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Guide to Stocks and Commodities

A Very Modern Business

The stereotypical position is to believe that there is far too much risk in dealing with commodity trading. This is compared less favorably with the stock markets. These stock markets for some unfathomable reason tend to have a firm hold on investors today. However the evidence points to a rather solid commodities market which has withstood all manner of global challenges. This compares very well with the stock exchange, which has been anything but stable. The volatility of the stock market should really come as no surprise to anyone who understands the modern business environment. However we have to account for the personal prejudices of people who do not quite believe the evidence when they see it.

The famous stock markets such as the Dow Jones shows that even with the indexing weighting system, it is clear that the commodities market wins hands down. The index has access to both the commodities and stocks markets so it is the best mechanism to compare the two and see whether the evidence before us justifies people’s beliefs. Most analysts are aware of the bad reputation that the commodities markets holds but they are not able to give a reasonable explanation for the phenomena. I suppose the people who manage the commodities market have to think of ways of publicizing the good news about their sector.

What Can Be Done?

The other critical factor in the continued popularity of the stock market could be related to the fact that the stock market is something that is very familiar to most people. The commodities market is rather niche and therefore will have to work a lot harder to convince a skeptical public that it is the best choice for investing. The people who work in the commodities sector have a responsibility to rebut any inaccurate information that is out there about the commodities market. Failure to so will mean that they keep losing business to the stock market, despite the evidence of their superiority.

I tend to find stocks rather abstract whereas with the commodity markets I believe that I am buying something tangible. I would have thought that the rest of the business community would be taking this attitude but the reality is that they are actually going the opposite way by concentrating on the stocks markets. It seems that they prefer the abstract to the reality of the commodities market. One could argue that the stock market has had a role to play in this because it has effectively marketed itself as the premium version of the commodities market. Everyone would like to get onto the stock exchange and be one of the traders but unfortunately the world does not always let that happen.

What then is the future of the commodities market? I believe that it will continue to compare unfavorably with the stock market despite evidence to the contrary. Unless there is a fundamental shift in the dynamics of the market, I cannot really see this situation changing. The business community in terms of those who have academic qualifications has not yet indicated which of the two they are willing to back against the other.