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I was just wondering if some could help me out with some theoretical background regarding the role of commodities in a diversified portfolio for an individual. Portfolio consists of a broad and global mix of stock that represents most of the portfolio. The ETF has shown a terrible performance in the last years that shows a consistent negative trend. I know that might very well be due to the general evolvement of commoditiy prices.
But in light of the situation, I was wondering how the situation is from a theoretical point of view. Is this just a coincident or do the costs of investing in commodities storage, negative roll return give rise to the assumption that on the long term negative returns should be expected from this way of investing in commodities. Could someone point me the right direction regarding this, maybe provide some reliable sources regarding this topic?
So, they do not have a fundamental positive return, other than inflation. To expect a positive return from buying commodities or gold, you would have to believe that someone in the future will be willing to pay a higher price for these assets.
Perhaps the commodities will be scarcer in the future, or perhaps economic growth will increase their demand. However, either way, the investment return is not intrinsic to the physical assets. Thanks for yor replys! Let me link two articles that I have found regarding this topic and that more or less reflect my understanding.
Once again, we will discuss leveraging portfolios in the future articles. But this makes only sense to invest in when you can at least expect some positive return on the asset class in the long run.
While the funds are fine for daily trading, holding them long term has spelled disaster. So again, I am wondering if this is just a longer phase of negative returns or if this will be a normal status for the future time. Galli I see the same situation with negative roll returns as written in my first post but I am lacking the data to check which commodities are in contango and what the impact of the roll return is.
If you have access to futures you should be able to see futures curves by product. I found a lot of articles about the negative effects of contango, it is like a rabbit hole. One that is very interesting I want to share here is about a direct comparison of a oil and a gas ETF to the evolvement of spot price. This looks rather devestation. Sadly, I could not find more information about which etf holds how much of commodities that are in contango, what the roll effect has been about the last year etc.
Questions that surely rise to any investor thinking about this. Thus I have closed out the position for now. I still would very much like to know more about this investment, so any comments are much appreciated. High vol, low expected return in the long-run. Stick to equities, fixed income, real estate and infrastructure in my opinion.
If liquidity is not a concern, then invest in illiquid assets for the long-run premium pick-up. Stay away from commodity ETFs, especially if they are an L. Well, this is not a convinient option. To be honest, I am quite confused that there seems to be no easy and inexpensive way to get a exposure on commodities.
For gold alone this is no problem. There must be some way to get exposure to a broader mix or basket of commodities?? Skip to main content. Be prepared with Kaplan Schweser. Mercutio Jun 5th, 5: Hi folks, I was just wondering if some could help me out with some theoretical background regarding the role of commodities in a diversified portfolio for an individual. Is this just a coincident or do the costs of investing in commodities storage, negative roll return give rise to the assumption that on the long term negative returns should be expected from this way of investing in commodities Could someone point me the right direction regarding this, maybe provide some reliable sources regarding this topic?
Automate your Excel models with the industry's most accurate financial, market and economic data. It is the best forum. Galli Jun 6th, 7: Mercutio Jun 7th, 4: Let me link two articles that I have found regarding this topic and that more or less reflect my understanding https: The following article takes up on the discussion about contango we just had http: Galli Jun 7th, 7: A quick search on google came up with this, keep in mind this is an old article.
Mercutio Jun 14th, 4: To follow up on this: Carson Jun 15th, 9: Galli Jun 15th, Mercutio Jun 16th, 9: You could just buy a bunch of precious metals and store them in your home. Mercutio Jul 19th, 9: