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from Commodity Corner:

Live from London Metal Exchange Week 2009

The great and good of the global metals industry gather for London Metal Exchange week -- the flagship event for the industry.

With most base metal prices running way ahead of fundamentals, real and apparent demand unclear and leading economies at different stages of recovery or not, its a key time to take the temperature of banks, producers, consumers and funds involved in metals.

To follow us on Twitter look for hashtag LME.

from Funds Hub:

Nickels and black swans

Some investors may not be fully aware of the risks they face as career-conscious hedge fund managers plump for strategies that build a convincing-looking track record but occasionally backfire badly.

According to a paper by Yale academic Hongjun Yan, hedge fund managers are far more likely to choose so-called 'nickel' strategies than 'black swan' strategies, even if returns are ultimately lower and they risk the occasional huge loss.

Nickel strategies are -- rather like the contrived image of picking up nickels in front of a steamroller -- those that yield small returns most of the time with the occasional disaster.

Yan says the carry trade, merger arbitrage and convertible arbitrage fall into this category.

The problem for unwary investors, as witnessed by last year's big losses by some funds, is that these trades occasionally go wrong, especially if a lot of other funds are doing the same thing.

"Investors should be aware of the risk (of) potential large losses," Yan tells me. "It is quite possible that many individual investors are not."

'Black swan' strategies, named after best-selling author Nassim Nicholas Taleb's credit crisis hit, take years of small losses but hit the jackpot when rare events -- such as the credit crisis -- occur.