Commodities, as an asset class, have had exciting performance year; well maybe, if you had the right index. A quick look at returns over the last year shows that if you held the SPGSCI index through the GSG ETF, you would have gained a very attractive 19 percent return. If you held the broader-based Bloomberg commodity index (BCOMM) (DJP ETF) you would have received only 3.2%. Both are well-defined indices, but the performance difference would have been in the double digits. This is all based on the weighting of the index. SPGSCI has a 2/3rds weighting in energy while the BCOMM only has a 30 percent energy weighting. If you liked energy, you would have been a star. If you preferred diversity, you would have been made only a slightly positive gain … Read more Commodity Gains Existed Over The Last Year, But It Depended On The Index Used

                  Correlation is not causality. Blending two variables on the same graph does not make a relationship, but there is a core link with the relationship between real and financial assets.  Financial assets are related to the future ability of issuers to generate cash flows for dividends or for paying down debt. Growth in real assets are linked to the demand for resources to sustain current and future consumption. Financial assets are at all time highs versus what is considered real assets; commodities, real estates and collectibles. Real assets usually exploded in … Read more The Relationship between Financial and Real Assets is at Extremes – It Can Be Exploited

Correlation is not causality. Blending two variables on the same graph does not make a relationship, but there is a core link with the relationship between real and financial assets. Financial assets are related to the future ability of issuers to generate cash flows for dividends or for paying down debt. Growth in real assets are linked to the demand for resources to sustain current and future consumption … Read more The Relationship Between Financial or Real Assets is at Extremes – It Can Be Exploited

Commodity index investing has not been very successful for investors as measured by leading index total returns since the Great Financial Crisis. The end of the super-cycle has been tough on most investors and only recently has there been a period of extended positive returns based on the rise in oil prices. Is there any relief for investors? … Read more Commodity Returns Over the Long-Run – A Good Diversifier, So Get Back in with an Asset Allocation

The benefits from using algorithms are well documented, yet they are still not used for many decision-making situations. The reasons for this lack of use are varied. It could be self-interest. It could be algorithms anxiety. It could be a lack of confidence in the modeling process. If there is a high level of uncertainty concerning the most effective model, there may be fear of being wrong … Read more You May Not Want to be Bound to an Algorithm – So Use a Dashboard as a Decision Support Tool