Commodities
At the very top of the investment risk pyramid are commodities. These include pork, grain, coffee, sugar, etc. Financial expert Andrew Tobias says that since 90 percent of the people who speculate in commodities lose (and 98 percent may be a more accurate figure), the key is how to be among the 10 percent or (2 percent) who win. He simply compares investing in commodities to gambling. At the top of the investment risk pyramid, you have high potential for return but also high risk. To invest there, you need to be able to afford to lose your entire investment.
Costs include brokerage fees. You also need considerable knowledge of the commodity in question and the markets in which it is created and sold as well as the changing situations of the buyers.
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