Authors: Amine Bouchentouf
ISBN-13: 9780470049280, ISBN-10: 0470049286
Format: Paperback
Publisher: Wiley, John & Sons, Incorporated
Date Published: December 2006
Edition: (Non-applicable)
Amine Bouchentouf is President and Chief Executive Officer of Renaissance Investment Advisors LLC. Renaissance is an international financial advisory firm headquartered in New York City, which provides long-term strategic advice to individuals, institutions, and governments around the world.
Amine is a world-renowned market commentator and analyst and has appeared in media in the United States, Great Britain, France, the United Arab Emirates, and Brazil. He is a member of the National Association of Securities Dealers and the Authors Guild and is also involved with the Council on Foreign Relations. He offers regular market intelligence briefings through the Web site commodities-investor.com.
Book Synopsis
Since 2002, commodities have outperformed every other asset class including stocks, mutual funds and real estate. If you’re itching to get in on the fun and profit, Commodities For Dummies is the resource you need to find out how to break into the commodities market and understand how to trade and prosper.
You’ll discover:
How commodities stack up against other investment vehicles
How to identify, manage, and overcome risk
The pros and cons of futures, equities, ETFs and mutual funds
Specific techniques for analyzing and trading in commodities
Powerful profits in energy—crude oil, natural gas, coal, nuclear, and alternatives
What you need to know about trading in metals—precious and not-so-precious
How to grow your portfolio with farm products
Featuring time-tested rules for investment success, this comprehensive, user-friendly guide helps you minimize risk, maximize profit, and find the shortest route to Easy Street.
Table of Contents
Introduction 1
About This Book 1
Conventions Used in This Book 3
Foolish Assumptions 3
How This Book Is Organized 4
Commodities: Just the Facts 4
Getting Started 5
The Power House: How to Make Money in Energy 5
Pedal to the Metal: Investing in Metals 5
Going Down to the Farm: Trading Agricultural Products 5
The Part of Tens 6
The Appendix 6
Icons Used in This Book 6
Where to Go from Here 7
Commodities: Just the Facts 9
Investors, Start Your Engines! An Overview of Commodities 11
First Things First 12
Going for a Spin: Choosing the Right Investment Vehicle 14
The futures markets 14
The equity markets 16
Managed funds 18
Physical attractiveness 18
Checking Out What's on the Menu 19
Energy 19
Metals 20
Agricultural products 21
Benefiting from Commodities Creatively 23
Earn, Baby, Earn! Why You Should Invest in Commodities 25
You Can't Argue with Success 26
The 21st Century Is the Century of Commodities 28
Ka-boom! Capitalizing on the global population explosion 29
Brick by brick: Profiting from urbanization 30
Full steam ahead! Benefiting from industrialization 32
It's All about Me! Why Commodities Are Unique 34
Inelasticity 34
Is it safe in here? Commodities as a safe haven 36
Hedge-hogging galore! Commodities as a hedge against inflation 36
Could you hurry up, please! Bringing new sources online takes time 38
Sell in May and go away? Definitely nay! 38
Time to Get Down to Business: Commodities and the Business Cycle 39
Is Investing in Commodities Only for the Brave? 41
Biting Off More Than You Can Chew: The Pitfalls of Using Leverage 42
Watch Your Step: Understanding the Real Risks behind Commodities 43
Geopolitical risk 43
Speculative risk 44
Corporate governance risk 45
Managing Risk 45
Due diligence: Just do it 45
Diversify, diversify, diversify 49
Get Ready to Rumble! Commodity Bulls vs. Bears 51
Seeing Both the Forest and the Trees 52
Ride the Wave? Kondratieff and the Super Cycle Theory 58
Keeping It Simple: Looking at the Laws of Supply and Demand 58
Feel the Love: Welcoming Commodities into Your Portfolio 61
The Color of Money: Taking Control of Your Financial Life 62
Looking Ahead: Creating a Financial Road Map 63
Figuring out your net worth 64
Identifying your tax bracket 66
Are you hungry? Determining your risk appetite 68
Making Room in Your Portfolio for Commodities 69
Fully Exposed: The Top Ways to Get Exposure to Commodities 70
Looking towards the future with commodity futures 70
Funding your account with commodity funds 73
You're in good company: Investing in commodity companies 74
Getting Started 77
Show Me the Money! Choosing the Right Manager 79
Mutually Beneficial: Investing in Commodity Mutual Funds 79
Riddle me this, riddle me that: Asking the right questions 80
Taking a look at what's out there 83
Examining Exchange Traded Funds 84
Mastering MLPs 85
The ABCs of MLPs 86
Cash flow is king 89
The nuts and bolts of MLP investing 91
Heads Up! Risk and MLPs 92
Relying on a Commodity Trading Advisor 93
Jumping into a Commodity Pool 95
Track and Trade: Investing through Commodity Indexes 97
Checking Out Commodity Indexes 98
What's the use of an index? 98
So how do I make money using an index? 99
From Head to Toes: Anatomy of a Commodity Index 99
Cataloguing the Indexes 101
Goldman Sachs Commodity Index 101
Reuters/Jefferies Commodity Research Bureau Index 104
Dow Jones-AIG Commodity Index 106
Rogers International Commodities Index 108
Deutsche Bank Liquid Commodity Index 111
Which Index Should You Use? 113
Understanding How Commodities Exchanges Work 115
Why Do We Have Commodities Exchanges, Anyway? 116
Identifying the Major Commodity Exchanges 117
Ready, Set, Invest: Opening an Account and Placing Orders 120
Choosing the right account 121
Placing orders 123
Tracking your order from start to finish 126
Owning a Piece of an Exchange 129
Back to the Future: Getting a Grip on Futures and Options 133
The Future Looks Bright: How to Trade Futures Contracts 134
The competition: Who trades futures? 136
Contract specs: Keeping track of all the moving pieces 138
For a Few Dollars Less: Trading Futures on Margin 142
Taking a Pulse: Figuring Out Where the Futures Market Is Heading 143
Contango: It takes two to tango 143
Backwardation: One step forward, two steps back 144
Keeping Your Options Open: Trading with Options 145
Cutting to the chase: Options in action! 146
Trader talk 147
Options have character 148
Technically Speaking: Using Technical Analysis 151
Looking at Charts: A Picture Is Worth More Than a Thousand Words 152
Line it up: Checking out line charts 153
Going for bar charts 153
Lighting up the chart with candlesticks 155
Identifying Patterns: The Trend Is Your Friend 156
Identifying support and resistance 156
Trend lines: Ride the trend till the end 159
Pump Up the Volume! 160
Moving Averages: Anything But Average 162
Keeping it simple with the SMA 162
Taking it up a notch with the EMA 162
It's All Relative: Using the RSI 164
Breaking into Bollinger Bands 165
The Power House: How to Make Money in Energy 167
It's a Crude, Crude World! Investing in Crude Oil 169
Crude Realities 170
No need for a reservation: Examining global reserve estimates 171
Staying busy and productive: Looking at production figures 173
It can be demanding: Checking out demand figures 174
Going in and out: Eyeing imports and exports 176
Going Up the Crude Chain 178
You want that light and sweet or heavy and sour? 179
Make Big Bucks with Big Oil 182
Oil companies: Lubricated and firing on all cylinders 182
Get your passport ready: Investing overseas 185
Welcome to Gas Vegas, Baby! Trading Natural Gas 189
What's the Use? Looking at Natural Gas Applications 190
Calling all captains of industry: Industrial uses of natural gas 192
If you can't stand the heat, get out of the kitchen! Natural gas in your home 193
Going commercial: Natural gas's commercial uses 194
Truly electrifying! Generating electricity with natural gas 195
Getting from here to there: Natural gas and transportation 196
Liquefied Natural Gas: Getting Liquid without Getting Wet 196
Investing in Natural Gas 197
Natural selection: Trading Nat Gas futures 199
Nat Gas companies: The natural choice 200
Fuel for Thought: Looking at Alternative Energy Sources 201
Out with the Old and in with the New? 201
King Coal: Not as Scary as You Think 203
Coal hard facts 203
Paint it black 206
It's a coal investment 207
Investing in Nuclear Power: Going Nuclear without Going Ballistic 208
You've Been Zapped! Trading Electricity 210
Current affairs 210
Power plays 211
Always Brand Spanking New! Renewable Energy Sources 213
Sunny delight: Solar energy 214
Fast and furious: Wind energy 214
Totally Energized: Investing in Energy Companies 217
Bulls Eye! Profiting from Oil Exploration and Production 217
Going offshore 218
Staying on dry land 221
Servicing the oilfields 221
Oh My, You're So Refined! Investing in Refineries 223
How to Become an Oil Shipping Magnate 226
Swimming in oil: Transportation supply and demand 226
Ships ahoy! 228
Masters of the sea: Petroleum shipping companies 229
Swimming with sharks: Avoiding industry risk 231
Pedal to the Metal: Investing in Metals 233
Getting the Glitters: Investing in Gold, Silver, and Platinum 235
Going for the Gold 235
The gold standard 236
Good as gold 240
Get the Tableware Ready: Investing in Silver 244
Checking out the big picture on the silver screen 244
A sliver of silver in your portfolio 246
Bling Bling: Investing in Platinum 248
Platinum facts and figures 249
Going platinum 249
Metals That Prove Their Mettle: Steel, Aluminum, and Copper 253
Building a Portfolio That's As Strong As Steel 254
Steely facts 254
Investing in steel companies 255
Aluminum: Everything Is Illuminated 257
Just the aluminum facts 257
Aluminum futures 258
Aluminum companies 260
A Visit to Dr. Copper 260
Quick copper facts 260
Copper futures contracts 262
Copper companies 263
Weighing Investments in Heavy and Not-So-Heavy Metals 265
Palladium: Metal for the New Millennium 265
Zinc and Grow Rich 269
You Won't Get Nickel and Dimed by Investing in Nickel 270
Mine Your Own Business: Unearthing the Top Mining Companies 273
Diversified Mining Companies 274
BHP Billiton 274
Rio Tinto 275
Anglo-American 276
Specialized Mining Companies 278
Newmont Mining-Gold 278
Silver Wheaton-Silver 278
Phelps Dodge-Copper 279
Alcoa-Aluminum 280
Arcelor-Mittal-Steel 281
Going Down to the farm: Trading Agricultural Products 283
Breakfast of Champions: Profiting from Coffee, Cocoa, Sugar, and Orange Juice 285
Give Your Portfolio a Buzz by Investing in Coffee 285
Coffee: It's time for your big break 286
Brewing the right investment strategy 287
Warming Up to Cocoa 289
Invest in Sugar: It's Such a Sweet Move! 291
Orange Juice: Refreshingly Good for Your Bottom Line 293
How to Gain from Grains: Trading Corn, Wheat, and Soybeans 297
Field of Dreams: How to Invest in Corn 298
Welcome to the Bread Basket: Investing in Wheat 300
Trading Soybeans: It's Not Just Peanuts 302
Soybeans 303
Soybean oil 304
Soybean meal 305
Alive and Kicking! How to Make Money Trading Livestock 307
Holy Cow! How to Invest in Cattle 308
Live cattle 309
Feeder cattle 310
Lean and Mean: Checking Out Lean Hogs 311
You Want Bacon with That? How to Trade Frozen Pork Bellies 312
The Part of Tens 315
Top Ten Ways to Invest in Commodities 317
Futures Commission Merchant 317
Commodity Trading Advisor 318
Commodity Pool Operator 318
Integrated Commodity Companies 318
Specialized Commodity Companies 318
Master Limited Partnerships 319
Exchange Traded Funds 319
Commodity Mutual Funds 319
Commodity Indexes 320
Emerging Market Funds 320
Top Ten Market Indicators You Should Monitor 321
Consumer Price Index 321
EIA Inventory Reports 322
Federal Funds Rate 322
Gross Domestic Product 322
London Gold Fix 323
Non-farm Payrolls 323
Purchasing Managers Index 324
Reuters/Jefferies CRB Index 324
US Dollar 324
WTI Crude Oil 324
Ten or So Resources You Can't Do Without 327
The Wall Street Journal 327
Bloomberg 328
Commodities-Investor.com 328
Nightly Business Report 328
Morningstar 329
Yahoo! Finance 329
Commodity Futures Trading Commission 329
The Energy Information Administration 329
Stocks and Commodities Magazine 330
Oil & Gas Journal 330
National Futures Association 330
The Appendix 331
Glossary of Technical Terms 333
Index 343
Subjects