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Only the Lonely Can Play


There's a real disconnect between the money to be made in the futures markets versus the money to be made in the options markets versus the stock markets.  For instance, it's not logical to recommend a security that doesn't scale to a large investor or fund.  Funds like DBC that deal in the futures markets don't scale well.  When they do scale, it adds more speculation into the futures markets, which usually increases the prices.  Since those prices are then often used in off-the-market contracts, the prices rise artificially, adding volatility.  Think about it.  If I own gas or oil resources in Oklahoma, I won't want to go through the expense of writing a contract for exchange on the market, especially if I usually don't produce a unit quantity of the resource.  Instead, I'll create an agreement to provide the resource at market less transport costs to the local aggregator.


For this reason, I think that the addition of funds like DBC and GSG are actually driving up the costs of doing business and living around the entire country.

The same thing holds true for the options market, but that market won't scale because there aren't enough participants.

I'm still long DBC, but the futures market is too small for the big players.  It just doesn't scale.  That's why Only the Lonely Can Play.