Saturday 10 November 2012

My thoughts on asset classes (4: Others)

I won't try to cover everything here, just a few of the more obvious choices for now.

Commodities:
I'm generally not a big fan of investing in commodities. The markets seem more volatile and don't offer income, and to me just feel more speculative or short term in nature. However, i wouldn't rule them out if i have a strong feeling on valuation.  In particular, i personally find it easier to think about the inherent value in energies and metals as opposed to food products etc, and often keep an eye on the price of oil which as a finite resource that most people depend on, i expect will increase in the long run.

Recently i've also been paying more attention to gold (including buying a small amount). This is primarily a result of QE, debt and inflation which i expect to weaken the USD over time.  I also keep an eye on silver, which has a lot more commercial uses than gold but is also a lot more volatile.

Bonds:
Apart from some corporate debt, the general lack of yield puts me off at the moment. Saying that i'll probably return to these over the coming years.  For now, if i can get higher yield on cash without the credit risk, i'll probably take that.  If not, i may allocate a small percentage of assets to higher yielding bonds.

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