20.12.2013 - Investors should abandon long-term commodity bets
A key rule in financial markets is that rational investors should not take unnecessary risks. It is strange, then, that some savvy investors still allocate to commodities over a long-term, five-year-plus horizon. The assumption is that commodities diversify portfolios, hedge against inflation, and, in the case of gold, offer a safe store of value. But our research suggests these justifications for long-term bets on commodities are illusory. First, the correlation between commodity and other asset price changes was near 20 per cent in the 1980s and 1990s. Commodities were better placed to diversify investment portfolios and hedge against risk...............................................Full Article: Source
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