...Commodities hedge funds have something that appeal to investors which I don't understand. I don't think diversification benefits are overstated. I think it's expected return that is overstated....That's from his post "Andurand Capital's Negative IRR?"
The wary investor has to approach commodities with the understanding that the beasties are the poster children of mean reversion. That apparently simple fact is sometimes very difficult to tease out of the noise but it is actually pretty profound.
See also Pension Pulse's Friday the 13th post, "The Secret Club That Runs The World?", if interested:
Pierre Andurand was so comfortable with his $8 billion crude oil position that he spent the first half of his day doing a hard core workout with his personal trainer, casually reading the news on a Bloomberg computer terminal, and munching on lean protein and toast at his London town house. It was May 5, 2011, Osama bin Laden had just been killed, and political instability in the Middle East seemed guaranteed to raise energy prices....
