letsmakemoney

Tough Outlook for Commodity Indexes

"Based on current prices, the fund is 21.56% annualized headwind over the next year. That means that, even if commodity prices stabilize, this index will decline by more than 20% over the next year if the contango situation holds."


I don't believe you can simply add these up and call it a 21.56% annual headwind. You should calculate a weighted average number for each commodity, based on its % weight in the fund (i.e., 35% x 13.15% +20% x 3.49%..etc). So this 'headwind' would be much lower, somewhere under 6% just eye-balling the math.

Apologize if I'm missing something based on your methodology..thanks for the insightful way of thinking about this extra headwind though..