First I must admit that I am a commodities bull. Although Iâ€™ve never owned a futures contract personally, Iâ€™ve been the errand boy and book keeper for two bosses who were burned to the crisp playing the futures gameâ€¦. one to the point of folding a bank!
Over the years Iâ€™ve earned my stripes working in several mid-sized oil and gas production companies and consequently that is what I know and where my investments are focused. Iâ€™ve recently watched the price of other commodities and their end products such as Jockey shorts increase. Despite my urge to play in these games, Iâ€™ve gained respect for what I donâ€™t know and avoided the temptation.
Iâ€™ve had a cautious distrust for ETFâ€™s as they tend to average the good and the bad in a sector creating inferior results to my personal picks.
There is however, an ETF that has emerged that Iâ€™ve begun to enjoyâ€¦... United States Commodity Index Fund [USCI]. What makes USCI unique is that its makeup is rebalanced monthly with 14 commodities selected from a basket of about 28. What really caught my eye is that the selection algorithm includes an inventory on hand component.
Since inception in August of 2010 USCI has effectively compounded at a rate of .2% per trading day! Third grade math says using 50% margin this equates to a measly 170% per year.
This one goes in my buy and hold portfolio.
The Tycoon Report