Commodities for Every Portfolio: How You Can Profit from the Long-Term Commodity Boom

Chapter 6

Participating Through Stocks

I know from experience that nobody can give me a tip or series of tips that will make money for me than my own judgment.

—Jesse Livermore

From a logistical perspective, it is relatively easy to participate in this commodity boom by buying shares of companies that profit from rising commodity prices. Since most investors are already familiar with buying Google or Microsoft stock, transitioning into buying the stock of a mining company or an energy company should not be too difficult. In fact, if you already have an online brokerage account or a stockbroker, buying commodity stocks should take no more than a click of the mouse or a verbal order over the phone.

But selecting which stocks to buy will take a little bit more effort on your part. First, you have to decide which companies will appreciate during various stages of this bull market. For instance, if you are bullish on energy, you will likely look at buying energy related companies. But which companies do you buy? Do you buy an oil company? Or do you buy a natural gas company? What about a company that produces both oil and natural gas? And let's not forget ethanol, coal, uranium, and other energy-related companies. You get the picture.

Once you determine which types of companies you want to buy, you then have to decide which specific company to purchase. Do you buy a large-cap stock or a small-cap stock? Do you put more value on a company that is established or on one that is aggressively ...