Planning Briefs
Commodities Stink But Serve A Purpose
Published Wednesday, May 2, 2018 at: 7:00 AM EDT
Commodities are supposed to buffer a portfolio from inflation, but years of low inflation have made commodities laggards in a broadly diversified portfolio. We're here to remind you why commodities still belong in a portfolio, even though they've been stinkers for years.Over the past 20 years, in a portfolio with 12 distinct types of securities, commodities delivered just a 3.48% average annual return. Only cash was worse, at 2.09%. Meanwhile, U.S. stocks delivered an average return annually over the 20-years two or three times that of commodities. Stocks and commodities are negatively correlated. When one zigs, the other tends to...
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