Friday, July 18, 2008
Anyone wondering whether we are closer to the middle or closer to the end of the current commodities boom need look no further than this story in the current issue of Money Magazine to be reassured that it is the former and not the latter.
The nation's most popular personal finance magazine is still largely clueless about commodities as an investment class, the most recent evidence provided in the current issue that recommends commodity stocks instead of commodities themselves as a second rate alternative to TIPS (Treasury Inflation Protected Securities) for those looking to "protect" themselves from inflation.
While acknowledging the hefty price increases in energy, agricultural goods, and metals, all of which are readily available to retail investors through a myriad of ETF offerings, the magazine maintains its aversion to anything black and gooey or yellow and shiny by recommending related stocks instead of the commodities.
Specifically, the T. Rowe Price New Era fund (PRNEX) and the iShares S&P North American Natural Resources ETF (AMEX:IGE) are both cited as good choices.
So, how have these stocks done against the commodity ETFs this year? Specifically, the iPath Crude Oil ETN (NYSEArca:OIL), the iShares Silver Trust (AMEX:SLV), the PowerShares DB Agriculture ETF (AMEX:DBA), and the SPDRS Gold Trust (NYSEArca:GLD)?
Not very good.
Of course they've done better than most other broad equity markets, so the Money Magzine staff is probably crowing about "beating the market".
And how is their number one inflation "protection" pick doing against mother nature's inflation protection?
As discussed here a few weeks ago, not very good either.
It seems that Money Magazine is no better than the government in helping to "protect" investors from inflation.