To limit or not to limit? That is the question on Washington's mind right now, as regulators struggle with how best to cope with the volatility of commodities funds like UNG. Given the regulatory frenzy over energy ETFs, we thought it might be a good time to check back in with Richard "Rick" Ferri, founder and CEO of Michigan-based Portfolio Solutions, LLC.

Mr. Ferri, who spoke with the voice of caution during our Great Commodities Debate, is an adjunct professor of finance at Walsh College. He has written five investment books; the second edition of his latest, "The ETF Book," was released earlier this month. Before starting his own firm, Mr. Ferri worked as a stockbroker with two major Wall Street firms for 10 years.

HAI Associate Editor Lara Crigger spoke with Mr. Ferri earlier this week about commodities and ETFs, including whether position limits could be helpful, the creeping cost of new funds and why his feelings about commodities haven't changed.

Lara Crigger, associate editor, HardAssetsInvestor.com (Crigger): Last time we spoke, you said you didn't include commodities in your clients' portfolios, because their returns just didn't justify it. Do you still feel this way?

Rick Ferri, CEO, Portfolio Solutions (Ferri): Yes. If the reason people buy commodities is because they think they're going to protect themselves in a down market, they have to come up with a different reason. In the last year or so, I think many people learned that commodities are not negatively correlated with stocks. There are times when they are negatively correlated, of course, but to believe that commodities are some sort of panacea for a bad stock market was always incorrect thinking. The past 14 months finally proved that.

Crigger: That's a short-term phenomenon. Shouldn't we look over the longer-term picture before saying that?

Ferri: Yes, it is a short-term phenomenon, and it only occurs when there is a financial crisis—right when you need it to not happen the most. It happened after the tech wreck in 2000; the worst periods for stocks were some time in the fall of 2002, exactly the same time when commodities started sinking.

When you have a real downturn in the global economy, there's less demand for commodities, of course, and so you'd expect commodity prices to fall. So if you're an astute observer, you look at the worst time for stocks and see that's when the correlation between stocks and commodities picks up.

When you had me on Hard Assets for the Great Commodities Debate, the message I tried to get across is: Commodities as a cure for a downturn in the stock market is not the answer. If you're going to use commodities the rest of the time, the other 80%, then yeah, there's a low correlation between the two, and at times even a negative correlation.

But that's not the whole story, though. The rest of it is: Will commodities actually deliver real returns after inflation? The answer to that is no. You'll get a lower volatility some of the time with commodities, but you'll also get a lower return. And that's what I think many people miss.

I don't think anyone now disagrees that commodities are expected to have a 0% long-term return after adjusting for inflation. I don't think anybody argues with that anymore. So what's the benefit then of taking stocks out of your portfolio that have a real positive return after inflation, and putting that into commodities? I don't get it.

But I'm not anti-commodities. I don't think they belong in a long-term asset allocation strategy, no. But they are trading vehicles. If you were going to speculate with your fun money, then yeah, sure, go ahead and include commodity trading like collateralized commodities futures or ETFs.

Crigger: What about commodities ETFs? Do you feel the same way about them?

Ferri: There's a big difference between the structure of commodity products like GLD—which is actual, physical gold that you own—and something based on the GSCI index or a Jim Rogers index. Those are all futures products; they're all strategies on futures products. So you have to be careful that you're differentiating between what's a commodity and what's a futures contract. I think what you're beginning to see are problems developing with the futures-based products that nobody had anticipated.

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