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If you are convinced of the latter point, then it's a great opportunity for you to invest in oil and benefit from your own wealth transfer.
by oniMaker 11y ago
If you are convinced of the latter point, then it's a great opportunity for you to invest in oil and benefit from your own wealth transfer.
- fweespeech 11y agoThe problem with this is no sane human would think they could guess the timing. Being too early is the same as being wrong.
- sbov 11y agoIsn't this only a problem when shorting? You can buy and hold for forever.
- oniMaker 11y agoYou could buy and hold until a stock went to zero, for example. Edit: Whoever is downvoting obviously has never seen this happen. There was just an article about it on HN the other day, describing how Dragon lost it all when the company they sold to plummeted to zero stock value.
- vox_mollis 11y agoIf you stand for delivery, you pay to store and insure it. If you don't stand for delivery, you pay contango to roll over the contracts. Going long commodities with uncertain date of sale always costs money.
- aianus 11y agoStoring oil isn't free (and by extension, neither is rolling over futures positions indefinitely).
- frandroid 11y agoStoring oil shares is free though.
- ci5er 11y agoYou mean ETFs? If not, what is an "oil share"? Futures contracts have maturity dates. At the end you sell them (at a price you might not like), roll them over (not free or even necessarily cheap) or take delivery on the oil (also usually not cheap, depending on your facilities).
- csomar 11y agoYou are comparing oil/energy to a stock (a proof of ownership). They are too different things. You can't simply buy "Oil". So if you buy an oil contract I'll expect, on the long run, to pay fees for storage at least.
- noir_lord 11y agoEver seen the story where the guy messed that up and they delivered the coal? http://thedailywtf.com/articles/Special-Delivery http://thedailywtf.com/articles/Special-Delivery don't know if it's true and not that bothered as it's still fairly hilarious. I think there would be legs in a Silicon Valley/IT crowd style show about market traders.
- leakybit 11y agoNo, but you can buy oil options and play them just like stock options.
- soylentcola 11y agoReminds me of this recent article where the author attempts to do just that: http://www.bloomberg.com/news/articles/2015-11-03/that-time-i-tried-to-buy-some-crude-oil http://www.bloomberg.com/news/articles/2015-11-03/that-time-...
- deleted 11y ago[deleted]
- plusbryan 11y agoWhat's the best way to capitalize on this assumption? USO?
- jonknee 11y agoOr a basket of energy companies like XLE.
- AstroJetson 11y agoI always suggest Vanguard funds - Vanguard Energy Fund Investor Shares: https://personal.vanguard.com/us/funds/snapshot?FundId=0051&FundIntExt=INT https://personal.vanguard.com/us/funds/snapshot?FundId=0051&... Note that this is SUPER RISKY investment fund. If you look at the chart it has major swings up and down. The fund is down 20% for 2016 (yikes!). But if you had held it from 2012 -> 2014 you would have gotten a 40% return on your investment. I like Vanguard funds since they have a low management cost to them and they tend to be a little more conservative in their selection. Good luck, remember me when you make your million!
- Ntrails 11y agoOther passive investment funds with similar or lower fees and appropriate target sector are available Also consider whether you want to invest in oil related companies or in the price of oil itself (which is just as possible). NB. I have nothing for or against Vanguard funds and have heard a few people supporting them.
- protomyth 11y agoVanguard is actually quite good just for the nice web site and ease of use.
- tamana 11y ago>Good luck, remember me when you make your million! Oldest trick in the book: fove out free advice and take a share of the wins, but don't pay a share of the losses ;-)
- 11y ago
- snowwrestler 11y agoBe careful, though, because when oil reaches its end game, the price will fall and never come back up. Are we there yet? Or is this just temporary drop? There's no way to know, now.
- kbenson 11y agoWait, wouldn't the scarcity of oil force a premium on the price? Wouldn't a dwindling resource with lots of legacy uses and equipment requiring it command even higher prices than when it's abundant?
- toomuchtodo 11y agoThe oil end game isn't that we run out; its we find something better (electric cars) and oil loses its value and becomes a stranded asset in the ground. Good for humanity, bad for O&G industries. EDIT: I'm fairly confident this is the start of the end. The US Congress extended the production tax credit for renewables for 5 years, along with Tesla's Gigafactory ramping up production, which means we're going to be awash in renewable-generated power and have the capacity to store it (in cars, and in stationary storage).
- kbenson 11y agoThat's an interesting argument, but as the p[rice drops, less companies will be willing to drill it, and that will provide an upward pressure from lack of supply, will it not? At some point I imagine it will stabilize at a new price (based on then demand), I guess the question is do we have models of something like this happening before?
- toomuchtodo 11y agoYou're assuming there is no demand destruction. Keep in mind: China economy cooling off, fuel efficiency standards, shifting demographics (older populations drive less). We reached peak oil, it just wasn't supply. It was demand.
- clock_tower 11y agoThat's certainly what I'm up to. MLPs are on sale right now -- and they give interesting benefits (large guaranteed dividends and capital deprecation on your income tax forms) if you're willing to buy and hold. I'm aiming for 10 years to financial independence; I might get there in 5, with the way things are going right now. I don't think there's much risk of bankruptcy for high-cap MLPs, and for low-cap ones the risk is priced into the stock (and then some). The price of oil has to recover sooner or later; the Saudis don't have an economy unless they have high oil prices, and they're the ones behind the current glut. Kuwait is already negotiating with OPEC and non-OPEC producers to raise oil prices again...