Howdy, Stranger!

It looks like you're new here. If you want to get involved, click one of these buttons!

In this Discussion

  • bee April 2015
Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.

    Support MFO

  • Donate through PayPal

Commodities “To Be Or Not To Be” GROWN

FYI: There are no conclusive definitions of an asset class or definitive lists of asset classes, but asset allocation depends on how one chooses to define asset classes that collectively form the opportunity set. A company owned by Morningstar called Ibbotson Associates together with PIMCO pulled together some research on the topic that I think is interesting. They present a framework based on three super asset classes:
Regards,
Ted
http://www.etftrends.com/2015/04/indexology-commodities-to-be-or-not-to-be-grown/

Comments

  • beebee
    edited April 2015
    Often not mentioned in these conversations is the role currency valuation plays in the valuation of assets, especially when charts are displayed using a strong currency (US dollars).

    Asset valuation has a direct relationship with the currency it's being valued in. The fluctuation of the purchasing power of world currencies, like ocean waves, can magnify the fluctuation of how fundamentals impact asset value.

    A relatively strong currency (US dollar) acts to magnify purchasing power when purchasing deflating commodities assets. While weak currencies that buy these same commodities feels no different than when commodity prices were high and the currency were strong.

    Additionally, weak currencies need to be exchanged into stronger (more expensive) currencies prior to settlement. For example, Euros have to be exchanged into US dollars before Europeans can purchase oil. Though, oil may be deflating in price relative to US dollars, Europeans exchanging weak euros into US dollars don't experience the pleasures of "cheap oil."

    It seems to me currency should plays a role in this conversation.
Sign In or Register to comment.