The next hot thing is - things. A new bull market is underway and it is taking place in commodities.

Earning money with raw materials: Investments Stock market & the power of things

Raw materials are omnipresent

It's about "commodities," "materials," "hard assets," and "tangible things" that are not just in your life, but in everyone's life People on Welt play a very important role. When you go to the supermarket or the mall, you find yourself in the midst of commodities that are traded around the world. In your car or truck, you are also surrounded by actively traded commodities. Without the futures markets, where commodity prices are determined and regulated, things that we all need to live would be scarce and often too expensive. These essential items include oil, natural gas, wheat, corn, cotton, soybeans, aluminum, copper, silver, gold, cattle, hogs, pork bellies, sugar, coffee, cocoa, rice, wool, rubber, lumber, and the 80 or so other items , which are listed in the Trader's Bible - that is, the Commodity Research Yearbook.

Commodities are so ubiquitous that one thinks Opinions after not successfully in stocks, bonds or currencies invest can if you don't understand the commodity markets. You have to understand them, even if you only want to invest in stocks and bonds. Commodities belong in every really well diversified portfolio. With a commodity investment you can protect yourself against a bear market, runaway inflation and even a serious economic crisis. Commodities are not the “risky Shop' as they are often referred to as. I believe commodity investing will offer tremendous opportunity over the next decade. For most investors, commodities trading is a mysterious land filled with mythical dragons.

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Many intelligent and well-informed people do not know anything about raw materials. To do this, they know the P / E ratios of large and small stocks, study the balance sheets of high-tech and biotechCompany, by semiconductor manufacturers and small banks in the southern states. These self-proclaimed "savvy investors" follow bond prices and yields more closely than baseball scores, and may even have one Eye on the euro, the yen, the dollar and the Swiss franc. If they do know something, it is mostly second- or third-party information Hand, which they misunderstood and which usually includes a cautionary tale about a brother-in-law who lost his shirt on a soybean speculation. When an investor shies away from commodities, they miss out on incredible opportunities - much like Americans who never go abroad travelbecause they know neither the language nor the customs there and fear that they will be humiliated or cheated.

You can't ignore an entire sector of the market -- at least not if you really want to be considered a "smart investor." If you have a friend who is heavily involved in the stock market and never even considered getting one in the '90s Technology-Action who didn't take notice of what was going on in the world of Microsoft, Cisco, Amazon, eBay and even IBM, then find his Behavior strange for sure. And yet most investors in commodities have behaved in exactly the same way. One reason companies and stocks performed well in the 80s and 90s was that commodities were in a bear market: low commodity prices took any Costs– and margin pressures from those companies that need the raw materials to do their jobs.

When does the bubble burst?

Those who believed that the commodities bear market would end in the late 90s also saw the end of the stock boom coming. Commentators on CNBC were all smiles at the time, advising to buy more dot-com stocks -- while savvy investors exited the market and turned to commodities. They could see that rising costs would soon weigh on profits - and that stock prices would gewinnen would follow. We're not talking about little things here. The commodities market is the largest market in the world - if you disregard the stock exchanges. The annual production of the 35 most actively traded commodities, priced daily in New York, Chicago, Kansas City, London, Paris and Tokyo, is worth $2,2 trillion.

The volume of money traded on the commodity exchanges is several times higher than on any stock market in the USA. (The turnover in over-the-counter commodities trading is many times higher than the turnover on the commodities exchanges.) And wherever there is a market, you can also make profits. I know: the business pages of your daily newspaper, the financial magazines and CNBC are mainly devoted to the stock market. If you believe the media and other stock market "experts," the stock bull has always been hiding around the corner. But millions of investors who listened to pundits babble about the new economy in 1998-2000 suffered huge losses in stocks and are still struggling to get their money back. The savvy investor looks for opportunities to buy something of value cheaply, while keeping an eye on an upcoming dynamic change directed, which could make this investment even more valuable. Today, both apply to raw materials. The bear market ended in 1998 as prices neared their 20-year lows (which, adjusted for inflation, equaled prices during the Great Depression).

What does the stock market have to do with philosophy?

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Philosophy, Politics and Economics (PPE) as a degree was conceived in Oxford in the 1920s, specifically at Balliol College. This was intended Combination as a Alternatives to the classical subjects and to Preparation of those who, as British officials, were to administer the Empire. Of course, the British back then wasn't clearthat the Empire was on its last legs. Today I know enough about universities Vocational Trainingto ask me if sending out many pompous PPE graduates might have even hastened the decline of the empire. The United Kingdom was the richest and most powerful country in the world in 1918. If you looked at the world map, you saw only red. The Empire was everywhere. Global trade flourished in the 19th century; there was the integration of the world economies, which opened up everywhere - mainly to the advantage of the sea power Great Britain. It was an exciting time from an economic, social and artistic point of view.

But all empires end up taking over and spending too much money. In 1918 the British Empire was already corroding from within. The blood and money that the Boer War cost sparked the same international turmoil that sparked a century later by the incompetent politicians of a subsequent empire - the United States. Americans arbitrarily wasted lives and resources on pointless ventures in Vietnam and Iraq; they overused the nation in every way: militarily, geopolitically, and economically - not to mention the moral aspect.

How do you become a successful investor?

My hometown of Demopolis is in central Alabama, where the Black Warrior River meets the Tombigbee River. It is the largest city in Marengo County and is located in the middle of a region that includes parts of Alabama, Georgia and Mississippi and is historically known as the Black Belt. It is so called because there is rich and fertile soil that has been growing for 200 years growth of huge cotton plantations. Some of them survived the abolition of slavery, but none survived the weevil that killed the seed pods of plants.

When I was a little boy my friends and I would dig in this dirt for bait and then we would spend the rest of the day fishing. Catfish are omnivores and will bite almost anything they can smell. They can also smell almost anything, and on a hot summer day, worms are easier to find than crickets. I was about eight years old and we were digging for worms in the garden of our house. Then my cousin Wade, about ten months older than me, made a remark that I didn't understand at the time, but which I still remember as if it were yesterday. "If we keep digging, we'll eventually get as far as China." I knew then that the earth is spherical, but it wasn't until I had a globe at my disposal - I was already an avid explorer - that I could really appreciate the fact that just across the planet from Alabama was the vast landmass of the People's Republic. Covered in dirt and sweat, I would actually come out there again if only I could Energy to dig further and further.

The rise of Asia

Decades have passed since then, my life has not been quite so straightforward, but today I really do live on the threshold of China. And I have two young daughters with blue eyes and blond hair who are as fluent in Mandarin as they are in English. How did I end up living in Singapore today? This too has something to do with digging, albeit in a different way; not quite as tedious, but not with less energy. It's the result of my tireless efforts to learn first-hand how the world works, to discover the truth -- just for myself. I've traveled around the world twice; once on a motorcycle, once in a car. I studied them from scratch, have the changing ones in these five years circumstances recorded in more than 100 countries. From my point of view, the story and its aftermath cannot be understood from an armchair. You have to look at the source. For me this has proven very rewarding; both personal and material. And it had to happen that I ended up here. Far from rural Alabama, instead in the largely Chinese outpost at the southern end of Peninsular Malaysia. If history confirms anything, it is the belief held by the ancient Greeks that the only constant is change. The spiritual father of this idea was the philosopher Heraclitus, who declared in the 6th century BC that it is impossible to step into the same river twice. Success in life is measured by the ability to anticipate change. My move to Singapore was in response to my realization that the world was in the midst of an historic turning point, in a dramatic shift in circumstances marked by a gradual loss of American leadership and, on the other hand, that Ascent Asia.

I am writing this in the midst of a global financial crisis. Most politicians assure you of this Crisis is a temporary phenomenon. We are told things will get better again. I don't want to deal with that at all. I feel it is my job to tell you that things are unlikely to change for the better in the long term in your lifetime. The incredible debt burdens in many countries will massively change the way we all live and work. Many old institutions, traditions, political parties, governments, cultures and even nations will decline, even collapse or simply disappear - as has always happened in times of political and economic upheaval. Investment bank Bear Stearns, for example, had existed for decades when it went under in 2008. The financial services firm Lehman Brothers, which collapsed that same year, had been in business for more than 150 years. The collapse of these long-established global corporations is an example of the changing conditions facing many American institutions. Harvard, Princeton, and Stanford may not know it yet, but they could be on their way to bankruptcy. Museums, clinics, and other institutions we know and love are facing problems, and we will see many of them disappear during the coming financial or economic upheavals. Some have called me a scaremonger, a sort of modern day Cassandra. But none of what I'm looking for Future forecast must be a cause for panic or just come as a surprise. The winds of change are blowing, blowing out of China and doing so in a predictable way. We experience nothing unusual; the story only turns to a known page. And throughout human history, such transitional situations have created opportunities for observant people. So I'm extreme optimistic, which affects many future developments.

Crises and transitions

At the beginning of the 19th century, smart people went to London. A hundred years later, the smart people moved to New York. And if you're smart at the dawn of the 21st century, make your way to Asia. In another hundred years, the cycle of change may lure people somewhere else. At the end of the first millennium, all wise people went to Córdoba, the heyday of Islamic Spain, then the intellectual center and most populous city in the world. I moved to Asia in 2007 and more importantly I moved there with my kids. in her life will Background over Asia to be essential for success. And speaking Mandarin will prove to be as important around the world as being able to be fluent in English is today. In the 1920s and 1930s, world power and influence shifted from Britain to the United States. The loss of British leadership was exacerbated by a financial crisis and political mismanagement - which many people didn't realize until 20 or 30 years later. Now power and influence is moving from the US to Asia, the loss of American leadership is being accelerated by the same forces, and these changes are also going unnoticed by most people. The transition towards Asia coincides with a second historical shift. In the face of a financial crash, the world stands on the brink of a transition away from finance, a cyclical shift away from financial corporations as a source of wealth. Throughout human history there have been phases in which the financiers have had the upper hand and others in which this role has been played by the producers of real goods: farmers, miners, energy suppliers or lumberjacks. In the 1950s, 1960s, and 1970s, before the big boom, Wall Street and the City of London were very quiet. This will happen again. The money-makers are in decline, and the "woodcutters and water-carriers" will now inherit the earth, as written in the Book of Joshua.

I have examined the historical forces responsible for the changes described. And because I am inclined to the simple hypothesis that nothing lasts forever, I agree with the remark of another great thinker, Albert Einstein, who declared: "Only two things are infinite: the universe and human stupidity. And as for the universe, I'm not like that for sure.' Let's not forget one thing: Cassandra, the Trojan princess who got on everyone's nerves because she warned against bringing the wooden horse of the Greeks into the city, imprinted at least one thing on people's minds: she had right. one of the Set This book is an exploration of how we got to where we are now and how we can prepare for the future. I'm going to share with you some of what I've learned from a life in finance, as an investor, and as an adventurer; Lessons I learned in my youth and on the streets that took me from the Black Belt to the other side of the globe in this city-state in Southeast Asia. A lifelong journey during which I got to know the whole world.

The adventure in the markets

My adventure in the markets began in the spring of 1964. I was just finishing my senior year at Yale and then got to Wall Street pretty much the same way I got to this elite university: I stumbled into it.

In high school, I was an enthusiastic member of the Key Club, a student-run service organization and part of Kiwanis International. Until 1976, only boys were allowed to become members. Joining Demopolis' Key Club was something of a big deal as the local sponsor had decided to only add five guys a year. The year I was chairman, the Demopolis club won the award for Best Small Town Key Club in the World. At that time, Yale University awarded a four-year scholarship each year to a member of the Key Club International. It was through this scholarship that I heard about Yale. Without the Key Club I would never have applied. I was absolutely certain that I was going to the only school I had applied to besides Yale: the University of the South in Sewanee, Tennessee. The focus there was on the humanities and there was a close connection to the Episcopal Church. I was accepted into Sewanee shortly after I submitted my application. It wasn't until April or May, well after my father had sent Sewanee the obligatory $50 admission fee, that I received a thick envelope from Yale. It showed that I was accepted and on the Key Club Scholarship of $2000 a year. I was amazed. I was 17 at the time and knew little about Yale other than that the university was based in New Haven, Connecticut. However, my parents knew enough to appreciate the importance of my admission to Yale. Both were college graduates. They had met at the University of Oklahoma, where they both belonged to the Association of Distinguished Academics. My father had studied petroleum engineering, mine Mother Humanities. It was a huge thing for them that I was going to Yale. I remember that mine

Father said, "I'm a little worried that we're going to have to hand you over to this bastion of liberalism in the north." But in reality, he and my mother were delighted. My father's joy was later dampened a bit because he was not refunded the $ 50 he sent to Sewanee. In 1960 in Demopolis, $ 50 was a lot of money. It's still a lot of money today, but then it was worth about five times what it is today. I was the oldest of five brothers and one of fewer than 50 students in my high school year. Soon I showed them all the exaggerated Sinn for my own importance, although in the end I was just lucky. I did Big Max right away, but my bloated self-esteem was only meant to be short-lived. It soon dawned on me: Oh no, now I have to go to Yale. And suddenly I got scared because I knew I was overwhelmed. What will i do now? On my way to Boston for the Key Club National Convention that summer, I got off the train in New Haven and went to the admissions office in Yale. I wanted to know why I was accepted. I hoped by asking this question I would get some idea of ​​what to expect and what these people expected of me. The head of the admissions office looked up my file and asked, “What do you mean? You did best in your class. In some subjects you got full marks. Even your average was close to full marks. ”Yes, but that was in Demopolis. My God, I thought, these people think I'm intelligent and think I know something.

The competition at the university

I felt totally unprepared to compete with graduates from reputable Northeast preparatory schools. So I went to Yale a little early and was willing to study harder than anyone else. Then there was an exam I remember and one of my classmates said he was going to study for five hours to prepare for it. “This exam is five hours Things to Learn worth,” he said. I found his reasoning very strange. Think Method was to study until I mastered the subject and then a little more just to be safe. That was my method in all areas; this Discipline my brothers and I took over from our parents. There is no such thing as »enough«. You just keep learning, working or researching; no matter what the task. I wish I could transfer that trait to my children today. I wish I could call my parents and ask, "What pill did you put us on?" Call it discipline, call it diligence or work ethic - we all have them, my brothers and I. I don't know where that comes from. I wish I could pinpoint the gene for it. I'm sure I'm not the only one who appreciates the value of perseverance. We all know smart people who don't succeed; we all know talented people who are not successful. Persistence makes the difference.

Tuition, board and lodging at Yale cost $2300 a year at the time. So with my $2000 scholarship, I was $300 short of getting started—plus the cost of books and other stuff expenditure. So I worked a few hours a week as a temp in the dining room and took other part-time jobs at the university whenever I was there. Work experience in youth offers quantifiable benefits. It not only teaches the value of money, but also helps to develop your own identity. When you learn your own Finance to manage, one gains a tangible degree of autonomy. I financed my own car early in life, long before I came to Yale. When I was six, my father taught me that "money doesn't grow on trees" and insisted that I pay for my baseball glove myself.

The best prognosis for a happy life

I went to Braswell Hardware in Demopolis and picked out a glove that cost $4. I would take it home and every Saturday I would stutter off 15 cents from the shopkeeper Cruse Braswell until the purchase price was paid in full. Years later, the dean quoted one Business School did a college study and told me that the best predictor of a happy adult life was a paying job in adolescence. All in all, I had a good time at Yale. I majored in history and was coxswain on the rowing team for the first two years of college (not for the final year). I even dabbled in acting a little and had a few leading roles. The director of one of those shows was John Badham, a senior in 1961. Can you imagine what a hit his film Saturday Night Fever would have been if he had remembered me and given me the lead role? But as much as I liked it, I didn't get too into it; for the same reason I stopped being a helmsman my senior year. I preferred to spend the time with my studies. And this discipline paid off. I wasn't as smart as everyone else, but I closed this Study »cum laude«. And like so many other college grads, I had absolutely no idea what to do next.

My applications were accepted by the Harvard School of Economics and the Harvard and Yale Law Schools, but it could have been a medical school too, so excited was I to be able to choose between them all. What I really wanted was to travel. As a boy I had read Dickens' Pickwick Papers with enthusiasm. The gentlemen of the Pickwick Club and their strange adventures may have played a role in developing my wanderlust. Even then, at the age of 21, I knew that simply moving around - in my case from rural Alabama to a famous and respected college 1000 miles from home - was an important part of my education. That opened my eyes and I learned a lot from it. "And what do they know about England who only know England?" Wrote Rudyard Kipling in "The English Flag."

From Yale to investment

I've always felt like I didn't quite fit in with a lot of people at Yale because they'd traveled a lot. Knowing and seeing more of the world has always been my passion. A few years earlier I had told my then-girlfriend Janet Corley about this longing. 'I'm 16,' I lamented, 'and I really haven't been anywhere.' The worldly Janet showed me her sympathy. 'I'm 16 and I've been to a lot of places,' she said. "I've been to Birmingham, Mobile, Montgomery, Tuscaloosa..." To broaden my horizons, I applied for various scholarships overseas. By the time people came to campus looking for graduates for their businesses, I already had an academic scholarship from Yale to study philosophy, politics and economics at Balliol College, Oxford. This was my chance to go abroad with the added benefit of having two more years to do so decidewhat I wanted to do with my life. (And I secretly harbored fantasies of being a helmsman in the legendary Oxford-Cambridge boat race.) I was eager to leave. Now all I needed was a job for the summer.

Dominick & Dominick Inc., one of the oldest private investment firms in the US, was in Yale looking for new employees. She was one of several companies I set up interviews with on campus. I didn't have much success with the other companies, but I got on really well with Joe Caccioti at Dominick & Dominick. He'd grown up on the streets of the Bronx and somehow made it to Harvard; I'd grown up in backcountry Alabama and somehow made it to Yale. We seemed to have a lot in common - with one important exception: Dominick & Dominick were looking for full-time employees. "I can't take a full-time job with you," I told him. "But I'd love to work for you in the summer." Founded in 1870 and one of the older members of the New York Stock Exchange, Dominick & Dominick didn't usually turn up at Yale every spring looking for summer temps seek. For some reason - probably at Joe's urging - she did Company an exception in my case, and in the summer of 1964 I began working on Wall Street.

Departure to Oxford

When I left for Oxford in the fall, I knew exactly what I wanted to do for the rest of my life. Before I went there, all I knew about Wall Street was that it was somewhere in New York and that something bad had happened there in 1929. I didn't know there was a difference between stocks and bonds, much less what that difference was. I had no clue about currencies or commodities. I doubt I knew then that the price of copper went up and down in those markets.

That first summer at Dominick & Dominick, I worked in the research department, answering wired questions from brokers: Does General Motors pay a dividend, and if so, how much? I thrive on digging up information. I also worked in the trading room where the firm acted as a market maker for various stocks not listed on the New York Stock Exchange. This was OTC trading before the NASDAQ existed. I learned a lot about how transaction-based markets really work. Once the senior board member asked me where I went to school. I replied that I had been to Yale. He said, "Well, we don't want too many red bellies and tiger cubs around here." He meant Harvard and Princeton grads. When I met him, I took the opportunity to ask if I Economy should study. He said, 'They won't teach you anything useful there. come here sell If you empty soybeans just once, you will learn a lot more about the markets than if you waste two years studying. "

Working on WallStreet

It's been an exciting summer. I saw the world in a way I had never seen before. Suddenly my studies of history and current events were more than theoretical exercises - they were of practical value. My passion for seeing the world now had a purpose. As a history student, I found it fascinating to learn how markets have been affected by global events. Most importantly, for the first time in my life, I truly realized the predictable way in which global events were influenced by the markets. I realized that everything was connected. I learned that one Revolution influenced the price of copper in Chile; hence the prices of electricity and houses - all prices around the world. This affected everyone, even homeowners in Toledo. I also learned that if you were able to predict a revolution in Chile, you could make a pretty good living. That summer I discovered my future. In fact, on Wall Street I was paid to indulge my passion for research.

And I would be paid a lot if I did it right. On Wall Street, I've been rewarded for doing what I love to do. It was the first of two summers at Dominick & Dominick and I knew straight away that after my stay at Oxford I would study law. I wouldn't go to business school. And so fast I would go back to work on Wall Street as much as possible.


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