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For the past week or so, I’ve been meeting our readers here to talk about how a prudent investor might build the optimum growth portfolio for 2010.
It’s a crucial question: Diversifying your money across the asset classes that are most likely to surge in the months ahead can make all the difference in the world. It helps ensure that all the items in your portfolio works together synergistically to boost your profit potential and cut your risk of loss.
So far, we’ve examined U.S. stocks … foreign stocks … fixed income investments … precious metals … and foreign currencies. Today, I need you to weigh in on our final asset class: Commodities.
First, though, let’s take a look at some of the answers to yesterday’s questions:
Do currency ETFs have a place in your portfolio?
Which currencies — the U.S. dollar, Canadian or Aussie dollar, euro, Japanese yen, Chinese yuan, Brazilian real or others — are you most bullish on right now?
What percent of your total investment capital do you invest in currencies?
At least one-third of our readers flatly reject the idea of diversifying a portion of their money into currencies …
William B. lacks the confidence to include currencies in his portfolio: “To be honest, I am not confident enough to invest in currencies with my level of expertise and have no currencies in my portfolio. I would include the Brazilian real if I were to invest in that market.”
Eugene agrees: “I am convinced that one can profit handsomely in [foreign] exchange,” he writes. “But that is too speculative for me. I’ll leave that to the Big Boys!”
But at least two-thirds of our readers disagree, saying that currencies can and should play an important role in a well-diversified portfolio:
According to Mike M, “Currencies, as of the past two years have been a part of my portfolio as a means of diversification. By trading currencies, I have broadened my knowledge on macro-economic and global situations, thus allowing for better decisions to be made regarding my trades.”
James P., who says he’s “all into currency,” writes: “I like currency ETFs and the likelihood of the dollar rising for now against the euro and British pound.”
Rachel D. says, “I have about 20% invested in currencies. I believe that the Norwegian krone and the Canadian dollar will do well this year.”
Gerard M., who also invests 20% of his portfolio in currencies, writes, “Currency ETFs are the answer to those of us not adept at the ‘currency’ market. I favor Brazil, China, Australia and Canada, the latter two for their commodity stash.”
Once again — remarkably well-informed insights and ideas!
And tomorrow, we’re going to summarize ALL of your responses to each of the asset classes we’ve examined — and begin the process of constructing the optimal growth portfolio for 2010.
First, though, I need your answers on our final asset class:
What portion of your portfolio do you have invested in commodities and natural resources?
Which commodities do you prefer?
And what instruments do you use — commodity ETFs, commodity stocks, futures, other?
Your answers will go a long way towards helping me help YOU build a more profitable portfolio for 2010.
Simply click here and use the “comments” area to share your thoughts. I’ll add my own thoughts as well.
Best wishes,
Larry
Related Posts
- 2010: Big Currency Profits Ahead? (02/01/10)
- Foreign stock bonanza ahead … or not? (01/27/10)
- The optimum growth portfolio for 2010 (02/03/10)
- How would YOU build the optimal portfolio? (01/12/10)
- Wall Street’s Achilles’ heel: How vulnerable are you? (01/25/10)
{ 60 comments… read them below or add one }
I have about a third of my investments in Canadian commodities. The government is strong, the banks don’t speculate, the mines are not subject to the whims of dictators etc like in many parts of the world, the country is safe, and the Asian countries will buy their commodities whether the US does or doesn’t . All in all, Canada is the place to invest and stocks like Quadra Mining. Altius, Vulcan Minerals, and Lundin Mining are examples of what I own.
Larry Edelson Reply:
February 4th, 2010 at 12:19 pm
Dear Ed,
Yes, indeed, Canada represents a great store of natural resources, and a strong currency to boot! Plus, as you note, Asia, especially China, is a great fan of the country and its assets. But a full third of one’s investments in any one region or asset class seems like a lot to me. Personally, I keep no more than 20 o 25% in any one area or investment class. – Best, Larry
being a commodity broker,farmer/rancher, fundamentally I see $75 crude and $3.25 corn, very profitable time for ethanol producers, exceptional growing conditions in 2009 produced very good crop any weather problems could send corn prices higher, however the trade believes that good growing conditions will prevail again, maybe, odds don’t favor that. I will be curious as how you believe the funds will treat commodities after your comment that the gov’t will do everything possible to keep commodity prices low for inflation purposes. I believe you. will be watching very closely your comments.
Larry Edelson Reply:
February 4th, 2010 at 12:19 pm
Dear Randy,
I don’t recall making that statement. To the contrary, I believe governments would be overjoyed if they see stable to rising commodity prices, It would mean their policies to reflate are working. — Larry
I like commodities, they are almost as liquid as currencies. I noticed an interesting thing happeneing starting the week of June 6, 2009. There was a 1000+ fold jump in volume in a large number of commodities. I assumed it represented big dollar hedging against wallstreet and washington( USD).I also saw a group with no volume increase–cocco,CRB, cotton, orange juice,sugar,pork bellies,oats,natural gas, coffee, S&P, DJ , dollar index, and 30 yr TQ. My take is these are things we are going to have to live without in the future. The rest “they” have decided we are going to need.
Larry Edelson Reply:
February 4th, 2010 at 12:20 pm
Dear Frank,
Most of that volume was likely due to simply rolling over June futures contracts to the next most active month, which was August in many cases. So I don’t see it as significant, just the usual roll-over process. — Larry
I believe that commodities should be in everyone’s portfolio. I like the grains ETF, JJA, because weather will play a role in increasing prices later this year. I also like the potash stocks; IPI, MOS and BHP, ERA. A well diversified portfolio should contain up to 5% of AG related ETFs/stocks. Need to be careful with some of the AG ETFs because the daily trading volume is quite low on some. Watch the charts and buy when favorable, not chase into peaks.
Larry Edelson Reply:
February 4th, 2010 at 12:20 pm
Dear Sam,
Agreed! — Larry
I have tried to keep it simple. I started to put away gold and silver coins mostly at face value inthe l960’s. Since then I have slowly added rare coins of all types. Since the 1990’s I have added buillion coins and bars. It’s unbelievable what this stuff is worth today!! Fiat currency is a fools game! So are most stocks priced in “mini-dollars!” It’s not too late today for anyone to save their wealth with hard assets of various kinds! My mentor was the late Dr. Franz Pick. God bless him because he was right all along!!!
Larry Edelson Reply:
February 4th, 2010 at 12:21 pm
Dear Roger,
You got it – fiat currency is a fool’s game! — Larry
I understand the logic that green energy investments will rise because governments are pumping money into this sector…probably creating another bubble. However, what I don’t understand is why oil companies are not drilling and producing oil from the vast Bakken reserves right here in the USA. Could you comment/explain? Is there an investment opportunity here?
Larry Edelson Reply:
March 5th, 2010 at 8:22 am
The Bakken reserves are HUGE, but costly to drill, refine, produce. However, I do believe it will be a viable project once oil averages a bit north of the $100 level, which should be next year.
Larry, Bryan Rich seems to have a different perspective than you regarding the future of the dollar, and I’d be very interested to hear your critique of his point of view (http://www.moneyandmarkets.com/the-four-stages-of-the-prospective-dollar-bull-market-38290) especially as it may relate to the price of gold & silver if, as he predicts, the dollar will increase in value for several years relative to other currencies. Thanks.
Larry Edelson Reply:
March 24th, 2010 at 9:11 pm
We disagree. It’s as simple as that. And for the last 9 years or so, I’ve been proven correct. Short term, the dollar can rally. Even for months. But long term it’s in a very well-defined bear market, both fundamentally and technically.
i like the NEW Iraq Dinar
what are your thoughts here?
Thank you,
Darryl
Have AUY read last newsletter about GRS at a hold. Considering selling some AUY to buy GRS but your recommendation is only a hold. You opinion please. I am a subsriber to Real Wealth report.
I am 30-35% invested in commodity-related stocks, not etfs. Am no genius so probably would be better off in etfs. Rarely get out in time.
i invest in the iraq dinars,what is your take on that?
We are very conservative. Too many big players and uncertainties in commodities in far off countries. Leading Australian banks have been offering pretty good term deposit returns. That’s our pick. I don’t trust the US$.
Regarding currency investments, I have only one representing less than 1% of my portfolio - Iraqi dinar.
I have about 12% of my portfolio in commodities and natural resources.
My preferred choices are gold, oil, water, energy and minor holdings in others.
I used commodity ETFS and commodity stocks for these investments.
Macro economic conditions are such that I currently have no positions in foreign currency. Changes in the conditions for open trade between countries,in my humble opinion, are to be tested soon with tarrifs to raise capital, restrictions to limit trade deficits, and greed for commodities of short supply such as rare earths. The sudde effects of these practices could cause gargantuan swings in currencies. A fall in imports from a challenged Chinese economy would cause huge fluctuations in aussie dollars and a shutdown of Nat Gas pipelines to Europe would have huge consequences for wester European countries.BRIC currencies would be the only ones I would consider and in particularly the Brazilian currency because of its vast untapped natural resources as well as it’s energy independence.
Respectfully,
W.D.Kearce
Yes, commodities for sure. Not directly, but through natural resource stocks. Ffeeport
McMoran, for example.
Commodities and natural resources make up about 35% of my portfolio: Gold: 15%, Energy: 10% and Agriculture: 10%. Most are stocks with a few ETF’s and mutual funds for greater diversification. Although it feels uncomfortable when in a correction mode, I’m staying the course given the government bureaucratic involvement and direction.
In the past I used to think, “If you didn’t know what else to do ,leave a large part of your portfolio in cash.” Well what’s the best cash? Gold and silver. Any excess liquidity should reside in real money, PERIOD.
WE have about 15% of our portfolio in commodities and natural resources - gold, energy in ETFs and mutual funds. Looking for Asian ETFs to invest in. Want to be where the money is and we are doubtful the US can give us the returns to grow our money.
I am retired & live on social security and an annuity which I draw from annually. I have just recently started to invest in silver mainly & some gold. coins from the American mint.they are discounted 10% for members
I am new to this and would like some advice…………………thanks
40% of my portfolio are in commodities/ natural resources. Stocks, ETF’s and mutual funds are used.
I especially like international stocks and ETF’s.
Heavy in commodities. My cycle studies indicate a very wet spring for the midwest and other cycles indicate a basic bull for commodities.
Hi Larry, I have about 70% of my investments in resources and commodities. Many of my holdings are in junior mining companies and an taking profits at 50-70%..Just sold FVI and recently did well with Troy. I live in Canada and have only about 15% of my equities in US- mostly in Phara, Some tech and some junior oil/gas holdings (services and pipelines). Very few holdings are considered long term holds. Jerry Draheim
Hi Larry,
I am 100% invested in commodities.
I like Copper, Nickel, Zinc, Uranium, Rare Earth and Silver.
I am invested in Aussie small caps ( some producing and some very close to starting production ). All have a good chunck of cash on their balance sheets.
My return since the market bottem of last year is more than 300%.
I believe Australia is best place to invest in for many reasons. It is a western democracy, it has very healthy and sofisticated banking system and last but not least it has massive undeveloped resources all over the country. I can provide you with a list stock picks if needed.
I hope this will help the discussion.
Regards.
John
This is all pretty interesting.
-Thanks
Commodities are where it’s at. I diversify among the different commodity classes using etf’s. I favor the miners and the metals. I think a lot of inflation is coming down the pike to show up suddenly so I want to be invested and ready for it. I have about 10% in agg. also. About 30% in metals and mining, about 30% in silver and 10% in gold miners. The rest in cash. I sleep well at night.
I haven’t traded currencies in a few years but still keep abreast of what’s going on. I like to trade futures in the Euro/dollar market. There is a lot to be capitalized on there no matter what the market is doing. A person doesn’t need but a tiny, tiny sliver of the pie to create incredible wealth.
I would like advice on how to open a Canadian bank account. It would seem prudent to get money out of the US before a possible crackdown.
Agricultural ETF’s, folks have to eat no matter what, fertilizer and agricultural input stocks ie POT, BHP. I avoid commodity contracts because you may have the trend absolutely correct, but you can get slaughtered by the day to day swings or if your timing is off. Also crude ETF’s
I currently have nothing invested in the commodities market, but intend to get back into commodity options soon.
I’m intending to just do Technical analysis and paper trade for now on multiple contract lines.
Natural gas is one of my favorites but simpler/ less expensive options like sugar and corn are probably on my horizon for a bit.
Sounds great, but I wonder how I could manage to invest in anything when I don’t even know what an ETF is. The terminology is as baffling for me as the ideas you present. I have held gold for years and got it when prices were down. It rose to the 800’s and I kept because it was supposed to be hedge for inflation. Then came diamonds as an inflation hedge. The Sellers turned great profits and afterward came the end of the madness, and the buyers were stuck with unsalable merchandise. Gold is at an all time high again: I don’t want to be pulled in. Sure gold went up, but factor how many years it took for this to happen, the annual percentage rate of the the rise amounted to a bag of beans.
What portion of your portfolio do you have invested in commodities and natural resources?
All of it.
Which commodities do you prefer?
Metals
And what instruments do you use — commodity ETFs, commodity stocks, futures, other?
Mining Stocks, very few ETFs
Hi Larry, I love reading all the e mails from all your savvy investors. I am at a point where I had my IRA and it was losing money so I put some in an annuity and some, more liquid, in a bond. Now I don’t know where I should invest and would appreciate any help I can get. I would like something that would pay a dividend sometime. I know gold or silver isn’t an option in that it’s safe and secure but I need dividends so that I can invest them. I don’t know if you ever receive this or your staff does but this is my situation I hope you can help. Thank you, Mary Langley
Right now I am all in cash. I need suggestions across the board on sectors expected to do well. Another debate is are you better to use stops. I just got out from under a money manager because he lost $12,000 in a month for me. I don’t think it was the stops & timing that got me in trouble as much as his buying when the 30 day MA was lower than the 90 day. Over a 10 year period it appears to me you are best to ride for the long term, but I do not think I can stand watching the loss the market took last year. What do you recommend & why?
thanks
Australian Banks are offering much better rates on Australian $ than USA and European Banks are offering on US$ and Euro deposits. Australian $ is going to be one of the safest currency in 2010. Silver and Platinum prices should be very strong in 2010 in my opinion.
20% in Oil Cnooc.
5% in oil ETF
5% in Nat gas ETF
5% in Rio Tinto
5% in BHP Billiton
5% in Uranez. ( Uranium prospector nd producer)
5% in Freslinno ( Silver producer)
5% in Gold etf.
Views please.
Thinking of buying an etf to cover $ declines.
Views please.
Peter
Only have Iraq dinar and Vietnam Dong…been following both for 5 years.
I have 40% of my investments in commodities -stocks and ETFS
Largely invested in hard assets, mines, large and small, India Fund , Tiawan etc.
90% in commodities, predominantly precious metals and oil. I follow your group’s writings, and have most of all Canadian stocks..
I don’t currently invest in paper currencies. They are all fiat. May be ok for the time being, but eventually all of it will need to be in physical bullion. NWO wants Carbon Credits to be the new currency. What a joke.
3 % in commodities plus whatever is in the large percentage of index funds that I have.
ALL OF IT IS IN GOLD =======+++++++======++++++++++
55% and growing!
I’m 30% into commodities and natural resources and may beef that up some if gold & silver drop more in price. I’m very happy with my MLPs in oil that I’ve held now for several years - KMP and KMR. SLB has treated me well too. I have gold and silver ETF gains and hoping for more.
I simply don’t trust the vendors of hard coins and don’t want anyone holding my hard assets for me.
I will ne attending The Money Show in Orlando this week, hopefully I will receive insight into where to put my money in 2010 with little downside risk. Currently I am about 50% invested in commodities mainly gold and silver and oil and gas ETFs. ETFs on China agricultural market is about 5% and the rst is in domestic mutual funds that I have held for many years. So far the gains noticed for 2009 was minimal and this year nothing. I would like to consolidate some of my investmants into foreign stocks or ETFs and get out of funds whose value is dependent upon the dollar.
Here is my comments II am old and retired on fixed income (85 Y.O) worked and saved for rainy days.
I save each week Looks like the younger people had the attitude they could spend and spend using
plastic.Some bought two or more automobiles,T.V,s etc. homes priced at $500,00 yet the mostly made less than $50,00 a year.The govenrment came along bailed them out.Now they.The same goverment.will not pay me a Cola for two years.At the same time Gasoline and fuel cost is higher and many others thingsed to live.My Dollar is now worth less than it has every been in my life time.
I am pissed off. I know there is nothing I can do.
The you liberties and do goodiers elected a me man for change. I hope they are satisfied,he is my president and will be until he is out of office.(I always have believed ) in support even LBJ.
Looks as the Chinese (Commies) will be the ruler of the world and never fire a shot.The Russiians
lost lost now it is a question if they really did lose the 22year iI spent in military looks lake for nothing.
Yours Roy L.Cumbie
i have invested about 10% of my porfolio in natural resources
I presently have 27% of my holdings in “Commodity” type investments. Primarily Gold & Copper
The Dollar is looking like a ponzi scheme that’s about run it’s course. Government debt and printing presses has guaranteed it’s demise. The only safe place to be is commodities. Specifically physical gold, and silver. My position is currently only about 10%, but I think 50% or more is my goal with the other half invested in oil and agriculture ETFs. I think we will see a major correction soon, and a better buying opportunity for metals.
About 60% of my current portfolio is in commodity EFTS with a focus on Gold and energy. Another 30% isi in foreign stocks, 10% in domestic stock including cash.
Larry, this has been a difficult time for me to “hold” when everything I’m seeing is falling (last week)
I can’t wait for you to comment and analize the positions we hold and where they’re leading us.
I might as well ask it.. when do I get back into positions I sold ?
.. signed, the quitter.
Larry,
30% of my holdings are in silver - ETC/s. Hopefully, even though it is at an all-time high; this remains a solid move for the next 25 months or so?
Thanks for all you do.
The article “Playing it safe with China” is that really possible? This article about the global organization that is set on improving the world seems to fit the discription of the Bilderberg Group and the new world order. I am oppose to that. I am wondering is it so wise to investing in China so much that it leaves the USA in the dust. Watching out for wolves in sheep clothing seem to be more and more in todays world
Mr Cumbie, we have some things in common (when is that last time you were addressed formally by someone with whom you have not been introduced?). Like you, I am a bit long in the tooth, and I fear for my grandchildren. For the past five years or so, I have given them gold bullion coins once a year to serve as Birthday and Christmas gifts. Last year may be the last year that I can do so, as I have a middle-aged daughter that has, through no fault of her own, financial problems. My son has the grandchildren.
My own portfolio consists of 1/4 (+) bullion coins, 1/4 (-) a CD, 1/4(-) stocks - Canadian energy & utilities,
and 1/4 (+) Lincoln Benefit Life Investments.
As for military service, I did my eight years in the ANG and active reserve, with nine months active duty in NE France as a recalled reservist (Berlin “crisis”).
I retired in ‘93, and have had time to read and think about my life long interests 0in History and Politics. I have come to believe that our last morally justified war was the War of 1812.
I have become cynical about our past and current governance. The last President who modeled his presidency after the ideals of our founders was Calvin Coolidge. Reagan may have approximated them. Post Reagan, our presidents have been venal, immoral, and evil, in varying degrees.
25% Copper, zinc,iron ore and lead, 25% gold, platinum and silver, 25% molybdenom, rare earths, lithium and palladium, 25%Coal, gas, diesel from gas, thorium, uranium
Total equals 33% of portfolio
Dear Larry, Last year I held Vale Mines s.a. and I dabbled in gold and silver a little. I also love BP oil. I guess you heard about the sword fish attack on an oil line off of africa royal dutch i think. This year I bought pcx and sold for a profit. I may buy in again. Still have the BP and gold rgld. I recently bought silver, palladium and Platinum. I know they are industrial metals and the future is resource wars so i figured i’d buy some resources. I also jumped into housing real quick because I am usually a contrarian by nature. Love BIDU but hate the price. Fidelity allows foreign exchange transactions i may try some. Send a real tip to me someday.
Most all of my portfolio is in commodities and natural resources. I know that the portfolio should be more diversified. However, if we are playing the stock market for profit then why look elsewhere? At this time, I like the precious metal, especially gold and silver miners and also oil and energy stocks.
yes commodity i think will go up ..
commodity are on the way up ,stock are on there way down. this well happen when you see food $ going up everyboby will feel it at the supermarket.
LARRY, BEING SMALL POTATOES I STILL FOLLOW YOU CLOSELY WITH WHAT MONEY I DO HAVE-BUT NOW I WOULD LIKE TO LOOK AT A FIXED INCOME,WHICH I DO NOT HAVE, I HAVE NO IDEA OF WHAT WOULD BE SAFE- PLEASE HELP ME CONSIDER MY BEST OPTIONS FOR A MONTHLY INCOME– IT SEEMS I DO NOT TRUST THE SCAMMERS! BECAUSE I DO NOT KNOW WHO THEY WOULD BE -FOLLOW YOU DAILY –THANKS FOR ALL YOUR INSIGHT…CAROL