Schweser V1 Exam 2 Afternoon Test- Q34, the WTF item set.
“He feels that using the indirect method of buying the stock of those companies to gain commodity exposure is an efficient and effective method for gaining exposure to commodities. This is not necessarily true because those companies often hedge their exposure to commodities”
So, a company is established. It is commodity oriented. They mine gold from teeth in a graveyard, or produce methane from piles of bulls sh&t. They brought teams of field experts from Commodostan. And at the end, their returns are not “necessarily” exposed to commodity because they’re iFFING Hedged. Then why bother from the beginning? Why they don’t just trade Treasuries? I’m Fed up (and Bundesbank up) from long long long chain of production, management, hedging, FX exchange,etc; all to gain at the end the risk free rate. Talk about value added.
Am quitting investment and becoming a farmer. I’ll hedge my tomatoes by Yoghurt Protected Greece Government Bonds.