Archive for September, 2010

A must-read: Bloomberg’s pitfalls and perils of investing in commodity ETFs

ETFs, Value investing

While sitting in a doctor’s office the other day, I happened across an article in Bloomberg magazine entitled “America’s Worst Investment” (magazine cover shown here) that explained why . Since Bloomberg is pretty reputable, and since I had previously invested (and lost money) in , a commodity ETN (exchange-traded note) that tracks the Rogers International Commodity Index, of fame, I was really interested in what the article had to say.

As I’ve posted here before, I’ve quite a bit in the past to do the bulk of my passive, buy-and-hold investing. They’re an easy way to diversify and since most of them track indices, there’s not much to think about compared to the difficulties of evaluating an individual stock. After reading Jim Rogers’ books, I was interested in diversifying into commodities, and when someone finally came out with an ETN that reflected his index a couple of years ago, I bought in.

The Bloomberg article is quite eye-opening and explains why commodities ETFs that are based in futures can be a no-win situation for individual investors. You’ll have to read the article to fully grasp the pitfalls of these vehicles, but one vocabulary word I learned was ““, something I had never heard of. It boils down in essence to the nature of a futures contract. Unlike an , where you have the right but not the obligation to buy or sell an underlying security, in futures contracts, you have the obligation to take delivery of the underlying security or good unless you rid yourself of that contract in some way.

Read the rest of this entry »

Why you should check out “I Will Teach You To Be Rich”

Personal finance

I’ve been a big fan of the site since 2006, although I’ve not quite been in Ramit’s target demographic for a while. Still, when I was approached to do a review of his site on this blog, I thought it worthwhile since I think I have many readers who’d enjoy his no-nonsense style and benefit from his advice.

It’s also be a nice change of pace from the last couple posts I wrote on special situations investing which, although they’re related to value investing and are real experiments I’m currently partaking in, I do admit are somewhat obscure for the average reader.

First, to be completely clear and open, Ramit is in no way compensating me for this reviewI wouldn’t be reviewing his site if I didn’t think it was a high-quality, valuable resource that my readers would benefit from (and believe me, I probably get many requests to do these kinds of reviews than you think.)
Read the rest of this entry »

Site’s back up now…and faster :)


Big apologies for the downtime on my site the last few hours. It was somehow overloading its server (shared hosting through HostGator), but on the bright side, they gave me a tip to install a . You should notice improved performance by 10x or more. Feel free to leave a comment if you see anything amiss.