Commodities and inflation are in the same headlines time and again. So what's the connection?
- The real definition of inflation
- Commodities as an inflation driver?
- Commodity investments as an inflation hedge?
What are commodities? It seems like a simple question. Ask someone on the street and they'll probably say "oil" or maybe "gold."
Those are good examples, but they don't tell you what really makes a commodity a commodity. And understanding that is the first step to becoming a better commodities investor.
Now it's time for the big question: Why invest in commodities at all?
The short answer is that, based on historical data, adding commodities exposure will increase your returns while lowering your risk.
Why? Well, to understand that, we first have to talk about the single most important topic in investing: asset allocation.
The company behind the hugely popular US Oil Fund (USO) and US Natural Gas Fund (UNG) files for an inverse oil ETF. Matt Hougan and Dave Nadig explain how this is fundamentally a different animal than the inverse and leveraged funds that have made so many unhappy headlines.
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