Todd King

3 Comments

    • Capitalize on Water Shortages With Grain ETFs [view article]
      Oops - I think I made a mistake. Wheat is actually a little under the ETNs, and I think that wheat is the biggest portion of this index. I'd have to calculate it all out to see how it's performing doing against its index (which is probably not going to happen :) Jun 19 11:08 AM
    • Capitalize on Water Shortages With Grain ETFs [view article]
      These two ETNs have severely underperformed the corn, soybeans, and wheat futures. They're off by about 20% in only the past three months. How can this be? Is this just inherent in any commodity ETF/ETN, that they're at great risk of severely underperforming (and never over-performing) their "benchmark" future? We saw the same thing with USO & oil futures. Jun 19 10:59 AM
    • DBO: Long-term Diversification or Short-term Hedge? [view article]
      You mention three things:
      - Oil is up 133% since Jan 2007
      - DBO is up 79% since Jan 2007
      - DBO is supposed to track the price of oil

      How can all three of these be true? If they all are, that means DBO is off of it's "benchmark" by over 50% in less than 16 months! I just checked USO, which is has done a little better than DBO, maybe an extra 8%. In either case though, that seems like absolutely terrible performance, being off its benchmark by such a large amount.

      I've read here on seeking alpha that they blame this on backwardation and contagion and technical things like that about futures. I'm not sure about all that, but I do see things like the Dec08 crude oil future did rise less than 100% since Jan 07, on par with DBO and USO.

      If there's such a major problem with tracking oil very well via futures (and I absolutely would call being 50% off of your benchmark a major problem), why don't they take possession of the oil, ie. actually buy it and store it? GLD does the same thing and has done quite well against its benchmark. Of course, storing gold bullion is easier than barrels of crude oil, but I'll gladly "spend" an extra percent or two if I can get a little closer to the benchmark.

      Thoughts welcome on this, as I'd love to have a long-term oil holding, but there's no way I'll invest in something that can't even get close to its benchmark (for whatever reason).

      Any investors out there who want to start up a major storage facility in rural Oklahoma? We could make a mint :)       Apr 26 06:17 PM
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