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bush_cheney2004

Let's make Some Easy Money - Oil ETFs

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The best advice I think you can get, at least on the cheap, on Canadian stocks, is 5I Research. They have information on most Canadian stocks, and also have model portfolios of recommended stocks for balance, income or growth. It's not free, but I regard the $140 a year I spend for membership to be well worthwhile. It's also tax deductible, btw, as a cost of investing.

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Michael has been talking about mid May to late October as being a good time to seasonally get out of the market as it often goes down then. Also that oil(and I'm talking ETF's here) could typically be rising until the end of August. Anyway, I'll check out the BNN market call tonight, I need to get more familiar with the investment game.

That's the "sell in May and go away" phiilosphy, which suggests all the big money is made between October and April. But that statistical fact hasn't held steady over the past five years.

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OK folks...time to make some more easy money as oil tanks below $40 US. The oil glut will continue and worsen as/when sanctions are eased against Iran. In addition to oil ETFs, I am also looking at currency shares, like FXC for the Canadian dollar, which closely follows oil/commodity prices.

Pick your entry points and ride them back up to a handsome profit. "Greed is good".

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OK folks...time to make some more easy money as oil tanks below $40 US. The oil glut will continue and worsen as/when sanctions are eased against Iran. In addition to oil ETFs, I am also looking at currency shares, like FXC for the Canadian dollar, which closely follows oil/commodity prices.

Pick your entry points and ride them back up to a handsome profit. "Greed is good".

It certainly is, which is why I am staying far, far away from anything to do with oil, as I have been since last fall. Up almost fifteen percent on the year because of it.

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They say oil could stay below $40 for years. If that's the case, then would other energy markets grow as a result?

Other energy markets? What do you mean? Oil below $40 is bad for all energy markets, oil or otherwise.

As someone said in the paper today, if alternative energy sources were uneconomical when oil was at $100 a barrel, how economical are they when oil is at $30-$40 a barrel?

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Those silly Arabs hurrying to pump their only natural resource out of the ground as fast as they can and selling it at firesale prices. The lower the price goes, the more they have to keep pumping so they can keep their populations on the dole. It will only hasten how fast the whole region falls out of relevance.

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Other energy markets? What do you mean? Oil below $40 is bad for all energy markets, oil or otherwise.

As someone said in the paper today, if alternative energy sources were uneconomical when oil was at $100 a barrel, how economical are they when oil is at $30-$40 a barrel?

What I'm trying to get at in my usual inelegant way, is to ask if some other market/stock/ goes up when oil is down.

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Those silly Arabs hurrying to pump their only natural resource out of the ground as fast as they can and selling it at firesale prices. The lower the price goes, the more they have to keep pumping so they can keep their populations on the dole. It will only hasten how fast the whole region falls out of relevance.

What's interesting is that the Saudi's are getting into solar power generation.

They want to produce solar for the local grid which would allow them to export more oil.

Makes sense.

But I am still hoping for the day when natural gas/solar/wind breaks the back of the Middle East (and, presumably, Alberta but collateral damage is collateral damage so so be it).

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What I'm trying to get at in my usual inelegant way, is to ask if some other market/stock/ goes up when oil is down.

Yep, you can buy ETF's that are the inverse of oil and natural gas and certain other sectors/markets/commodities.

For example, DWTI is a leveraged inverse fund that follows WTI.

It is 3 times leveraged so if WTI goes down 2% it will go up 6% (it is not perfect though).

You have to be careful with these funds because they decay over medium/long periods of time. Meaning, that over time the funds eventually will go to zero no matter what the market does (assuming the funds never split/reverse split and assuming they did not raise further funding).

If you want to find similar funds I recommend you use the ETF screener and filter for inverse funds.

I find them fun to use but I'm a terrible market timer so I have made and lost money on these things (using the gambling part of my portfolio).

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I wouldn't hold leveraged and/or inverse funds for more than a few days tops, honestly. They decay pretty badly over time.

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I wouldn't hold leveraged and/or inverse funds for more than a few days tops, honestly. They decay pretty badly over time.

Right....triple the reward but triple the risk as well. I have a small position in an inverse oil ETF ==> SCO. It is up 300% in one year.

I accumulated some shares just as a hedge for USO. None of these oil ETFs are a good long term strategy. Contango gets you too.

Edited by bush_cheney2004

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What I'm trying to get at in my usual inelegant way, is to ask if some other market/stock/ goes up when oil is down.

Sure. Take a look at what's happened to airline stocks this year. Oil is a major expense for them, so cheaper oil means more profits. A lot of industries use a lot of oil and oil byproducts, such as the chemical industry. Tire makers would be another one. Those who benefit from more travel - and cheaper oil means more travel, would also do well. That's provided the economy is doing okay, of course. Consumers with more money in their pockets due to having to spend less on gas would also be spending more on other things. So consumer discretionary stocks have done well this year - well, up until August. Nobody has been doing well in August, particularly over the past week.

Edited by Argus

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Argus, I would not want to be holding a big wad of Apple shares right now. There's a lot of glamour about that company which scares me. I should add I know absolutely nothing about the industry.

How did the guys who talked about oil at the beginning of this thread do so far?

Over the years, I have invested in a few dead cats strictly for entertainment, e.g. Irish banks, Nortel and Air Canada, and by dumb luck I happen to be up (although not on Air Canada which remains consistently disappointing in every possible way). I am tempted to take a punt on VW at the moment. However, I leave the serious stuff in my portfolio to people who seem to know what they are doing because I will never have a competitive advantage there and I am too old to take big chances.

Edited by SpankyMcFarland

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Argus, I would not want to be holding a big wad of Apple shares right now. There's a lot of glamour about that company which scares me. I should add I know absolutely nothing about the industry.

How did the guys who talked about oil at the beginning of this thread do so far?

I'm doing fine.

Still holding my Apple shares and they go up and they go down etc... One of these days I'm going to sell them but meh, I hate selling and love buying so it's hard.

Only related oil purchase I have made is XEG - a Canadian ETF that focuses mainly on Alberta companies. I only have 200 units around a $12ish cost so I'm down a couple hundred.

Really bought it to watch the industry closer and like to compare it to Kevin O'Leary's fund as when the NDP were elected in Alberta he cried for everyone to get out of Alberta. So that one is more for fun than profit.

Other than that, bought FCG - natural gas ETF but US based. Got it on the cheap but it has gone up by 10% and down by 20% since I have owned it. I expect to hold that one for 5+ years so whatever.

I think anything else I have bought since then is not related to the oil industry and I have not sold too much (at least not recently).

USO is now on my short term watch/buy list. I would really prefer oil to go to $30 so I could comfortably just go all in.

Oil could go to the $20 range and stay there for a brief period of time (say weeks, possibly a month or two).

But I still expect some kind of trading range - $40 to $60. So, buy when it's below $40 and sell when it's above $50 would probably be an ok strategy.

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Bought 10K REXX today on the dip as oil prices crater near $40. Unleaded gasoline is now selling for under $2.00/gallon in my region.

Buy low...sell high...rinse and repeat.

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REXX crashed today below support on a downdrade...glad my stop loss order executed !

Saudis may reduce production, but we will still be swimming in oil for some time.

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Wow! What a ride down today for WTI crude....$34 per barrel. I loaded up on oversold energy stocks, hoping for some recovery by end of the week.

Hope that H-bomb was fake !

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Oil may have bottomed and more QE & cheap money is promised by Europe.

You keep telling yourself that.

Production has lowered by 0.1% after all, and now the Iranians are starting to pump out oil.

The tank farms are starting to fill up. The world is flooded with oil.

Edited by Argus

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lol

Inventories are at an all time high, oil companies desperately need to continue to pump because they need cash to stay above water, Iran will ramp up production, economic growth is sluggish, growth in alternative energy will dampen demand, and there is a 4,000 well "fracklog" (shale wells that have been drilled but not completed) that will dampen any price upswing.

On the flip side, big car sales are rising, new projects have been cancelled, shale wells are notorious for having steep rates of decline, there's always the possibility of war or instability in the middle east, at some point large mature oil pools that have been supplying the world for decades will go into decline and nobody knows when or if the world economy will take off again.

IOW, nobody can tell when or if the price of oil will spike again. Don't bet the grocery money on it.

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