what jim rogers doesn't tell you

Discussion in 'ETFs' started by fhl, Oct 22, 2009.

  1. fhl


    "Here’s why commodity trackers lose you money *

    The Goldman Sachs Commodities Index has done very nicely this year, rising by nearly 45 percent since January 1. So if you had bought a commodity tracker fund then, you’d be pretty happy today, eh? Well, no.

    This chart shows that the total return to an investor is a mere 12 percent. Measured since January 2005, the picture is even worse. Despite the boom, which has driven the index up by about 60 percent, our investor will actually have lost about 15 percent of his capital over four years.

    In theory, commodity trackers should be as attractive as share index trackers. Pooled funds allow investors to buy an index at low cost, so why not do the same with commodities?

    Standard & Poors reckons that $100 billion is invested in commodity tracker funds, and it is only now that the problems are becoming clear. Unlike shares, commodities need space and insurance for storage, so the funds buy the commodities forward, selling them before having to take physical delivery and buying forward again. Because they have strict rules about how and when they roll the contracts, the traders can see the forced sellers (and buyers) coming a mile off, and move their prices accordingly.

    This is, effectively, a tax on the fund, and the bigger the fund gets in any one market, the greater the tax the traders can demand to roll its contracts. The result is to guarantee underperformance against the relevant index, and the longer the investment is held, the greater the underperformance will be.

    That’s bad enough, but it gets worse: shares produce dividends, so a tracker fund should automatically outperform its basic index simply because of the effect of reinvested dividends. There are no dividends from holding commodities, just the hope of a capital gain on what’s left after the traders have scalped you. They are quite probably employed by the same bank that runs the commodity tracker.

    The moral of this story is that anyone tempted to diversify a portfolio by buying into a commodity fund should lie down until the feeling goes away."

    *from a reuters blog
  2. CET


    He said buy commodities. He is not responsible for doing your homework on what stock or ETF you buy. Typical lazy man post.
  3. where's the part about about Jim Rogers? Dumbass
  4. the1


    Huh. And here I thought it was just Goldman Sach siphoning off their racketeering fees -- you win, they win; you lose, they win.
  5. fhl


    Jim Rogers has a commodity tracker fund called The Rogers Diapason Index Fund.

    Humorous that you would be calling another's post lazy.
  6. fhl


    Jim Rogers has a commodity tracker fund called The Rogers Diapason Index Fund.

    Humorous that you would call me a dumbass.
  7. well since ur slow... Your post is about a gs fund but for some reason u want to make a connection To Jim rogers. If u wanted to make a point why not have something to say on the performance of the Rogers fund.
  8. Have you looked at the $ drawdown and the underwater time in trades he endures? They are astronomical on both counts.
  9. There is no difference in the contango/backwardation issues between GSCI or Jim Rogers Commodity index. The OP of this thread was directly criticizing the term structure problems of commodity futures investments. These are similar across all future/ETF commodity investments.

    Anybody who took Jim Rogers genius advice to plow money into his commodity fund in Oct 2007 (stock market peak) because "INFLATION WILL SKYROCKET" must feel a little disappointed these days.

    Rogers Commodity Index ETF is down -23.3% since Oct 2007, outperforming the SP500 by a mere 5%.

    Remember his BS line? "You shouldn't invest in stocks, the fundamentals are awful and keep getting worse. You invest in commodities where the fundamentals are great and keep getting better".

    Rogers has become a broken record who pays no attention to what the market is saying - he simply keeps spinning the same record. Forever.
  10. I agree -- totally. How can anyone take a guy like Rodgers seriously. He tries to pretend that the commodities debacle that began in the summer of '08 and continued until April of '09 was simply a correction. Does anyone here know of a trader that would consider 70% + price declines a correction rather than a bear?

    Worse than the fact that he is an imbecile is the fact that he believes all of the rest of us are even dumber than he is.

    There is nothing wrong with being bearish on paper assets -- I am longer term -- but to bend reality like a pretzel precludes deserving any respect. This guys 15 minutes of fame has lasted 30 years. The hook is overdue.

    #10     Oct 25, 2009