Question: Several years ago, probably more years than I care to think about, you presented your thoughts on a balanced portfolio that included commodities. The commodities part was not an insignificant percentage, maybe 20%. I jumped right in at that time. At first the commodity part did very well. Here lately, of course, not so well. Read more »
Are Commodity Futures a Good Hedge?
Question: I’ve been holding PCRDX since 2006 in a tax-sheltered account. How have I done? What are your current thoughts on commodities? Answer: PCRDX is the PIMCO Commodity Real Return Strategy Fund, which uses Treasury Inflation Protected Securities (TIPS) as collateral for a 100% long investment in a basket of commodity futures. Depending on when Read more »
Lesson 21 – A More Sensible Use of Hedges
As I mentioned in the last lesson, the Permanent Portfolio (PP) is NOT an example of a well-diversified portfolio. It does, however, have, in my opinion, three excellent hedges: Treasury bills, Treasury bonds, and gold. Hedges, as insurance, are to protect you against losses you can’t afford to take. If you’re a long-term investor, a Read more »
Lesson 19 – Panic Insurance
The great investor, Warren Buffett, has said, “Unless you can watch your stock holding decline by 50% without becoming panic-stricken, you should not be in the stock market.” Buffett’s Berkshire Hathaway holding company has endured such declines multiple times during its climb from $15 per share in 1965 when he took over the company to Read more »