chinaco
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- Joined
- Feb 14, 2007
- Messages
- 5,072
Please share your opinion on this.
I have been concerned that oil prices will do what they did in 2008 again over the next several years as the economy picks up with China and India continue the rapid pace of development.
I am not interested in trying to hedge against energy inflation because energy costs are embedded in everything we buy (from gasoline to food).
However, I would like to stick with something I understand (or at least think I understand). So that rules out derivatives, directly owning commodities or Commodity ETFs, etc.
The Vanguard Energy (sector) fund is mainly invested in companies that are involved in the production and exploration of oil and natural gas.
It seemed to track fairly well with the rise in oil prices back in 2008... because of their profits.
I was thinking that I might buy the Energy Sector (go long) as a hedge against energy inflation.
I am considering investing enough in the sector (I am working on the amount to invest... it would be a small % of the portfolio) so if prices take off over the next several years, the gains would offset the energy inflation of our household spending for say 5 years or 10 years. I would do this as a tactical allocation. If the value jumps to a certain level of gain, I would probably average out of the position to lock-in the gain. Ultimately, the gain would be spent to offset the extra inflation that hits our expenses (gas prices, food, etc).
The risk would seem to be that the energy sector may under perform for a while... At worst, I might lose a little. But going long probably means I won't lose big as long as I do not need the money for the next 5 years or so .
I have been concerned that oil prices will do what they did in 2008 again over the next several years as the economy picks up with China and India continue the rapid pace of development.
I am not interested in trying to hedge against energy inflation because energy costs are embedded in everything we buy (from gasoline to food).
However, I would like to stick with something I understand (or at least think I understand). So that rules out derivatives, directly owning commodities or Commodity ETFs, etc.
The Vanguard Energy (sector) fund is mainly invested in companies that are involved in the production and exploration of oil and natural gas.
It seemed to track fairly well with the rise in oil prices back in 2008... because of their profits.
I was thinking that I might buy the Energy Sector (go long) as a hedge against energy inflation.
I am considering investing enough in the sector (I am working on the amount to invest... it would be a small % of the portfolio) so if prices take off over the next several years, the gains would offset the energy inflation of our household spending for say 5 years or 10 years. I would do this as a tactical allocation. If the value jumps to a certain level of gain, I would probably average out of the position to lock-in the gain. Ultimately, the gain would be spent to offset the extra inflation that hits our expenses (gas prices, food, etc).
The risk would seem to be that the energy sector may under perform for a while... At worst, I might lose a little. But going long probably means I won't lose big as long as I do not need the money for the next 5 years or so .
- Do you think oil and gas prices will continue to rise when the economy recover?
- Do you think this is a reasonable way to try to hedge energy costs for our household spending?
- Do you think it can work by taking a tactical approach is a good idea for this investment?