What are commodities?
Commodities are products that are found or man made natural products. Think grain, sugar, oil but also meat, energy and metals. The four main categories of commodities are:
- Livestock and meat
These categories can be split in:
- Hard commodities, which are mined and extracted, like gas, oil and metals.
- Soft commodities, which are grown and harvested, like grain, coffee, lumber and cattle.
Because commodities are most of the time mass produced in the same quality and quantity, they are priced the same no matter who produced them.
Commodity prices fluctuate all the time based on how the world responds to its many events. Because commodities are very different from stocks and bonds (these are only financial contracts), investors can use commodities to diversify their portfolio. Commodities are very commonly traded as a derivative in the form of futures. As mentioned before, many companies rely on certain ingredients. So a fixed future price might be very beneficial for various reasons.
The most famous commodity of them all is gold. Gold has been a relative safe investment. It's a store of value.
Chapters: The Ultimate Investing Guide
- 1. Intro2. What is investing?3. What are stocks?4. Types of stocks5. Why buy stocks?6. How to buy stocks7. Store stocks8. Stock splits9. Stock quests10. What are bonds?11. Secured bonds and maturity12. How do bonds work?13. Credit rating14. Treasury bonds15. Corporate bonds16. Municipal bonds17. Agency bonds18. Bond quests19. Mutual funds20. Mutual funds earnings21. ETFs22. Why ETFs23. Index funds24. Hedge funds25. Derivatives26. Commodities27. Indices28. Overview29. Determine company value30. IPOs31. Penny stocks32. Dividends33. Financial health34. Profitability35. Operating efficiency36. Liquidity37. Solvency38. Market Evaluation39. Not only numbers40. Investing portfolio considerations41. Creating portfolio42. Buy/Sell Strategy43. Broker44. Emotions45. Final steps46. Key Concepts
How you think about this?