Tag Archives: Commodities

The High Cost of the July 4th Cookout

Many Americans will be feeling the effects of higher commodity prices this 4th of July.

If you have been to the grocery store lately, you’ve probably done a double-take at the register as your outdoor grilling essentials are being scanned. Steak and ground beef prices are up almost 6% over the last 12 months and a persistent drought in the mid-West is driving corn prices up dramatically. USDA recently reported that the average price that Americans pay for food will be up between 2.5% and 3.5% vs. what we paid in 2011.

However, before you ration the hot dogs and burgers and put a hold on serving steaks at your BBQ this year, lets take a look at the long-term history of food prices in the U.S.

Don’t Blame Inflation This Time

The good news is that Continue reading

Jeremy Grantham, Investing, Natural Resources, and Retirement Planning

Jeremy Grantham, of asset management firm GMO, is one of the most insightful ‘deep thinkers’ in the financial world.  His outlooks have also proven remarkably accurate through the years.  In his latest essay (free registration required), Grantham takes on the issue of commodities prices.  His piece is long and detailed, and the issues he raises are of considerable importance (whether or not you actually agree with his conclusions). Continue reading

Retirement Solutions: Target Date Investing

Investors Have Lost Their Way

The aggregate performance numbers and evidence suggesting that most investors are holding inappropriate asset allocations foretell disaster for the investors who are relying on their 401(k) plans as the primary source of their retirement income.

There is little question that the average investor would benefit from some help in portfolio construction and maintenance.  Continue reading

Investing in Commodities

Given the record values commodities hit in 2010 and the fact that they’ve suffered a slump so far in this still-new year, should anyone be thinking about adding commodities to their portfolio now? Some experts say yes. Continue reading

Inflation is Low? The Answer is Personal.

The front page of Wednesday’s Wall St. Journal features an article on rising commodity prices title Commodity Prices Surge.  Prices on a wide range of commodities have risen in double digit percentages so far in 2010.  Companies such as Dean Foods and Sara Lee have seen their earnings hit hard by the rising costs of commodities they use in their products.

Meanwhile, it was announced in mid October that there would be no Cost of Living Adjustment (COLA) for social security recipients for 2011.  The COLA is calculated based on government-compiled inflation data, so the zero COLA means, apparently, that inflation is low.

Meanwhile, health care costs are expected to rise about 10% from 2010 to 2011.  Tuition at public colleges and universities has gone up by almost 8% in the last year. Continue reading

Diversification In Pictures

If a picture is worth a thousand words, when it comes to the payoff of diversification, a chart or two may prove even more valuable.

The principles over at MyPlanIQ, a firm specializing in sorting through corporate 401k plans and offering suitable portfolios from the funds on offer, have put several together. They show what portfolio theory teaches: that adding more asset classes to a portfolio improves its performance over time. Continue reading

Commodities in Asset Allocation

A recent Wall Street Journal article discusses a growing movement among Target Date Funds (TDFs) to include an allocation to commodities.  This article is notable not least because it gives a sense that the methods applied to retail investing lag well behind institutional thinking. Continue reading