Should I Invest In Managed Futures?

Krista has been with a broker for five years. The broker called Krista and recommended a managed futures fund. Krista doesn't know much about that, and she suspects her broker doesn't either.

QUESTION: Krista has been with a broker for five years. The broker called Krista the other day and recommended a managed futures fund. Krista doesn’t know much about that, and she suspects her broker doesn’t either. Dave tells her what it really means, and he doesn’t like it.

ANSWER: If that’s a 3 on a scale of 1–10, she just offered you a 50. “Managed futures” is virtually an oxymoron. I don’t know what happened here, and no, she can’t explain this away. The only thing she needs to explain is her behavior—not the investment—in order to keep your business. Now you have to be cynical about everything.

What you’re betting on here is the future price of a commodity. You’re guessing about what the future will be. We’re going to manage a group of those guesses. That’s a joke. The biggest problem is that this is somebody you thought you could trust.

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