If you were bullish on a certain commodity (say Copper), why would someone buy a certain stock that is in the business of copper instead of just outright buying the commodity?
You could buy the actual commodity, but then transaction costs will be huge, storage costs will be huge as well. You could buy a futures contract, but the futures contract is likely going to be for a huge amount money, probable consuming nearly 100% of most peoples portfolio.
I don’t mean buying the actual commodity, but the contract in the market.
Rydex Wrote: ------------------------------------------------------- > You could buy the actual commodity, but then > transaction costs will be huge, storage costs will > be huge as well. You could buy a futures > contract, but the futures contract is likely going > to be for a huge amount money, probable consuming > nearly 100% of most peoples portfolio. 1 copper contract is about $40K in copper and about $8000 in margin requirements.
you could also buy a commodity ETF that holds the underlying future.
buy JJC