A Past of Cattle Futures

Back in the early 1990s, when I was in my 20s and trying speculative market ventures, a co-worker was receiving calls from a futures broker in Chicago. He said I should try it out. So I sent in $3,000. My money was put into cattle futures, and I saw my investment go to about $6,000! Within a few months, though, I suddenly had lost everything and then some — I owed them another $2,000. The happy ending here is that ultimately, I managed to lose only everything I invested.

— S. Smith, Pittsburgh

The Fool Responds: Investing in commodities can be very risky. One danger with them is that you can get sunk by leverage, investing with a lot of borrowed money. If things go your way, you might make great returns. But if they don't, you can end up owing much more than you invested. This is how many people have been wiped out by commodities. Know that many investors do very well without ever investing in commodities — you don't need to resort to pork bellies and soybeans.

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