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The Little Book of Alternative Investments: Reaping Rewards by Daring to be Different by Phil DeMuth, Ben Stein

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Chapter Five

Conventional Alternatives I: Commodities

To Make a Killing, Take Out a Contract

On the great hunt for alternative assets to stocks and bonds, our first stop must be commodities. Many of us were introduced to the wonders of commodities as they were explained to Eddie Murphy in the movie Trading Places: coffee . . . that you had for breakfast . . . bacon . . . which you might find in a bacon, lettuce, and tomato sandwich. For our purposes, we expand this list to include:

Agriculture

  • Butter
  • Cocoa
  • Coffee
  • Corn
  • Cotton
  • Lumber
  • Milk
  • Oats
  • Orange Juice
  • Rough Rice
  • Soybean Meal
  • Soybean Oil
  • Soybeans
  • Sugar
  • Wheat
  • Wheat (Chicago Wheat)
  • Wheat (Kansas Wheat)

Livestock

  • Pork Bellies
  • Lean Hogs
  • Live Cattle
  • Feeder Cattle

Energy

  • Coal
  • Electricity
  • Heating Oil
  • Gasoil
  • Unleaded Regular Gasoline
  • Crude Oil
  • Brent Crude Oil
  • Propane
  • Natural Gas

Industrial Metals

  • Aluminum
  • Copper
  • Lead
  • Nickel
  • Zinc
  • Tin

Precious Metal

  • Gold
  • Silver
  • Platinum
  • Palladium

However, our friend Jim Rogers recommends, “If you cannot spell commodities, I wouldn’t suggest buying commodities.” Don’t use the above as a shopping list next time you pull your big rig up to Costco. We’re talking about buying commodities in something called the futures market.

As Jim Rogers recommends, “If you cannot spell commodities, I wouldn’t suggest buying commodities.”

What is the futures market? We’re glad you asked.

Back to the Futures Market

Today, the center of the commodities world is the CME Group in Chicago, but the futures market for ...

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