Hedging Against Inflation: The Role of Real Assets (Commodities) (S1 E18)

Not Another Investment Podcast

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Unlock the mysteries of real assets and their touted powers as inflation hedges with me, Edward Finley, on Not Another Investment Podcast. Together we explore the role of real assets in a portfolio. We develop three categories of real assets, like commodities, production means, and infrastructure. By breaking down these complex relationships, we find that some "real" assets are more real than others. You'll gain insight into not only the potential safeguards against inflation they offer but also the intricacies of investing in assets with their unique risks and liquidity challenges.
Venture into the fascinating realm of commodity futures, there typical way investors gain exposure to commodities, and understand how the dance between futures prices and spot prices reveals much about the health of our economy. We'll clarify the concepts of backwardation and contango, where the roles of hedgers and speculators pull the strings behind the scenes, crafting the market's momentum and influencing the all-important roll yield. This nuanced understanding is key for those looking to tap into commodity spot returns without the hassle of physical inventories, and I promise, it's a topic that will sharpen your investment acumen.
We'll put theory into practice by analyzing how commodity futures, particularly corn and oil, have performed through the lens of historical data. From the shockwaves sent through oil markets during COVID-19 to the long-term perspective on its efficacy as an inflation hedge from 1997 to 2023, this episode is a goldmine for enthusiasts and experts alike. And remember, for more in-depth resources, charts, and a chance to continue the conversation, visit Not-Another-Investment-Podcast.com. Your engagement is not just welcomed—it's essential in fueling our journey to demystify the investment world.
Episode Notes: https://1drv.ms/p/s!AqjfuX3WVgp8unnB8BqkHQD1_6HG

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Chapters

1. Hedging Against Inflation: The Role of Real Assets (Commodities) (S1 E18) (00:00:00)

2. Understanding Real Assets (00:00:23)

3. How the Commodity Futures Market Works (00:11:25)

4. Roll Yield and Commodity Futures Performance (00:21:09)

5. Are Commodities Real Assets? (00:28:08)