The Financial Times of London had an interesting article about commodities that pointed out that buy-and-hold is not a useful strategy to employ. Commodities, because of the frequent lack of correlation with other asset classes, can be an outstanding tool for risk diversification in a portfolio, but they cry out for use in a tactical fashion. For retail clients, being able to get commodity exposure through ETFs and ETNs has been extremely helpful, but it may be important to have some kind of systematic tactical process in place as well. Holding positions for long periods of time just to have exposure may not be the optimal strategy.
—-this article was originally published 10/13/2009. Buy-and-hold in the commodity futures world is just as dangerous as ever, what with contango waiting to jump up and bite you. A rotational strategy makes sense for exposure to this asset class.
