COMMODITY SPECULATION FOR BEGINNERS: A Guide to the Futures Market by Charles & Barbara Marinacci Huff


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For inflation-battered investors of average means, this is an instructive introduction to commodity futures which bridges the gap between technical tomes and get-rich-quick tracts. Featured is Mr. E. (for Everyman?), who sensibly consults the pros and thus learns, before committing himself, that commodity futures trade in the form of contracts--agreements calling for delivery (or acceptance of delivery) of a given quantity of a specified commodity at a designated time in the future for a stipulated price. On a visit to the preeminent Chicago Board of Trade, he also discovers that futures prices are established by open outcry of competitive bids and offers; and that, more than in other markets, quotes respond to supply/ demand forces. Exchanges like the CBT provide the means of transferring the risks associated with unforeseen price fluctuations to so-called speculators--who not only assume these unwanted risks (in hopes of commensurate rewards), but also provide the liquidity essential to the efficient operation of futures markets. Leverage, Mr. E. ascertains, is a big factor in the popularity of commodity futures; typically, margin requirements average 10 percent of the full value of a contract. Diversity plays an important role as well. Opportunities range from beef to forest products to copper to potatoes. Throughout Mr. E.'s tutorial, which ends with submission of his initial order to a brokerage house, Huff and Marinacci offer common-sense advisories (managing money prudently can be as important as being on the right side of a trade) and explain such fine points as fundamental and technical analysis, clearinghouse functions, and commission charges. Though they carefully translate the lingo of the trading pits into layman's language, a ready-reference glossary would have been a welcome addition. But overall, newcomers would be well advised to tag along with Mr. E.

Pub Date: Oct. 22nd, 1980
Publisher: Macmillan