Posted on 28 August 2011.
Stock market commodities are stocks based upon tangible goods. Instead of investing in a company hoping its earnings and value will increase, you invest in a product with the idea that its market value will increase. Examples of commodities include metals (gold, silver, copper, uranium), crops (wheat, corn, soybeans), livestock (cattle, swine, poultry), oil, and other resources (lumber, cotton, sugar).
Some of the highest jumping stock market commodities of 2011 were energy stocks. These include oil and natural gas. In agriculture, corn has been a showstopper, skyrocketing by 103% in the last year. Mined commodities have been rising consistently as well. Gold leads the way with prices per ounce topping $1,600. Rock phosphate is also another winning earner whose value has risen by 46% in the last 12 months.
Picking stock market commodities based upon what is hot now is not always the best way to make money. Contrastingly, look at what is down. Just as in real estate, you buy when the market is down and sell after values have risen substantially. Uranium is a good example of this. Uranium stocks have taken a hit due to the recent tragedy in Japan. Nuclear power is not going to be abandoned any time soon, however. This means that once the shock of the Japan incident wares off, prices will have to stabilize again. Now that share prices are so unnaturally low, it is a great opportunity to invest
Commodities can be risky, just like any other sector of the stock market. Do your best to research the products. Take into account as many political and environmental factors as possible that may impact the value of these goods. Investing in stock market commodities is a wise way to diversify any stock market portfolio.
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