What is your commodities stocks/indexes allocation?

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What is your allocation of stocks/indexes specifically categorized as commodities?

0%
52
74%
1-4%
8
11%
5%
4
6%
6-9%
2
3%
10%
2
3%
>10%
2
3%
My house is full of gold
0
No votes
 
Total votes: 70

Topic Author
Impromptu
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What is your commodities stocks/indexes allocation?

Post by Impromptu »

Do you own any stocks or indexes that are specifically categorized as commodities?
What percentage of your goal allocation are made up of commodities?
Has their poor performance caused you to modify this percentage?
Does the current world situation make you think they will go up soon?
Does the current world situation make you think they will keep declining?
Does the current world situation make you think they will stay the same?
Are you buying any soon?
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saltycaper
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Re: What is your commodities stocks/indexes allocation?

Post by saltycaper »

I have followed PICK and RING for some time. Occasionally, I think about buying some. But they are not in my asset allocation strategy. So, I don't.
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chaz
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Re: What is your commodities stocks/indexes allocation?

Post by chaz »

0%...
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livesoft
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Re: What is your commodities stocks/indexes allocation?

Post by livesoft »

I don't see any reason to have a specific asset allocation to commodities now or in the near future. I can reach all my goals easily without using them.
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bhsince87
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Re: What is your commodities stocks/indexes allocation?

Post by bhsince87 »

I own some indirectly through energy company stocks and Vanguard's energy fund.

I prefer to own companies which are run by people trying to make a profit, as opposed to owning the "stuff" itself.

That being said, I own a bit of silver and gold, which some folks consider commodities. I consider them another form of money.
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ddj
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Re: What is your commodities stocks/indexes allocation?

Post by ddj »

0%. I didn't count my handful of silver dollars and half dollars.
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nisiprius
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Re: What is your commodities stocks/indexes allocation?

Post by nisiprius »

Ibbotson published some research in 2006 suggesting a commodities allocation could improve a portfolio and it quickly became a sort of fad. Oddly enough, right after the research was published, commodities developed a high correlation with stocks and ceased to be a good diversifier. Funny how things like that happen.

In 2013, Consumer Reports Money Advisor reported:
Worth the trouble?

We created two hypothetical portfolios that were worth $100,000 at the beginning of 2008. We invested one in an traditional mix of 60 percent stocks and 40 percent bonds. The other contains 51 percent stocks, 34 percent bonds, and 15 percent commodities, split evenly among three ETFs: the broad-based iShares S&P GSCI Commodity-Indexed ETF, SPDR Gold Shares, and iShares Global Timber and Forestry. During the past five years there was little discernible difference between the two portfolios; volatility wasn't reduced, nor were returns greater.
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Index Fan
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Re: What is your commodities stocks/indexes allocation?

Post by Index Fan »

1-4% for a small amount of GLD & silver/gold coins.
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tludwig23
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Re: What is your commodities stocks/indexes allocation?

Post by tludwig23 »

Really don't own any, but I chose 1-4% because I have some 10 oz. and 100 oz. bars of silver used for paperweights and doorstops respectively.
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tigerman3
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Re: What is your commodities stocks/indexes allocation?

Post by tigerman3 »

About 4% in IAU (gold etf) as a theoretical inflation hedge though I'm well aware of the arguments against.
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ruralavalon
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Re: What is your commodities stocks/indexes allocation?

Post by ruralavalon »

0%....
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Impromptu
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Re: What is your commodities stocks/indexes allocation?

Post by Impromptu »

I currently have 0%. My target asset allocation that I am following has 5% commodities. As a new investor I have bought all of my other target classes, so now it is time to bite the bullet and buy commodities or change my target asset allocation. I don't have a great reason to change my target, so I'll likely buy in the near future.

I can come up with many scenarios of world events having to do with China, Brazil, Russian, terrorist, hurricanes, etc, that would explain why commodities continue to decline, stay the same, or skyrocket. The world economy is too complex predict. Whatever happens, someone will cherry pick events to explain it with their 20/20 hindsight vision. If I were to time the market, commodities have been down for many years, and this may be a good time too buy low, especially for a young, long term investor who may benefit from an early bear market.

The Greenhaven Continuous Commodity Fund (GCC) is the one I am most interested in. It is divided between 17 equally weighted commodities. Natural gas, crude, heating oil, corn, wheat, soy beans, soy oil, live cattle, lean hogs, coffee, cocoa, sugar, cotton, platinum, gold, silver, copper. Most other large funds are more heavily tilted toward energy.
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Lou
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Re: What is your commodities stocks/indexes allocation?

Post by Lou »

livesoft wrote:I don't see any reason to have a specific asset allocation to commodities now or in the near future. I can reach all my goals easily without using them.
'+1

......at least, I hope I can reach my goals EASILY.......

As I age, the required strategy seems to become simpler!.......
technovelist
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Re: What is your commodities stocks/indexes allocation?

Post by technovelist »

0%. BTW, I don't consider gold to be in the category of "commodity"; it is primarily money, with some commodity uses that account for a relatively small part of its value.
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staythecourse
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Re: What is your commodities stocks/indexes allocation?

Post by staythecourse »

nisiprius wrote:Ibbotson published some research in 2006 suggesting a commodities allocation could improve a portfolio and it quickly became a sort of fad. Oddly enough, right after the research was published, commodities developed a high correlation with stocks and ceased to be a good diversifier. Funny how things like that happen.

In 2013, Consumer Reports Money Advisor reported:
Worth the trouble?

We created two hypothetical portfolios that were worth $100,000 at the beginning of 2008. We invested one in an traditional mix of 60 percent stocks and 40 percent bonds. The other contains 51 percent stocks, 34 percent bonds, and 15 percent commodities, split evenly among three ETFs: the broad-based iShares S&P GSCI Commodity-Indexed ETF, SPDR Gold Shares, and iShares Global Timber and Forestry. During the past five years there was little discernible difference between the two portfolios; volatility wasn't reduced, nor were returns greater.
Nisi,

Now come on you know it means nothing looking at a whole 5 years of data, especially since that data was coming out of the great recession where nearly all asset classes had very high cross correlations. Also, the timber and forestry fund is not a pure commodity play as it is an equity play in that sector so one would expect high correlation with the 60% stock component.

I will bet you take out the forestry equity play and divide the rest into the other two alternatives and let it play out 20 years and you will see differences. Now if that is better or worst is a different story, but it will be different and CCF and gold have very low or no correlation to the other 2 asset classes (stocks and bonds).

Good luck.
"The stock market [fluctuation], therefore, is noise. A giant distraction from the business of investing.” | -Jack Bogle
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leonidas
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Re: What is your commodities stocks/indexes allocation?

Post by leonidas »

I have gold and silver coins/bars and I own the ETF SGOL. It totals about 5% of my portfolio. pre 2007 I was nearly 9% but I decided to dial back to 5% and have been pretty stable since then.
magneto
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Re: What is your commodities stocks/indexes allocation?

Post by magneto »

Impromptu wrote: Do you own any stocks or indexes that are specifically categorized as commodities?
Yes income producing commodities fund
What percentage of your goal allocation are made up of commodities? 8% of stocks
Has their poor performance caused you to modify this percentage? No
Does the current world situation make you think they will go up soon? No idea
Does the current world situation make you think they will keep declining? ditto
Does the current world situation make you think they will stay the same? ditto
Are you buying any soon?
continuing to buy on weakness

Rather like real estate, it is a useful, seemingly uncorrelated (with the main stock markets), asset.

Very little else is cheap at present, other than Russia!

Hope that helps

Volatility can be welcomed as a friend.
'There is a tide in the affairs of men ...', Brutus (Market Timer)
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brisni
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Re: What is your commodities stocks/indexes allocation?

Post by brisni »

I have about 5% in PCRIX. Of course, it's been drifting down, and I admit it's hard to rebalance into it.
However, I've been around long enough to know that what looks bad one year can suddenly look great the next.
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nedsaid
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Re: What is your commodities stocks/indexes allocation?

Post by nedsaid »

Impromptu wrote:Do you own any stocks or indexes that are specifically categorized as commodities?
What percentage of your goal allocation are made up of commodities?
Has their poor performance caused you to modify this percentage?
Does the current world situation make you think they will go up soon?
Does the current world situation make you think they will keep declining?
Does the current world situation make you think they will stay the same?
Are you buying any soon?

My portfolio does not contain commodities as such, certainly I have investments in companies that produce them through the various funds that I own. Nor do I own an energy fund or a natural resources fund. I do own a couple of Timber REITs and stock in a major oil company. Certainly whatever investments I have in Emerging Markets are a commodity play which is one reason these funds haven't done very well for a while.

Rick Ferri's book "All About Asset Allocation" says that long term commodity prices go down 1% a year in real terms. That doesn't sound like a good investment to me. I expect this trend to continue. But investments in commodity producing stocks have proven to be profitable.

I have thought about buying a Precious Metals Mining fund as a portfolio diversifier but I have passed.
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bottomfisher
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Re: What is your commodities stocks/indexes allocation?

Post by bottomfisher »

Currently - 0%. Previously invested Vg Energy fund and Vg Precious Metals & Mining fund. But have since exchanged them for TSM/TISM in effort to simplify portfolio. Occasional temptation to tinker into such allocations again, but so far have resisted...
staythecourse
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Re: What is your commodities stocks/indexes allocation?

Post by staythecourse »

leonidas wrote:I have gold and silver coins/bars and I own the ETF SGOL. It totals about 5% of my portfolio. pre 2007 I was nearly 9% but I decided to dial back to 5% and have been pretty stable since then.
Just curious why SGOL? I know It is domiciled abroad, but the ER is more then 10- 20 basis points then GLD or IAU that do the same thing? Also, if I remember correctly the trustee of SGOL and some others are the same which are under U.S. law if something was to happen, i.e. confiscation again.

Good luck.
"The stock market [fluctuation], therefore, is noise. A giant distraction from the business of investing.” | -Jack Bogle
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