THE FASTEST GAME IN TOWN: Commodities

A slapdash look at commodities speculation--offering neither the comfort of authoritative guidance nor the entertainment value of instructive anecdotes. By his own admission, Yarry, a co-founder of Institutional Investor magazine, knew little about trading futures contracts (agreements calling for the eventual delivery of pork bellies, corn, Treasury bills, and the like) until he served briefly as president of the still-nascent New Orleans Commodity Exchange. Drawing on his short but apparently far-from-sweet experience in this post, he reviews some of the undisputed perils involved in playing the commodities market--e.g., the inability of federal regulators to police an industry whose volatile price swings as well as leverage opportunities attract innocents eager for instant riches or hedges against inflation. On average, Yarry reports, eight of ten individual speculators wind up losers. Still, a few success stories appear--like that of the airline pilot who, on a run to the West Coast, spotted a storm that unexpectedly clobbered the Midwest's winter wheat crop. There's also a revisionist (i.e., sympathetic) account of the Hunt brothers' billion-dollar misadventures in silver and soybeans. It's all made to sound pretty cute (Yarry's exemplary brokerage house is Bull, Bear & Boring; its archetypal account exec bears the name Lemming) and pretty impudent (re the scramble by traders to cover short positions in silver when the Hunts achieved a near corner: ""I mean they were even contemplating having the fillings in their teeth removed, that's how bad it was""). But none of it provides any real perspective on the economic utility of commodity futures markets, let alone an understanding of how they work. A far better bet for neophytes is Commodity Speculation for Beginners (1980), by Charles Huff and Barbara Marinacci.