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How do you "invest in oil"?
- Thread starter BillyIdol
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Ski_Banker
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USO is the most direct way for a retail investor to buy oil that I'm aware of. Obviously, oil & gas companies do well when oil goes up and vice versa too.
That answers your question.
Now, my opinion... you might as well buy gold, or hardwood, or pork bellies or...
If you don't know why the asset has appreciated ("supply and demand" is not the answer so don't be an economist
) then you would be well advised to stay away from it.
Smart investors avoid things they don't (and can't) know. Those are words I live by.
That answers your question.
Now, my opinion... you might as well buy gold, or hardwood, or pork bellies or...
If you don't know why the asset has appreciated ("supply and demand" is not the answer so don't be an economist
) then you would be well advised to stay away from it.Smart investors avoid things they don't (and can't) know. Those are words I live by.
USO is the most direct way for a retail investor to buy oil that I'm aware of. Obviously, oil & gas companies do well when oil goes up and vice versa too.
That answers your question.
Now, my opinion... you might as well buy gold, or hardwood, or pork bellies or...
If you don't know why the asset has appreciated ("supply and demand" is not the answer so don't be an economist
Smart investors avoid things they don't (and can't) know. Those are words I live by.
I've got to agree with that. Oil is going to drop in price I would have to think. At the very least level off. No way I would want to buy into it NOW.
I wouldn't buy into Gold now either. Last year would have been nice.
I agree. The absolute worst time to buy into a commodity is when it is at historic price points and there is still a surplus.
I'd like to make a correction, fund managers are not starting* to invest in oil. They are much closer to finishing this current trend then starting it. By saying "starting", you are giving yourself a reason to buy in to the trend without any actual data or reasoning to back you up.
That being said, there are several types of firms associated with oil and there is the commodity itself. As Ski noted, you cannot really "invest in oil" without a futures contract and the USO is good enough.
I like MRO and NOV, both newer positions. RIG and APA are also strong firms. You must understand how they generate revenue and establish some sort of catalyst or reasoning that you can watch and adjust for as new events occur.
On the contrary of what Ski said, it often does come down to little more than supply and demand. While there are some excess inventories, all current oil fields are near max capacity and peak production occured in late 2004. I assure you global demand has sky rocketed since then. But on a shorter term basis, currency issues, fed activities, nigerian rebels, all sorts of goofy stuff will seem to control the price action.
I would not buy crude itself right now. NOV has contracts backed up for years and has a semi-monopoly in rig construction/maintenance. MRO is roughly 50% a refiner and 50% a driller/sourcer with a very reasonable price valuation [9 p/e] and a lot of potential upside even in declining oil prices. Some would say it's actually a play on declining oil prices but I think that's arguable.
My lil Bro....started off as chem eng (ga tech) grad in 2000. Invested 15percent of salary in 401k with Exxon, which who he works for. In 2003 it has grew to 87k. He got his MBA (rice), so they switched him to the Biz Side and gave him a region, so he invested 25% of pay which went mostly into OIL. At the end of 2007 he had over 1 million in 401k....He switched it to 5% last month, for fear of it bottoming out for he felt like it has reached close to its peak...........sell sell sell....And to think He has a company gas card and car---
We fuss about gas all the time....Supply and Demand my BUT!!!
We fuss about gas all the time....Supply and Demand my BUT!!!
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my lil bro....started off as chem eng (ga tech) grad in 2000. Invested 15percent of salary in 401k with exxon, which who he works for. In 2003 it has grew to 87k. He got his mba (rice), so they switched him to the biz side and gave him a region, so he invested 25% of pay which went mostly into oil. At the end of 2007 he had over 1 million in 401k....he switched it to 5% last month, for fear of it bottoming out for he felt like it has reached close to its peak...........sell sell sell....and to think he has a company gas card and car---
We fuss about gas all the time....supply and demand my but!!!
wow!
You invest long in oil the same way you invest in dot coms at the top. When I see a post like this it pretty much signals we are near a top. Once they get enough "How do you "invest in oil"? people invested you should see a 30 dollar drop.
Once upon a time in an Indian village, a man appeared and said to the villagers that he would buy monkeys for 10$. The villagers seeing that there were plenty of monkeys around, went out to the forest and started catching them. The man bought hundreds at 10$ each and as the supply dwindled, the villagers stopped their effort. He then announced that he would now buy at 20$. This rekin-dled the efforts of the villagers and they started catching mon-keys again. Soon the supply diminished even further and people started going back to their farms. The offer rate increased to 25$ and the supply of monkeys be-came so little that there were few monkeys left in the forest. The man now announced that he would buy monkeys at 50$! However, since he had to go to the city on some business, his assistant would now buy them on his behalf. In the man's absence, the assistant told the villagers. Look at all these monkeys in the big cage that the man has collected. I will sell them to you at 40$ and when the man returns from the city, you can sell them to him for 50$. " The villagers pooled all their savings and bought the monkeys. By that time the man and his assistant had disappeared, but mon-keys are everywhere!!!! Welcome to the Stock Market!!!!
If you go long oil I would get out at 145-148 if it ever gets there. I will be shorting it at 145-148.
Once upon a time in an Indian village, a man appeared and said to the villagers that he would buy monkeys for 10$. The villagers seeing that there were plenty of monkeys around, went out to the forest and started catching them. The man bought hundreds at 10$ each and as the supply dwindled, the villagers stopped their effort. He then announced that he would now buy at 20$. This rekin-dled the efforts of the villagers and they started catching mon-keys again. Soon the supply diminished even further and people started going back to their farms. The offer rate increased to 25$ and the supply of monkeys be-came so little that there were few monkeys left in the forest. The man now announced that he would buy monkeys at 50$! However, since he had to go to the city on some business, his assistant would now buy them on his behalf. In the man's absence, the assistant told the villagers. Look at all these monkeys in the big cage that the man has collected. I will sell them to you at 40$ and when the man returns from the city, you can sell them to him for 50$. " The villagers pooled all their savings and bought the monkeys. By that time the man and his assistant had disappeared, but mon-keys are everywhere!!!! Welcome to the Stock Market!!!!
If you go long oil I would get out at 145-148 if it ever gets there. I will be shorting it at 145-148.
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Go back and look at the "I want to invest in gold" posts. I think they called the top within 5%.
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