Commodities For Dummies®

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Format: Paperback
Pub. Date: 2006-12-01
Publisher(s): For Dummies
List Price: $26.74

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Summary

Since 2002, commodities have outperformed every other asset class including stocks, mutual funds and real estate. If you're itching to get in on the fun and profit, Commodities For Dummies is the resource you need to find out how to break into the commodities market and understand how to trade and prosper. You'll discover: How commodities stack up against other investment vehicles How to identify, manage, and overcome risk The pros and cons of futures, equities, ETFs and mutual funds Specific techniques for analyzing and trading in commodities Powerful profits in energy-crude oil, natural gas, coal, nuclear, and alternatives What you need to know about trading in metals-precious and not-so-precious How to grow your portfolio with farm products Featuring time-tested rules for investment success, this comprehensive, user-friendly guide helps you minimize risk, maximize profit, and find the shortest route to Easy Street.

Author Biography

Amine Bouchentouf is President and Chief Executive Officer of Renaissance Investment Advisors LLC. Renaissance is an international financial advisory firm headquartered in New York City, which provides long-term strategic advice to individuals, institutions, and governments around the world.
Amine is a world-renowned market commentator and analyst and has appeared in media in the United States, Great Britain, France, the United Arab Emirates, and Brazil. He is a member of the National Association of Securities Dealers and the Authors Guild and is also involved with the Council on Foreign Relations. He offers regular market intelligence briefings through the Web site www.commodities-investor.com.

Table of Contents

Introduction 1(1)
About This Book
1(2)
Conventions Used in This Book
3(1)
Foolish Assumptions
3(1)
How This Book Is Organized
4(2)
Part I: Commodities: Just the Facts
4(1)
Part II: Getting Started
5(1)
Part III: The Power House: How to Make Money in Energy
5(1)
Part IV: Pedal to the Metal: Investing in Metals
5(1)
Part V: Going Down to the Farm: Trading Agricultural Products
5(1)
Part VI: The Part of Tens
6(1)
Part VII: The Appendix
6(1)
Icons Used in This Book
6(1)
Where to Go from Here
7(2)
Part I: Commodities: Just the Facts
9(68)
Investors, Start Your Engines! An Overview of Commodities
11(14)
First Things First
12(2)
Going for a Spin: Choosing the Right Investment Vehicle
14(5)
The futures markets
14(2)
The equity markets
16(2)
Managed funds
18(1)
Physical attractiveness
18(1)
Checking Out What's on the Menu
19(4)
Energy
19(1)
Metals
20(1)
Agricultural products
21(2)
Benefiting from Commodities Creatively
23(2)
Earn, Baby, Earn! Why You Should Invest in Commodities
25(16)
You Can't Argue with Success
26(2)
The 21st Century Is the Century of Commodities
28(6)
Ka-boom! Capitalizing on the global population explosion
29(1)
Brick by brick: Profiting from urbanization
30(2)
Full steam ahead! Benefiting from industrialization
32(2)
It's All about Me! Why Commodities Are Unique
34(5)
Inelasticity
34(2)
Is it safe in here? Commodities as a safe haven
36(1)
Hedge-hogging galore! Commodities as a hedge against inflation
36(2)
Could you hurry up, please! Bringing new sources online takes time
38(1)
Sell in May and go away? Definitely nay!
38(1)
Time to Get Down to Business: Commodities and the Business Cycle
39(2)
Is Investing in Commodities Only for the Brave?
41(10)
Biting Off More Than You Can Chew: The Pitfalls of Using Leverage
42(1)
Watch Your Step: Understanding the Real Risks behind Commodities
43(2)
Geopolitical risk
43(1)
Speculative risk
44(1)
Corporate governance risk
45(1)
Managing Risk
45(6)
Due diligence: Just do it
45(4)
Diversify, diversify, diversify
49(2)
Get Ready to Rumble! Commodity Bulls vs. Bears
51(10)
Seeing Both the Forest and the Trees
52(6)
Ride the Wave? Kondratieff and the Super Cycle Theory
58(1)
Keeping It Simple: Looking at the Laws of Supply and Demand
58(3)
Feel the Love: Welcoming Commodities into Your Portfolio
61(16)
The Color of Money: Taking Control of Your Financial Life
62(1)
Looking Ahead: Creating a Financial Road Map
63(6)
Figuring out your net worth
64(2)
Identifying your tax bracket
66(2)
Are you hungry? Determining your risk appetite
68(1)
Making Room in Your Portfolio for Commodities
69(1)
Fully Exposed: The Top Ways to Get Exposure to Commodities
70(7)
Looking towards the future with commodity futures
70(3)
Funding your account with commodity funds
73(1)
You're in good company: Investing in commodity companies
74(3)
Part II: Getting Started
77(90)
Show Me the Money! Choosing the Right Manager
79(18)
Mutually Beneficial: Investing in Commodity Mutual Funds
79(5)
Riddle me this, riddle me that: Asking the right questions
80(3)
Taking a look at what's out there
83(1)
Examining Exchange Traded Funds
84(1)
Mastering MLPs
85(8)
The ABCs of MLPs
86(3)
Cash flow is king
89(2)
The nuts and bolts of MLP investing
91(1)
Heads Up! Risk and MLPs
92(1)
Relying on a Commodity Trading Advisor
93(2)
Jumping into a Commodity Pool
95(2)
Track and Trade: Investing through Commodity Indexes
97(18)
Checking Out Commodity Indexes
98(1)
What's the use of an index?
98(1)
So how do I make money using an index?
99(1)
From Head to Toes: Anatomy of a Commodity Index
99(2)
Cataloguing the Indexes
101(12)
Goldman Sachs Commodity Index
101(3)
Reuters/Jefferies Commodity Research Bureau Index
104(2)
Dow Jones-AIG Commodity Index
106(2)
Rogers International Commodities Index
108(3)
Deutsche Bank Liquid Commodity Index
111(2)
Which Index Should You Use?
113(2)
Understanding How Commodities Exchanges Work
115(18)
Why Do We Have Commodities Exchanges, Anyway?
116(1)
Identifying the Major Commodity Exchanges
117(3)
Ready, Set, Invest: Opening an Account and Placing Orders
120(9)
Choosing the right account
121(2)
Placing orders
123(3)
Tracking your order from start to finish
126(3)
Owning a Piece of an Exchange
129(4)
Back to the Future: Getting a Grip on Futures and Options
133(18)
The Future Looks Bright: How to Trade Futures Contracts
134(8)
The competition: Who trades futures?
136(2)
Contract specs: Keeping track of all the moving pieces
138(4)
For a Few Dollars Less: Trading Futures on Margin
142(1)
Taking a Pulse: Figuring Out Where the Futures Market Is Heading
143(2)
Contango: It takes two to tango
143(1)
Backwardation: One step forward, two steps back
144(1)
Keeping Your Options Open: Trading with Options
145(6)
Cutting to the chase: Options in action!
146(1)
Trader talk
147(1)
Options have character
148(3)
Technically Speaking: Using Technical Analysis
151(16)
Looking at Charts: A Picture Is Worth More Than a Thousand Words
152(4)
More Than a Thousand Words
152(1)
Line it up: Checking out line charts
153(1)
Going for bar charts
153(2)
Lighting up the chart with candlesticks
155(1)
Identifying Patterns: The Trend Is Your Friend
156(4)
Identifying support and resistance
156(3)
Trend lines: Ride the trend till the end
159(1)
Pump Up the Volume!
160(2)
Moving Averages: Anything But Average
162(1)
Keeping it simple with the SMA
162(1)
Taking it up a notch with the EMA
162(2)
It's All Relative: Using the RSI
164(1)
Breaking into Bollinger Bands
165(2)
Part III: The Power House: How to Make Money in Energy
167(66)
It's a Crude, Crude World! Investing in Crude Oil
169(20)
Crude Realities
170(8)
No need for a reservation: Examining global reserve estimates
171(2)
Staying busy and productive: Looking at production figures
173(1)
It can be demanding: Checking out demand figures
174(2)
Going in and out: Eyeing imports and exports
176(2)
Going Up the Crude Chain
178(4)
You want that light and sweet or heavy and sour?
179(3)
Make Big Bucks with Big Oil
182(7)
Oil companies: Lubricated and firing on all cylinders
182(3)
Get your passport ready: Investing overseas
185(4)
Welcome to Gas Vegas, Baby! Trading Natural Gas
189(12)
What's the Use? Looking at Natural Gas Applications
190(6)
Calling all captains of industry: Industrial uses of natural gas
192(1)
If you can't stand the heat, get out of the kitchen! Natural gas in your home
193(1)
Going commercial: Natural gas's commercial uses
194(1)
Truly electrifying! Generating electricity with natural gas
195(1)
Getting from here to there: Natural gas and transportation
196(1)
Liquefied Natural Gas: Getting Liquid without Getting Wet
196(1)
Investing in Natural Gas
197(4)
Natural selection: Trading Nat Gas futures
199(1)
Nat Gas companies: The natural choice
200(1)
Fuel for Thought: Looking at Alternative Energy Sources
201(16)
Out with the Old and in with the New?
201(2)
King Coal: Not as Scary as You Think
203(5)
Coal hard facts
203(3)
Paint it black
206(1)
It's a coal investment
207(1)
Investing in Nuclear Power: Going Nuclear without Going Ballistic
208(2)
You've Been Zapped! Trading Electricity
210(3)
Current affairs
210(1)
Power plays
211(2)
Always Brand Spanking New! Renewable Energy Sources
213(4)
Sunny delight: Solar energy
214(1)
Fast and furious: Wind energy
214(3)
Totally Energized: Investing in Energy Companies
217(16)
Bulls Eye! Profiting from Oil Exploration and Production
217(6)
Going offshore
218(3)
Staying on dry land
221(1)
Servicing the oilfields
221(2)
Oh My, You're So Refined! Investing in Refineries
223(3)
How to Become an Oil Shipping Magnate
226(7)
Swimming in oil: Transportation supply and demand
226(2)
Ships ahoy!
228(1)
Masters of the sea: Petroleum shipping companies
229(2)
Swimming with sharks: Avoiding industry risk
231(2)
Part IV: Pedal to the Metal: Investing in Metals
233(50)
Getting the Glitters: Investing in Gold, Silver, and Platinum
235(18)
Going for the Gold
235(9)
The gold standard
236(4)
Good as gold
240(4)
Get the Tableware Ready: Investing in Silver
244(4)
Checking out the big picture on the silver screen
244(2)
A sliver of silver in your portfolio
246(2)
Bling Bling: Investing in Platinum
248(5)
Platinum facts and figures
249(1)
Going platinum
249(4)
Metals That Prove Their Mettle: Steel, Aluminum, and Copper
253(12)
Building a Portfolio That's As Strong As Steel
254(3)
Steely facts
254(1)
Investing in steel companies
255(2)
Aluminum: Everything Is Illuminated
257(3)
Just the aluminum facts
257(1)
Aluminum futures
258(2)
Aluminum companies
260(1)
A Visit to Dr. Copper
260(5)
Quick copper facts
260(2)
Copper futures contracts
262(1)
Copper companies
263(2)
Weighing Investments in Heavy and Not-So-Heavy Metals
265(8)
Palladium: Metal for the New Millennium
265(4)
Zinc and Grow Rich
269(1)
You Won't Get Nickel and Dimed by Investing in Nickel
270(3)
Mine Your Own Business: Unearthing the Top Mining Companies
273(10)
Diversified Mining Companies
274(4)
BHP Billiton
274(1)
Rio Tinto
275(1)
Anglo-American
276(2)
Specialized Mining Companies
278(5)
Newmont Mining --- Gold
278(1)
Silver Wheaton --- Silver
278(1)
Phelps Dodge --- Copper
279(1)
Alcoa --- Aluminum
280(1)
Arcelor-Mittal --- Steel
281(2)
Part V: Going Down to the Farm: Trading Agricultural Products
283(32)
Breakfast of Champions: Profiting from Coffee, Cocoa, Sugar, and Orange Juice
285(12)
Give Your Portfolio a Buzz by Investing in Coffee
285(4)
Coffee: It's time for your big break
286(1)
Brewing the right investment strategy
287(2)
Warming Up to Cocoa
289(2)
Invest in Sugar: It's Such a Sweet Move!
291(2)
Orange Juice: Refreshingly Good for Your Bottom Line
293(4)
How to Gain from Grains: Trading Corn, Wheat, and Soybeans
297(10)
Field of Dreams: How to Invest in Corn
298(2)
Welcome to the Bread Basket: Investing in Wheat
300(2)
Trading Soybeans: It's Not Just Peanuts
302(5)
Soybeans
303(1)
Soybean oil
304(1)
Soybean meal
305(2)
Alive and Kicking! How to Make Money Trading Livestock
307(8)
Holy Cow! How to Invest in Cattle
308(3)
Live cattle
309(1)
Feeder cattle
310(1)
Lean and Mean: Checking Out Lean Hogs
311(1)
You Want Bacon with That? How to Trade Frozen Pork Bellies
312(3)
Part VI: The Part of Tens
315(16)
Top Ten Ways to Invest in Commodities
317(4)
Futures Commission Merchant
317(1)
Commodity Trading Advisor
318(1)
Commodity Pool Operator
318(1)
Integrated Commodity Companies
318(1)
Specialized Commodity Companies
318(1)
Master Limited Partnerships
319(1)
Exchange Traded Funds
319(1)
Commodity Mutual Funds
319(1)
Commodity Indexes
320(1)
Emerging Market Funds
320(1)
Top Ten Market Indicators You Should Monitor
321(6)
Consumer Price Index
321(1)
EIA Inventory Reports
322(1)
Federal Funds Rate
322(1)
Gross Domestic Product
322(1)
London Gold Fix
323(1)
Non-farm Payrolls
323(1)
Purchasing Managers Index
324(1)
Reuters/Jefferies CRB Index
324(1)
US Dollar
324(1)
WTI Crude Oil
324(3)
Ten or So Resources You Can't Do Without
327(4)
The Wall Street Journal
327(1)
Bloomberg
328(1)
Commodities-Investor.com
328(1)
Nightly Business Report
328(1)
Morningstar
329(1)
Yahoo! Finance
329(1)
Commodity Futures Trading Commission
329(1)
The Energy Information Administration
329(1)
Stocks and Commodities Magazine
330(1)
Oil & Gas Journal
330(1)
National Futures Association
330(1)
Part VII: The Appendix
331(12)
Appendix: Glossary of Technical Terms
333(10)
Index 343

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