#83. Here's why commodities are an overrated investment.

07/13/21 • 51 min

Commodities probably don't help your portfolio the way you think they do.
In this episode, Trishul and Aaron discuss how commodities may fit into an asset allocation. In theory, gold, oil, and even corn can be a store of value and provide opportunities for speculation. And with futures and the magic of margin leverage, it's possible to amplify returns. Further, according to asset allocation research, securities with low correlations and positive expectations can even improve overall risk-adjusted returns. Nevertheless, can we safely assume that commodities will generate positive inflation-adjusted returns in the future?
Episode References
Tax Efficient Way to Own Gold
SEC vs CFTC
Derivative Contract Markets
Futures
Short Futures
Taxes on Commodities
Commodity Trading Advisor (CTA)
Podcast Description
Welcome to The Mind Money Spectrum Podcast where your hosts Aaron Agte and Trishul Patel go beyond traditional finance questions to help you explore how to use your money to achieve the freedom you want in life. Aaron is a Financial Planner from the Bay Area, and Trishul is a Wealth Manager on the East Coast. For more information about Aaron, check out GraystoneAdvisor.com. And for more information on Trishul check out InvestingForever.com. We thank you all for listening, and stay tuned for our latest episode on our website, MindMoneySpectrum.com.

Aaron Agte and Trishul Patel go beyond traditional finance questions to help you explore how to use your money to achieve the freedom you want in life. Aaron is a Bay Area Financial Planner with GraystoneAdvisor.com, and Trishul is an East Coast Wealth Manager (InvestingForever.com). MindMoneySpectrum.com and YouTube.

Previous Episode

#82. Are you overlooking this stellar asset class?

It's easy to be pessimistic about bonds, but they are actually necessary for your portfolio.
In this episode, Aaron and Trishul go in-depth on why you need bonds. Despite low rates of interest and their limited ability to outpace inflation, bonds are essential in all but the most aggressive of portfolios. By understanding the mechanics of coupons, par value, credit quality, and duration, you can start to understand why bonds are a sensible low-risk, low-return investment. When stocks tank, there may be a flight-to-safety, which can drive bonds up. But the biggest benefit of fixed income comes during withdrawals, where bonds can mitigate your sequence of returns risk when it matters most.
Episode References
iShares Total US Bond Market
BND Performance
Yield To Maturity
Duration
Kitces: Bond Tent mitigates Sequence of Returns Risk
Podcast Description
Welcome to The Mind Money Spectrum Podcast where your hosts Aaron Agte and Trishul Patel go beyond traditional finance questions to help you explore how to use your money to achieve the freedom you want in life. Aaron is a Financial Planner from the Bay Area, and Trishul is a Wealth Manager on the East Coast. For more information about Aaron, check out GraystoneAdvisor.com. And for more information on Trishul check out InvestingForever.com. We thank you all for listening, and stay tuned for our latest episode on our website, MindMoneySpectrum.com.

Next Episode

#84. Is the Yale Model dead?

Even if the Yale Model works for endowments, you probably shouldn't follow it.
In this episode, Aaron and Trishul discuss the Yale Model. With indefinite investment horizons, endowments typically gravitate towards illiquid investments, such as hedge funds, private equity, and venture capital. Trend following aims to take advantage of human irrationality. Long-short allows you to adjust and perhaps stamp out market risk. M&A takes advantage of price jumps when companies get bought out. Venture capital understands that most bets will lose money because the winners will make up for the rest. Unfortunately, smaller investors end up paying 3-4% a year in combined fees. Even so, the returns are worth it, right?
Episode References
David Swensen
Why You Should Still Invest Like Yale
Private Equity
Value and Momentum Everywhere
Hedge Fund Fees
Funds of Funds
Do Funds-of-Funds Deserve Their Fees-on-Fees?
Podcast Description
Welcome to The Mind Money Spectrum Podcast where your hosts Aaron Agte and Trishul Patel go beyond traditional finance questions to help you explore how to use your money to achieve the freedom you want in life. Aaron is a Financial Planner from the Bay Area, and Trishul is a Wealth Manager on the East Coast. For more information about Aaron, check out GraystoneAdvisor.com. And for more information on Trishul check out InvestingForever.com. We thank you all for listening, and stay tuned for our latest episode on our website, MindMoneySpectrum.com.