bobcor, First, the margin. You don't pay interest on futures margin, as no money is lent out. Your margin is sort of like a surety of payment.
Yes, most futures traders are very active. But, you don't have to be. You can buy or sell oil futures, for example, out to 2009 and hold until then or until your profit is high enough, or your loss large enough. And you pay no commissions until you close the position. You can take gold out to 2006.
The best thing about futures is that there is no insider trading, no pro forma earnings, no mergers ("cotton just bought out cocoa today. Get ready for real cotton candy"), few analysts (and nobody listens to the ones that do exist), no phony balance sheets and they absolutely do move with economic reality, i.e., supply and demand. The bad news is, when you are wrong, you don't get bailed out by insane crowds who don't know any better.
Commodities are less volatile than stocks, though the margin makes them appear more volatile. |
