Barron's: How to Simplify Your Commodities Exposure

By SIMON CONSTABLE

Investors have long known that adding a dash of commodities to their portfolios can be beneficial to their wealth. The only problem has been implementing this strategy.

It's difficult to know which commodities are a good bet, and broad commodities-focused indexes are inadequate. Investors also worry that futures prices don't always track the spot market. But veteran economist David Ranson, at Cambria, Calif.-based HC Wainwright & Co. Economics, might have a solution to all these potential problems: investing in just four commodities. See original story here.

Photo by Markus Winkler on Unsplash

MarketWatch: CEOs Play the Fool with Stock Option Pay

By SIMON CONSTABLE

Just because you run a large and sophisticated public corporation doesn’t mean you can’t be played for a fool when it comes to executive pay.

It’s hard not to draw such a conclusion after reading a recently published study of CEO pay which cited extreme naiveté, confusion and knee-jerk decision-making.

Academics Kelly Shue and Richard Townsend of the University of Chicago and Dartmouth College, respectively, studied executive pay at corporations in the S&P 500 between 1992 and 2010. What they found is somewhere between jaw-dropping and staggering. Read more here.

Xcore082, CC BY-SA 3.0, 

via Wikimedia Commons

WSJ: Why the Time Horizon Matters in Investing

By SIMON CONSTABLE

When it comes to investing, we sometimes forget about the clock. Or as the pros call it, the investment time horizon.

That's unfortunate, because "it's incredibly important," says Cody Willard, an investor in Alto, N.M.

The time horizon is a guide investors use to decide how long to hold an investment. You should make the decision "before you move any money around," says Mr. Willard.

For traders, time horizons can be short—sometimes a matter of hours or days. But for most investors, they are much longer.

A trader may make a bet based on economic data due out a week from now. When the news breaks, the trade is either successful or it isn't. Either way, the position should be closed out.

Failure to close a position within a predetermined time is one of the biggest mistakes a trader can make, says Mr. Willard. That's when a losing trade gets turned into an "investment," he says.

For retirement planning, time frames are necessarily longer. A 30-year-old man should have a time horizon of at least 50 years. Even if you retire at 65, you need to consider that you'll likely be living into your 80s, so your assets will need to be invested for a long time.

Over such a long period, the relative volatility of stocks versus bonds or cash doesn't matter since there is plenty of time for the price to recover.

See original story here.