Tags: WSJ | Careful | investing | commodities

WSJ: Be Careful About Investing in Commodities

By    |   Sunday, 27 April 2014 03:39 PM

Commodity prices are rebounding so far this year after falling since May 2011. But The Wall Street Journal urges caution before you jump in to buy.

The Dow Jones-UBS Commodities Index has climbed 9.8 percent so far this year, after dropping 20.5 percent the previous 18 months.

"The rebound may stir hopes that a longer-term boom has resumed after three rough years for natural resources, and a measured bet could pay off," writes Christian Berthelsen of The Wall Street Journal.

Editor’s Note: 5 Shocking Reasons the Dow Will Hit 60,000

"But for ordinary investors, commodities often are a raw deal. They should take a hard look before loading up."

First, you should figure out if you even need commodities, Berthelsen says. You might already have shares of companies that are exposed to commodities, such as energy corporations.

If you decide to invest in a commodities mutual fund or exchange-traded fund (ETF), you can choose one that invests in a broad array of commodities or one that invests in a single sector or commodity.

The broader funds make more sense for an investor who wants a basic exposure to commodities, Berthelsen writes.

Some experts are quite enthusiastic about commodities now. "We feel sentiment is turning," Pierre Andurand, managing partner of Andurand Capital, a hedge fund firm, told the Financial Times.

"Pension funds are coming to us and saying they want to invest in commodities while others aren’t looking." He said "smart investors" worried about potential declines in the stock market are turning to commodities.

Editor’s Note: 5 Shocking Reasons the Dow Will Hit 60,000

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Commodity prices are rebounding so far this year after falling since May 2011. But The Wall Street Journal urges caution before you jump in to buy.
WSJ, Careful, investing, commodities
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2014-39-27
Sunday, 27 April 2014 03:39 PM
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