The text said there is a debate as to whether or not commodities should be considered an asset class because their price tends to fall over time, not rise. Then it goes on to say investing in commodities is good for your porfolio because they have a similar risk-return profile as equities, then shows a graph of them rising over 100 years. WHAT THE FRICK IS GOING ON HERE!?
There are a few theories where the author discusses it and comes to no conclusion. Just get the gist of it and move on.
Reggie Wrote: ------------------------------------------------------- > The text said there is a debate as to whether or > not commodities should be considered an asset > class because their price tends to fall over time, > not rise. Then it goes on to say investing in > commodities is good for your porfolio because they > have a similar risk-return profile as equities, > then shows a graph of them rising over 100 years. > WHAT THE FRICK IS GOING ON HERE!? The graph is probably assuming that the commodity index is constantly being rebalanced. Rebalancing a commodity portfolio is essential to sustaining long-term gains.
Thanks bpdulog. Sorry for freaking out, it was just a contradiction that I don’t need right now.
Ohhh Chuck, you the man, completely forgot about this. And I believe it was on the mock. Thank you sir