Passive Aggression in Commodities-WSJ

Having unfortunately worked in the commodities industry I can speak from experience that the vast majority of people lose money buying or selling commodities.  This is particularly accurate when brokers are charging high commission fees and are aggressively trading accounts.  Commodities are much more difficult to value than businesses so it is inherently a more speculative endeavor.  If you really want exposure to commodities there are wonderful options such as buying businesses that produce the particular commodity that you want to invest in.  This doesn’t always work as can be seen by the outperformance of the GLD fund versus gold producing stocks, but in general it is a better way to go about investing in the sector.  Buying and selling futures contracts is often a fool’s errand unless you are doing so to hedge, or you have a long and audited track record doing so successfully.  CTA’s are often misrepresented as well so the investor must be extremely cautious as to the fees being charged, and the number of funds that the manager runs.  There are companies that have 20-30 different funds and just attempt to market the fund that is showing the best performance over a short term period.  Often these “good performing” funds have very little in assets under management, and the performance might be the result of just one or two positions.