What's going on?

Glencore, a major miner and commodities trader, reported its financial results on Wednesday �and the company has made a huge turnaround since its struggles last year�

What does this mean?

We reported quite a bit last year about Glencore�s problems with debt and its struggling stock price, but it�s looking like it�s in better shape now: it�s greatly reduced its debt and commodity prices have rebounded somewhat. The result? Glencore�s stock has almost tripled in price since its low last year! The company is still cutting its debt (by, for example, selling more of its mines) and it plans to, once again, start paying investors an annual cash payment (a.k.a. a dividend) sometime next year (which investors usually like).

Why should I care?

The bigger picture: Turnaround plans sometimes work!


There was a huge amount of negativity surrounding Glencore last year � one major bank even suggested that its stock was worth absolutely nothing. But the company laid out a turnaround plan and executed pretty quickly on it (they were helped a lot by improving commodity prices).



For you personally: Debt can accentuate investment returns � both on the up- and the downside.


The value of Glencore was under so much pressure mainly because it was carrying a lot of debt when the commodity markets went sour. The same thing can, effectively, happen to individuals. It�s possible to buy many investments with borrowed money (a house is one obvious example), �but debt limits your maneuverability when things go wrong. For example, if you lose your job, you might not be able to pay the interest on your loan and could be forced to sell your home. On the flipside, borrowing money can be a good idea: it makes home ownership vastly more achievable and can enhance the return on your house (or other investments). The point? It makes sense to be aware of the risks associated with debt – both as an investor and as an individual.