Lazy Man and Money

Investing in Agriculture? DBA vs. MOO

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A couple of days ago, I reviewed SigFig and declared it “The best way to track your investments.” In the review, I opened up my retirement accounts for the world to see. One thing that I didn’t address was the top recommendation SigFig made. Specifically SigFig attempted to scare the poop right out of my bum with a “DBA performs poorly AND charges you $74.89 more in fees to boot!” (Hey if I’m going to have a family-friendly website, I might as well write like 5 year old, right?)

No one wants to be in poorly performing investment and pay large fees to do it. Why did I choose DBA in the first place? I believe in Hedging Rising Food Prices and the PowerShares DB Agriculture Fund (NYSE:DBA) was the most obvious way to do it. DBA’s goal is to track commodity prices. So if wheat and soybeans get more expensive the stock should go up.

So if SigFig doesn’t like DBA, what does it suggest? It suggests Market Vectors Agribusiness (NYSE:MOO). Part of me wants to buy in on the ticker symbol alone. I looked into MOO a little more and here are the top holdings according to Morningstar: Monsanto Company, Potash Corporation of Saskatchewan, Inc., Deere & Co, Syngenta AG, Wilmar International Ltd, Archer-Daniels Midland Company, Mosaic Co, BRF – Brasil Foods SA ADR, Agrium Inc, Yara International ASA.

You know what I don’t see in MOO’s holdings? I don’t see corn, wheat, soybeans or any of that. I see companies like Monsanto and John Deere. The difference between what I own and the recommendation is pretty large. In SigFig’s defense, they are pretty clear that the recommendations are just suggestions.

Ask the Readers: If one is going to try to hedge against rising food prices, should he/she diversify within the category investing money in the commodities itself as well as the companies that help bring that food to your table? Let me know in the comments?

Hedge Rising Food and Gas Prices with ETFs

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I’ve been following the financial news a little more lately than I have in past. I don’t like what I hear.

An interview with a Shell Oil representative is claiming we might be paying $5 a gallon in two years. I shudder to think about what that means for me for California because we are up there with the most expensive gas in the nation. It’s a good thing that I work at home and don’t drive too much.

Then earlier today, I came across this article that predicted food costs more than ever and the United Nations says prices can go much higher.

Great googly moogly, higher gas prices and higher food prices?!?! What can be done about this? I’ll tell you what I’m doing: hedging my investments. When gas was cheap, I bought some PowerShares DB Oil Fund (NYSE:DBO). I also bought some PowerShares DB Agriculture Fund. Investing in these two commodities takes some of the sting away from rising prices.

Looking for a great way to complement that strategy? How about implementing these tips to save money on groceries and save money on gas?

What do you think? Are you hedging your bets against higher prices or not? Is now the time buy or have prices of these ETFs already risen too much? Is this six straight question I’ve asked? Yes it is.