Are Commodities Futures Too Risky for Your Portfolio? Hogwash!

From this week's Knowledge@Wharton: Everyone uses commodities such as wheat, cocoa, crude oil, butter, coal and electricity. But most investors know that speculating on commodities in the futures markets is only for the pros, and no sensible amateur would bet his retirement or college funds on sugar, silver, orange juice or feeder cattle. But are commodities really that risky? Using the most comprehensive data on commodities futures returns ever assembled, Wharton finance professor Gary Gorton and K. Geert Rouwenhorst, finance professor at the Yale School of Management, have reached a surprising conclusion -- that commodities offer the same returns as investors are accustomed to receiving with stocks.

Read the Knowledge@Wharton article HERE

Gorton and Rouwenhorst present their findings in a paper titled, "Facts and Fantasies about Commodity Futures." Download the entire paper HERE