Thursday, May 22, 2008

Future History – an oxymoron? Part IV

Men haven’t changed much in the last 2000 years and, in consequence, we must still learn from history
Kenneth Clarke

Our starting premise is “Future History” and the “Power of Ideas

Earlier blogs were, by definition, general in nature so to extend this theme – for the moment – can we turn ideas into something more practical?

Precious metals:
You can invest in these in three principal ways

 Physical
 Stocks and shares in producers and related companies
 ETFs (Exchange Traded Funds)

The market place has changed radically in recent months as ETFs have become the handiest ways of investing. This has lead to increased volatility and underperformance in the shares of mining related companies – particularly the mid-tier and juniors.

Each of the three options has their merits, for general investors, traders and specialists.

Food and Commodities:
Again a few different ways to invest

 Futures – a specialist method - not for the general public
 Stocks and shares in producers and related companies e.g.
fertilizers, refiners etc
 ETFs

The rise in the price of this group has been multi-faceted: - Lower production in main producing countries due to lower yields, shortages, internal pressures and of course growing world population and wealth. On this latter point, as the poorest part of society spend proportionately more of their income on food, any rise in such income – at least in the early stages – goes on more and better food.

Another factor is of course inflation and so we have the circle of - shortage - leading to price inflation - to a fight for available resources. (Some may argue that these three are in the wrong order if so, let the argument commence!)

A word on ETFs
These instruments have been created to cover sectors, individual resources, countries, indices etc etc. while some are leveraged and also inverse.
They provide a neat way of playing your Bull or Bear tendencies in an increasingly wide spread of investment options - or even as an each-way bet if you are so inclined!

Next - specific recommendations

Latin America: Food expenditures and Consumption
Prospects for the Future: Nutritional, Environmental and Sustainable Food Production Considerations - Changes in Cultural and Consumer Habits
Farmers guarding their crops
Africa Health

Robert Mooney discusses topics around investment strategies, ETF investing and Market Sentiment for Zignals