and small caps for the duration of 2010. Masking this a year in which knowing where to be in the market was more valuable than knowing whether to be in the market. 2008 was obviously an example of knowing whether to be in (or out of) the market, as equities were out of favor for the duration of the year. The International market leadership still points to the emerging markets. Weakness in the broad fixed income asset class continues as interest rates rise and demand falls. The 10 year yield index (TNX) has risen from 2.30% to 3.45%. Commodities continue to remain resilient overall.
Securities and Investment Advisory services offered through NBC Securities, Inc., member FINRA and SIPC. Investment products 1) are not FDIC insured, 2) not guaranteed by any bank and 3) may lose value including a possible loss of principal invested. NBC Securities, does not provide legal or tax advice. Recipients should consult with their own legal or tax professional prior to making any decision with a legal or tax consequence.
This is not an offer to sell or buy any securities products, nor should it be construed as investment advice or investment recommendations.
Despite all that has occurred on the surface of the market the words "what is, is" comes to mind as the leadership within the market has a very similar complexion to that of a year ago. The primary market indicator remains positive, albeit in overbought territory. Despite an exhale in the market since a peak in early November, trends remain positive. Certainly these things can change, and at some point they certainly will, but for now we see a market that remains generally strong longer-term but far less overbought near-term than we were just a few weeks ago.
Both domestic and international equities remain emphasized. Large caps have been out-of-favor relative to mid and small caps for the duration of 2010. Masking this a year in which knowing where to be in the market was more valuable than knowing whether to be in the market. 2008 was obviously an example of knowing whether to be in (or out of) the market, as equities were out of favor for the duration of the year. The International market leadership still points to the emerging markets. Weakness in the broad fixed income asset class continues as interest rates rise and demand falls. The 10 year yield index (TNX) has risen from 2.30% to 3.45%. Commodities continue to remain resilient overall.
Securities and Investment Advisory services offered through NBC Securities, Inc., member FINRA and SIPC. Investment products 1) are not FDIC insured, 2) not guaranteed by any bank and 3) may lose value including a possible loss of principal invested. NBC Securities, does not provide legal or tax advice. Recipients should consult with their own legal or tax professional prior to making any decision with a legal or tax consequence.
This is not an offer to sell or buy any securities products, nor should it be construed as investment advice or investment recommendations.
Thursday, December 2, 2010
Is Gold the Favored Metal?
So far in 2010 the S&P 500 Index has experienced a 9.50% return while the GreenHaven Continuous Commodity Index (GCC), an equal weighted commodity index, has seen a gain of nearly 17.08%. Much of this year’s return has been driven by metals, more specifically; precious metals. And, while commodities have outperformed equities this year, commodities have been an area of strength for the past decade.
The media has given you the impression that Gold was leading the precious metals race, while in actuality we find that Palladium and Silver are actually outperforming gold by a substantial margin. And while fear-mongers and gold peddlers are urging you to buy gold (and guns) and store it in your backyard, both Tin and Copper have beat the S&P 500 and Gold, and Cotton is up 85.78% for the year. So this may be a good time to buy linens, particularly high count Egyptian cotton sheets before prices increases work through the system.
Gold, while up 26.84% for the year is underperforming a basket of 20 Precious Metals related company’s stocks, which, as an aggregate, are up 36.55% for the year. So, a case can easily be made for turning to commodity-related equity ETFs as a way to get exposure to both commodities and equities. Now that we know what choices we have, the question is, "should you own the commodity ETF or a commodity-related company ETF?"
For answers contact me-
Securities and Investment Advisory services offered through NBC Securities, Inc., member FINRA and SIPC. Investment products 1) are not FDIC insured, 2) not guaranteed by any bank and 3) may lose value including a possible loss of principal invested. NBC Securities, does not provide legal or tax advice. Recipients should consult with their own legal or tax professional prior to making any decision with a legal or tax consequence.
This is not an offer to sell or buy any securities products, nor should it be construed as investment advice or investment recommendations.
The media has given you the impression that Gold was leading the precious metals race, while in actuality we find that Palladium and Silver are actually outperforming gold by a substantial margin. And while fear-mongers and gold peddlers are urging you to buy gold (and guns) and store it in your backyard, both Tin and Copper have beat the S&P 500 and Gold, and Cotton is up 85.78% for the year. So this may be a good time to buy linens, particularly high count Egyptian cotton sheets before prices increases work through the system.
Gold, while up 26.84% for the year is underperforming a basket of 20 Precious Metals related company’s stocks, which, as an aggregate, are up 36.55% for the year. So, a case can easily be made for turning to commodity-related equity ETFs as a way to get exposure to both commodities and equities. Now that we know what choices we have, the question is, "should you own the commodity ETF or a commodity-related company ETF?"
For answers contact me-
Securities and Investment Advisory services offered through NBC Securities, Inc., member FINRA and SIPC. Investment products 1) are not FDIC insured, 2) not guaranteed by any bank and 3) may lose value including a possible loss of principal invested. NBC Securities, does not provide legal or tax advice. Recipients should consult with their own legal or tax professional prior to making any decision with a legal or tax consequence.
This is not an offer to sell or buy any securities products, nor should it be construed as investment advice or investment recommendations.
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