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$85 a barrel Oil??
Old 02-24-2006, 10:00 AM   #1
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$85 a barrel Oil??

Nigeria in disarray, Iran could shut off the flow or have the US launch an embargo, Saudi could be caught up in civil unrest, the US will pull out of Iraq which will descend into Tribal Warfare, Canadian Oil Sands not ready yet, Chavez still in, all of which point to Oil Stocks as being a good buy.

I have bought the Energy ETF.
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Re: $85 a barrel Oil??
Old 02-24-2006, 10:21 AM   #2
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Re: $85 a barrel Oil??

The energy sector is very sensitive to news and volitile. Proceed with cautions.
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Re: $85 a barrel Oil??
Old 02-24-2006, 11:01 AM   #3
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Re: $85 a barrel Oil??

If you bought Energy at $15 bbl oil, then you made a ton.

$85 oil? Sure. Place your bets, gents.
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Re: $85 a barrel Oil??
Old 02-24-2006, 02:34 PM   #4
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Re: $85 a barrel Oil??

Time to turn sand into glass.
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Re: $85 a barrel Oil??
Old 02-24-2006, 02:56 PM   #5
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Re: $85 a barrel Oil??

I watched an in depth interview with a commodities trader, what he said made sense, not a short term play, but a small allocation could help offset lousy bond returns.
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Re: $85 a barrel Oil??
Old 02-24-2006, 02:57 PM   #6
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Re: $85 a barrel Oil??

Where does oil fit in your asset allocation plans?
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Re: $85 a barrel Oil??
Old 02-24-2006, 03:47 PM   #7
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Re: $85 a barrel Oil??

In my case, I don't go out of my way to invest in oil assets because I work in the industry. It would be a bummer to lose my job and have the portfolio take a big hit at the same time for the same reason.

I do think that in the long-run it would be a good idea to own some major oil comanies provided they have a good balance sheet and good fundamentals including reserves! We are still dependent on oil and as places like India and China continue to industrialize (although this has already happened to a large extent), demand for a dear commodity will increase.

Keep an eye on companies that have properties in northern Alberta in the oil sands, like Exxon-Mobil (AKA Imperial Oil) and Shell (especially Shell). As I have pointed out before, oil sands reserves are NOT counted as reserves by the SEC today (as I understand it). The story is that soon they may be. At this point, several of these companies will have a step increase in their reserves on the books. Remember that Shell had a scandal a year or two ago about inflating reserves figures. They had to restate them three times, I seem to recall, and their stock suffered. For this reason, I think Shell may be especially susceptible to a bounce in stock price when their reserves get a kick. (Disclaimer--I own no Shell stock. I have worked for Shell up here as a contractor, but not at the moment. I do not have any inside information. All this is public knowledge. It just makes sense to me.) Be aware that at some point, the analysts will have built this expectation into the price. It may have happened already. Do your own homework.

If I were to buy an oil stock, it would be a major with a good balance sheet. But I don't buy individual stocks any more.

May the froth be with you. (inside joke)

Ed
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Re: $85 a barrel Oil??
Old 02-24-2006, 03:56 PM   #8
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Re: $85 a barrel Oil??

Quote:
Originally Posted by justin
Where does oil fit in your asset allocation plans?
Commodities provides additional diversification because of their low correlation with equity markets.
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Re: $85 a barrel Oil??
Old 02-24-2006, 04:00 PM   #9
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Re: $85 a barrel Oil??

Quote:
Originally Posted by Ed_The_Gypsy
I do think that in the long-run it would be a good idea to own some major oil comanies provided they have a good balance sheet and good fundamentals including reserves! We are still dependent on oil and as places like India and China continue to industrialize (although this has already happened to a large extent), demand for a dear commodity will increase.
Probably good advice. Vanguard put out an article recently showing the percentage of energy-related holdings for their various index funds. Bottom line is that if you have a diversified portfolio, you probably already have a 8-10% stake in the energy or energy-related sector.

Example - if you own S&P 500 index fund, 3.1% of the fund is Exxon Mobil. In total, the SP500 index is ~10% energy.

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Re: $85 a barrel Oil??
Old 02-24-2006, 04:34 PM   #10
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Re: $85 a barrel Oil??

Quote:
Originally Posted by justin
Where does oil fit in your asset allocation plans?
Not overweighted hopefully. VFINX, PCRIX, SPH
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Re: $85 a barrel Oil??
Old 02-24-2006, 06:48 PM   #11
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Re: $85 a barrel Oil??

30% of my Portfolio is XIU/TSE, it contains the major indices, 5% is XBG the energy ETF, and I own another 10% in Petrocan.
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Re: $85 a barrel Oil??
Old 02-24-2006, 07:42 PM   #12
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Re: $85 a barrel Oil??

Quote:
Originally Posted by Ed_The_Gypsy
*
May the froth be with you.* ** (inside joke)

Ed
I fully understand about paraffinic froth.
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