01-11-2015, 10:06 PM
I have been a series 7 broker for over 25 years. Never fucked with oil, never had to. It is starting to become a topic.
The first problem with buying into "Oil" is exactly what Strife was saying, oil dropped by over 50% but Exxon didn't. So if you expect oil to increase by x%, you can't really expect Exxon to increase by the same percentage.
That is the same problem with all of the "Energy" mutual funds. They own the stock in the companies that didn't fall 50% and won't go up 50%.
But the average person can't just buy oil and store it in great big tanks and sell it at a later date when the prices are higher. It really isn't like gold where you can put it under the bed or where ever.
So what you are left with is really the futures market or some derivative of that. The easiest thing that allows the individual investor to speculate in the futures market with at least some kind of management or stated investment strategy is an ETF Exchange Traded Fund. And an ETF is such a wide open term I can't even quantify it. They are pretty well allowed to do anything.
I won't even try to explain "Contango" but it is something that you have to consider if you are looking at rolling the futures market. <!-- m --><a class="postlink" href="http://www.investopedia.com/terms/c/contango.asp">http://www.investopedia.com/terms/c/contango.asp</a><!-- m -->
There is another interesting thing about ETFs, they can be leveraged. <!-- m --><a class="postlink" href="http://www.investopedia.com/terms/l/leveraged-etf.asp">http://www.investopedia.com/terms/l/leveraged-etf.asp</a><!-- m --> So when the the underlying asset goes up they go up greater, and when it goes down they go down greater.
At some point, I have some clients that want to buy into oil. Where is the bottom? Hell if I know.
But I am a value oriented broker. I love shit that is beaten down but not going out. I don't expect oil to go out. The history says every time oil has dropped 50%, in the next couple years you make a rather large profit.
The EFT that I am looking at for future investments is ProShares Ultra Bloomberg Crude Oil (UCO). it is leveraged 2x. over the last year the high was $40.17 and the low was $7.97. it finished Friday at $8.36. The reason is because I don't really know if oil is actually headed back over 100. It might settle well below that and if it does I still want to maximize profit.
In my mind at the end of the day it isn't an investment, it is a bet. Might be a good bet, but a bet none the less. Do your own research and ask for professional advice.
The first problem with buying into "Oil" is exactly what Strife was saying, oil dropped by over 50% but Exxon didn't. So if you expect oil to increase by x%, you can't really expect Exxon to increase by the same percentage.
That is the same problem with all of the "Energy" mutual funds. They own the stock in the companies that didn't fall 50% and won't go up 50%.
But the average person can't just buy oil and store it in great big tanks and sell it at a later date when the prices are higher. It really isn't like gold where you can put it under the bed or where ever.
So what you are left with is really the futures market or some derivative of that. The easiest thing that allows the individual investor to speculate in the futures market with at least some kind of management or stated investment strategy is an ETF Exchange Traded Fund. And an ETF is such a wide open term I can't even quantify it. They are pretty well allowed to do anything.
I won't even try to explain "Contango" but it is something that you have to consider if you are looking at rolling the futures market. <!-- m --><a class="postlink" href="http://www.investopedia.com/terms/c/contango.asp">http://www.investopedia.com/terms/c/contango.asp</a><!-- m -->
There is another interesting thing about ETFs, they can be leveraged. <!-- m --><a class="postlink" href="http://www.investopedia.com/terms/l/leveraged-etf.asp">http://www.investopedia.com/terms/l/leveraged-etf.asp</a><!-- m --> So when the the underlying asset goes up they go up greater, and when it goes down they go down greater.
At some point, I have some clients that want to buy into oil. Where is the bottom? Hell if I know.
But I am a value oriented broker. I love shit that is beaten down but not going out. I don't expect oil to go out. The history says every time oil has dropped 50%, in the next couple years you make a rather large profit.
The EFT that I am looking at for future investments is ProShares Ultra Bloomberg Crude Oil (UCO). it is leveraged 2x. over the last year the high was $40.17 and the low was $7.97. it finished Friday at $8.36. The reason is because I don't really know if oil is actually headed back over 100. It might settle well below that and if it does I still want to maximize profit.
In my mind at the end of the day it isn't an investment, it is a bet. Might be a good bet, but a bet none the less. Do your own research and ask for professional advice.