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This is an excerpt from The Little Book of Commodity Investing, by John Stephenson. Got a question on investing in commodities? Join Mr. Stephenson for on Monday.

Your next, best investment opportunity isn't in stocks, bonds or real estate-it's in commodities, the basic raw materials of everyday life. Smart investors know that after a decade of decline, stocks aren't where the big money will be made. The winning bets of the future will be where global growth is going, rather than where it's been.



A rapid re-ordering of the global economic pecking order is underway, transforming the lives of millions and setting the stage for a massive bull market in commodities. Asia, led by China, is rising, and by 2020 the developing world is expected to be responsible for a staggering two-thirds of total global economic output. As millions of people around the world join the ranks of the global middle class, they'll be snapping up consumer items such as appliances and cars and underpinning an enormous demand for commodities. The economic strides made by the developing world so far have been breathtaking, but they're only just beginning. And that's a good news story for commodities.



Opening your mind to the world of commodities is much more than a great investment idea-it's crucial to your overall success as an investor. Once you realize that commodities are real things-the rubber that meets the road in any economic expansion-you'll also realize the broad investment implications of rising commodity prices. Currencies, real estate, inflation, stocks, and bonds are all impacted when commodities are on fire.

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When demand for commodities is strong, countries rich in natural resources are great places to look for solid investment opportunities, and not just in commodities, but in real estate, currencies, and the stocks of the commodity-producing companies too. A solid understanding of commodities will give you insight into the way the world works and into why some investments soar while others slump. Knowing something about commodities means that everyday activities like shopping for groceries or paying at the pump are no longer simply chores-they become important windows on the world. Adding commodities to your investment portfolio is an investment move that isn't just timely-it's savvy.



The tried and true investment path led many investor to ruin in the 2008-2009 market collapse. What worked before is unlikely to work again. The world has changed and so too has investing. Commodities zig when stocks and bonds zag, and this often-overlooked but crucial part of the investing landscape is finally about to get its due.



From cocoa to copper, the world of commodities is awash in opportunity. Yet commodities get short shrift in most investment portfolios despite the fact that there are long stretches when commodities soar while stocks and bonds swoon. This is one of those times.





Excerpted from The Little Book of Commodity Investing. Copyright © by John Stephenson. Excerpted with permission of the publisher John Wiley & Sons Canada Ltd.



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