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Even if you don't think you do, you already know plenty about commodities. Want us to prove it? No problem.
What makes oil produced in Saudi Arabia different from oil exported from Nigeria? It's the same thing that makes the corn you ate at last summer¿s barbecue different from the corn used to produce ethanol. Stumped? Well, don't feel bad, it's a trick question. The answer? Absolutely nothing. Corn is corn no matter where it comes from -- just as wheat is wheat and natural gas is -- right! -- natural gas. (Though the quality may differ, the make-up is uniform.)
So, in less elaborate terms, corn and oil (and all other commodities) are homogenous goods that can be processed, resold and more often than not, used as an input to the production of other goods or services. These goods are traded on a commodity exchange, thus setting the price-per-barrel (or other metric unit) used to value them.
Now pay attention, here's a question that indeed does have an answer: What is the difference between a commodity and a stock? While a stock can tank and become worthless, a commodity cannot have its value be wiped to zero. One other difference: Most commodities are traded in futures, meaning traders buy and sell where they think the price of a product will be at a certain point in the future. Stocks trade based on the value of the underlying company at that point in time.
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Tuesday, August 05, 2008
The Stahler Inflation Pain Index Helps Consumers Understand the Inequality of Inflation
Comtex
CHICAGO, Aug 05, 2008 /PRNewswire via COMTEX/ ----Consumers are becoming increasingly suspicious of the traditional metrics used to measure the state of the nation's economic health. That's why Steven Stahler of The Stahler Group commissioned the Chicago-based survey-research firm Leo J. Shapiro & Associates (LJS) to develop the Stahler Inflation Pain Index, a research-based statistical tool that measures what the government's metrics can't -- the emotional and psychological impact of the U.S. economy on people's daily lives. The Inflation Pain Index is funded by The Stahler Group, a financial advisory firm. Often, government statistics are devised to serve a specific purpose, and do not contain any explanation or data. However, the Stahler Inflation Pain Index is a quarterly report that provides a direct measure of the impact of a fluctuating economy on all types of people.
Consumers may read in the news that the U.S. inflation rate is 3% or 4%, but this number is meaningless without further data or a more personal connection. In the first quarter of 2008, the average Inflation Pain Index rose to 123, the highest level recorded in three years. Back in 2005, the average Pain Index of Inflation was less than 100, but it has been growing steadily since.
In 2005, The Stahler Group employed LJS to begin polling consumers to create what is now called the Inflation Pain Index, a straightforward statistical measurement of how Americans are faring financially, based on the amount of pain they feel as a result of their economic status and situation. The report is compiled from personal interviews conducted by telephone with 5,400 households annually at the rate of 450 households per month. The questions asked of survey respondents are designed to assess how hard or easy it is for people to achieve their standard of living.
For example, we all know that gas prices are going up and that the rising cost of oil is causing a ripple effect of price increases in virtually every sector of the economy, especially food. Significantly, the core inflation rate quoted in the news excludes food and energy costs, but consumers don't have the luxury of ignoring rising gas and food costs. Indeed, though the "official" inflation may be hovering around 4% now, many middle-class families in America are finding that they are paying 10% to 20% more for the same goods and services this year as they did last year, and if they are unfortunate enough to be tied to an adjustable rate mortgage, that percentage can rise significantly higher.
The result: pain.
Additionally, the Index indicates quite clearly that the bite of inflation is directly related to household income. Among households with incomes of $30,000 or lower, the Index was 153 in the first quarter of 2008, compared to a relative pain index of 84 for households earning $100,000 or more. More than half the households in America subsist on less than $50,000, experiencing a pain index of 129 or higher.
When the Inflation Pain Index measurements began, homeowner equity provided a significant cushion against the pain of inflation, but since then the mortgage meltdown has all but dissolved this cushion, exposing homeowners, particularly those with adjustable rate mortgages, to more pain. In the first quarter of 2008, homeowners making less than $30,000 a year recorded the highest Inflation Pain Index ever: 161. Homeowners making more than $50,000 reported experiencing roughly the same amount of pain as non-homeowners in the same income category, indicating that homeownership itself no longer provides protection from the pain of inflation.
The Stahler Inflation Pain Index is published quarterly by Leo J. Shapiro & Associates. For more information contact:
Steve Stahler THE STAHLER GROUP 153 W. Ohio St, Suite 210 Chicago, IL 60610 225-214-4210 Office 312-576-6250 Cell steve@thestahlergroup.com
SOURCE Steven Stahler; The Stahler Group
Copyright (C) 2008 PR Newswire. All rights reserved
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