Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Too late to buy energy ETF?
Old 03-05-2005, 04:46 PM   #1
Thinks s/he gets paid by the post
wildcat's Avatar
 
Join Date: Feb 2005
Location: Lou-evil
Posts: 2,025
Too late to buy energy ETF?

I hate to buy when sectors are hot but I wanted to get the opinion from others on the ER forum. I have been watching the Vanguard Viper Energy for a little while but the question is will oil (accounts for the majority of the ETF) stay high or go higher? Is the supply really tight? Also will energy be a good hedge in a time of higher inflation (seems like it b/c it contributes to higher prices)? I also cranked some data and found the returns of energy related stocks to only be slightly positively correlated (.21) with the S&P over a 10 yr period. Thoughts? Concerns? Ballyhoo?
__________________

__________________
"These walls are kind of funny. First you hate 'em, then you get used to 'em. Enough time passes, gets so you depend on them"
wildcat is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Re: Too late to buy energy ETF?
Old 03-05-2005, 05:25 PM   #2
Thinks s/he gets paid by the post
charlie's Avatar
 
Join Date: Mar 2004
Location: Dallas
Posts: 1,211
Re: Too late to buy energy ETF?

wildcat,

Do you see anything on the horizon which will
crater oil prices in the near future? There is a
"terrorism" premium built into the price that
could evaporate if a lot of things go our way
in the mid-east .... but that's a big if. Even if
the terrorism premium goes away, I don't think
we will ever see unprofitable oil prices again.
The demand from China and India and decreasing
reserves all push up the price.

I have been asking myself the same question
and have decided to start putting my toe into
the water. This is an asset class that, IMHO,
should help fight inflation in the long run.

Cheers,

Charlie
__________________

__________________
charlie is offline   Reply With Quote
Re: Too late to buy energy ETF?
Old 03-05-2005, 05:33 PM   #3
Moderator Emeritus
Nords's Avatar
 
Join Date: Dec 2002
Location: Oahu
Posts: 26,617
Re: Too late to buy energy ETF?

I say again, consider the link between rising energy (& commodities) and the dropping dollar.

Energy ETFs sound like a good deal but most investors back away from currency contracts, no?

Your judgment may be sound but you may also be swimming upstream against market sentiment. With the Dow closing at its highest level in 3+ years and about to break 11K (plus our retirement portfolio rising to its highest value since 1999) I'd hold off for a pullback... like early 2006!
__________________
*
*

The book written on E-R.org, "The Military Guide to Financial Independence and Retirement", on sale now! For more info see "About Me" in my profile.
I don't spend much time here anymore, so please send me a PM. Thanks.
Nords is offline   Reply With Quote
Re: Too late to buy energy ETF?
Old 03-05-2005, 06:53 PM   #4
Thinks s/he gets paid by the post
charlie's Avatar
 
Join Date: Mar 2004
Location: Dallas
Posts: 1,211
Re: Too late to buy energy ETF?

Nords, when I said "toe in the water" I ment just
that .... DCA over a 3 year period or plunge when the
market craters .... whichever comes first. Last
year I was asking the same question about
REITs and made my initial investment just before
the big dip in the spring at which time I went all in.

Cheers,

Charlie
__________________
charlie is offline   Reply With Quote
Re: Too late to buy energy ETF?
Old 03-05-2005, 08:12 PM   #5
Thinks s/he gets paid by the post
Spanky's Avatar
 
Join Date: Dec 2004
Location: Minneapolis
Posts: 4,046
Re: Too late to buy energy ETF?

Quote:
With the Dow closing at its highest level in 3+ years and about to break 11K (plus our retirement portfolio rising to its highest value since 1999) I'd hold off for a pullback... like early 2006!
Tt seems to make sense to buy during a pullback. Does it also make sense to sell before the pullback? Why wait until 2006?
__________________
May we live in peace and harmony and be free from all human sufferings.
Spanky is online now   Reply With Quote
Re: Too late to buy energy ETF?
Old 03-05-2005, 08:15 PM   #6
Thinks s/he gets paid by the post
Spanky's Avatar
 
Join Date: Dec 2004
Location: Minneapolis
Posts: 4,046
Re: Too late to buy energy ETF?

Charlie,

Many experts suggest that most REITs are overpriced. Have you thought about selling them before a major pullback?

Spanky
__________________
May we live in peace and harmony and be free from all human sufferings.
Spanky is online now   Reply With Quote
Re: Too late to buy energy ETF?
Old 03-06-2005, 09:10 AM   #7
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
brewer12345's Avatar
 
Join Date: Mar 2003
Posts: 16,391
Re: Too late to buy energy ETF?

Personally, I think commodities are likely to be a better overall inflation hedge than energy. That is one of the reasons I am in PCRDX instead of QRAAX: the DJ-AIG index that PCRDX follows is limited to 1/3 energy (the rest is other physical commodities), while QRAAX follows the Goldman Sachs index, which is mostly energy-based. QRAAX may have more spectacular returns lately, but it is more volatile and less highly correlated with inflation than PCRDX. I would imagine that energy companies would have similar drawbacks.
__________________
"There are three kinds of men. The one that learns by reading. The few who learn by observation. The rest have to pee on the electric fence for themselves."



- Will Rogers
brewer12345 is offline   Reply With Quote
Re: Too late to buy energy ETF?
Old 03-06-2005, 04:39 PM   #8
Thinks s/he gets paid by the post
charlie's Avatar
 
Join Date: Mar 2004
Location: Dallas
Posts: 1,211
Re: Too late to buy energy ETF?

Spanky, I sold some in the fall after the big run up and
again in January to get back to my allocation. I will
bring my allocation up to snuff again probably next
January.

I am in REITs for the long haul now and won't sell
everything.

Cheers,

Charlie
__________________
charlie is offline   Reply With Quote
Re: Too late to buy energy ETF?
Old 03-12-2005, 07:19 PM   #9
Dryer sheet wannabe
 
Join Date: Jan 2004
Posts: 11
Re: Too late to buy energy ETF?

I confess up front that I am an energy bull for the long term. (But, as Charlie notes, its is both an volatile industry and one with seasonality.) It is also a truly difficult industry to really understand; as soon as you think you've got a good grasp, something new develops. However, at the end energy (and oil more specifically) is a core segment of my portfolio. The basic reason is that worldwide demand is increasing, and supply is decreasing. Beyond that, as I believe the USD is weak, oil is a good currency hedge. I generally ignore day to day movement in oil prices and look at the trend underlying. (The underlying industry is not priced at $55/BBL oil.)
I do not generally buy funds, but rather individual stocks - the vast majority being dividend payers. If you like REITS, you might want to look at some of the MLPs - but like REITS they are somewhat interest sensitive.

__________________

__________________
Stephen_C is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
FPA's sem-annual report & Rodriguez's view on energy wildcat FIRE and Money 0 11-23-2006 02:08 PM
Vanguard Funds' take on energy moves justin FIRE and Money 0 09-01-2005 11:07 AM
Peak Oil Marshac Young Dreamers 65 08-03-2005 09:47 AM
Best Buy Desktop special: Is it a good deal? Dante Other topics 3 07-13-2005 09:05 AM
Buy House Now w/Low Down or Save Bigger Down? BigMoneyJim Young Dreamers 11 07-14-2004 05:23 PM

 

 
All times are GMT -6. The time now is 12:38 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.