Trade Commodities Like Legend Jim Rogers

One little nugget I think I am noticing in comparing RJA to JJA (yeah, the symbols are easy to mix up) is that JJA has a larger weighting to coffee than RJA. Starbucks(SBUX) has had middling success trying to open stores in China, where obviously more people drink tea.

If, and this is a big "if," Starbucks can actually have success in China converting a measurable portion of China's 1.3 billion people into coffee drinkers, that could mean very good things for the price of coffee and give a long-term advantage to JJA.

You can take the same type of look at the metals and energy area, too. There are single-product funds from several providers and other broader funds too. The selection process needs to be a blend of what you know, or are willing to learn, and what you are trying to add to your portfolio. Obviously, the narrower you go the more risk you take.

You will read differing opinions about how much exposure you should have to commodities. The range seems to be between 0% and 20%, and there are reasonable arguments for both extremes. I, for one, believe in having exposure but I think it should be moderate.

Commodities are volatile and historically have a low correlation to equities. The reason I want exposure to commodities is to own something that zigs when the stock market zags. I don't want to make a big bet within this asset class. That leads me to believe a 5% weighting is about right, but you need to dance to your own beat on this.

Lastly, some nuts and bolts about these funds. They are exchange-traded notes, not exchange-traded funds. They do not own the underlying commodities, they are structured as debt instruments set to mature in 2022 and the implied promise is that their price movements will correspond with indices they mimic.

They will not pay interest and will have an annual expense ratio of 75 basis points. As these are debt instruments, they rely on the parent company Swedish Export Credit Corp's ability to pay.

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