- Commodity investing is different than stock or bond investing.
- A challenge with oil investing is as more investors trade oil futures it puts pressure on futures prices, causing futures returns to deviate from spot returns.
- Financialization of commodities has changed the nature of the investment.
- Crowding occurs when there is an abnormal concentration of investors on one particular side of a market. Crowding matters because it can distort the risks and returns of an investment strategy.
For further details see:
Oil Investing: Contango And The Financialization Of Commodities