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Old 02-21-2008, 08:01 AM   #1
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Oil

As you know, oil topped $100 yesterday and has backed off a bit this morning. Just heard Boone Pickens say he was shorting oil and natural gas and sees oil correcting by $10-15 per barrel. Sees oil climbing back to $100 in the 2nd half of year. Any you guys ever short oil through something like DUG?
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Old 02-21-2008, 08:06 AM   #2
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Never done it, but I would probably prefer something that is direct exposure to oil futures. OIL is the vehicle I would use.

Oh yeah: This may or may not be a bad idea for a speculation. But it definately is risky and potentially exposes the investor to a significant risk of loss. Consult your investment advisor/psychiatrist/mother/swami/etc. before even contemplating anything like this.
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Old 02-21-2008, 08:12 AM   #3
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Consult your investment advisor/psychiatrist/mother/swami/etc. before even contemplating anything like this.
This is it. No, I would never put any serious money in something like this. Just short term play money.
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Old 02-21-2008, 09:36 AM   #4
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Last year Pickens predicted on CNBC that oil would hit $100. as soon as it did he says he is shorting it.

smart guy, but would you really trust him since he has a lot of his own money at stake and why would he give away his strategy on TV?
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Old 02-21-2008, 09:40 AM   #5
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Last year Pickens predicted on CNBC that oil would hit $100. as soon as it did he says he is shorting it.

smart guy, but would you really trust him since he has a lot of his own money at stake and why would he give away his strategy on TV?
Maybe to try and move the market? Lot's of people listen when he speaks.
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Old 02-21-2008, 09:57 AM   #6
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If I want to gamble I'll visit the casino
Long term, oil will go up. This year? Who knows, depends upon too many unknowns.
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Old 02-21-2008, 10:07 AM   #7
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I sold my energy ETF about 1.5 yrs ago, to "simplify" my portfolio. Have around 5% PCRIX as a more or less permanent fixture, but if oil drops significantly, I may add a smidgen, say 5%, for the sake of "peak" oil. Still contemplating. Also thinking, per other discussions about asset allocation, about increasing PCRIX, or maybe DJP for ease/cost considerations. Seems frothy now, but I've been wrong before...

I've settled on an allocation I'm reasonably happy with, but I'm willing to adapt.
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Old 02-21-2008, 11:36 AM   #8
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Due to certain job responsibilities I am prohibited by federal law from investing in anything primarily related to oil, including related sector specific mutual funds, and since I must provide complete financial disclosure annually, that is pretty much that.

Having had to stand by the sidelines and watch energy funds rising for years and years, which I think any moron could have predicted, can you imagine how disgusted I am with the feigned innocence of some politicians and CEO's when caught with their hands in various other cookie jars? SHEESH. As if they didn't know.

As for me, I prefer to err on the side of being overly ethical and out of hot water. I can do that by sticking to very broad index funds such as VTSMX, and a Bogleheadish investment approach.

Sorry if this post is off topic. I was just feeling a little bit like "poor me"!
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Old 02-21-2008, 01:19 PM   #9
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or maybe DJP for ease/cost considerations.
If you buy DJP, you are assuming a certain amount of tax risk. There have been rumblings about disqualifying the favorable tax treatment DJP receives vs. stuff like PCRIX. We will see if it ever actually materializes in the form of something with actual teeth.
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Old 02-21-2008, 01:55 PM   #10
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If you buy DJP, you are assuming a certain amount of tax risk. There have been rumblings about disqualifying the favorable tax treatment DJP receives vs. stuff like PCRIX. We will see if it ever actually materializes in the form of something with actual teeth.
If DJP loses the favorable tax treatment how bad will that
have an affect on the price.
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Old 02-21-2008, 02:07 PM   #11
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If DJP loses the favorable tax treatment how bad will that
have an affect on the price.
Likely will make little, if any, difference, aside from a temporary move if people sell. The alternatives are PCRDX and PCRIX, which already have lousy tax profiles and are at least as expensive as DJP.
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Old 02-21-2008, 02:28 PM   #12
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Luckily, my PCRIX is in the 401k, so no tax considerations for now.
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Old 02-21-2008, 06:33 PM   #13
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Hi, my first post.

Mr. Pickens is indeed smarter than I am, but I simply can't be bothered with trading in and out of asset classes. I like investment horizons of 5 years and up. I've invested heavily in Vanguard Energy since around 2001. 24% of my liquid investments. Probably some may excoriate me for my over-concentration in this sector. (Similar time frame and position in Precious Metals.) In all modesty, I've been making buckets of money. And I'm familiar with all the well-reasoned arguments against my approach.

Regarding oil's future, here's a good intro to peak oil theory.


Peak oil - Wikipedia, the free encyclopedia

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Old 02-21-2008, 08:18 PM   #14
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Hi, my first post.

Mr. Pickens is indeed smarter than I am, but I simply can't be bothered with trading in and out of asset classes. I like investment horizons of 5 years and up. I've invested heavily in Vanguard Energy since around 2001. 24% of my liquid investments. Probably some may excoriate me for my over-concentration in this sector. (Similar time frame and position in Precious Metals.) In all modesty, I've been making buckets of money. And I'm familiar with all the well-reasoned arguments against my approach.

Regarding oil's future, here's a good intro to peak oil theory.


Peak oil - Wikipedia, the free encyclopedia

Tom
Concentration may be appropriate for some investors, especially young ones. By way of comparison, I run an account for my father-in-law. Its maybe a third of his liquid assets and most of the rest is in domestic and foreign large cap equities. I wanted to diversify him and have an account that had decent return prospects and very little chance of loss. So the account started at 1/4 each commodities, foreign bonds, REITs, and Lehman Agg bond index. I have made some changes in the almost 2 years I have been runningthe account (tossed REITS in late 2006/early 2007, tossed Lehman Agg in late 2007, started buying finance equities, bank loans, preffereds and merger arb funds), but the performance of this account in seriously stressed conditions has been surprisingly strong. Will have to think about this approach (or HaHa's "morlock" style) when I am ready to retire.
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Old 02-21-2008, 08:24 PM   #15
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I don't understand why people call betting on the short term movement of the price of a particular commodity an investment. Its a speculation. Investing in energy companies in general could be a strategic investment, but this short term price guessing is gambling. Have fun at the casino if you must, but keep an eye on your risks.
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Old 02-22-2008, 08:35 AM   #16
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I don't understand why people call betting on the short term movement of the price of a particular commodity an investment. Its a speculation. Investing in energy companies in general could be a strategic investment, but this short term price guessing is gambling. Have fun at the casino if you must, but keep an eye on your risks.
Well one could say the same thing about traders of any kind of financial product. They are making bets based on short term trends and data. Call it gambling, speculation or whatever, but people make money at it. And yes, they lose money.

As I said in my original post, I wouldn't put any serious money on a short term bet. I 'invest' 90% of my money in mutual funds and etf's for the long haul with just minor adjustments for rebalancing purposes. My other 10% is through individual stocks that I might keep a few months or a few years. My largest individual stock is worth roughly 1.5% of my entire portfolio. So risk is taken into account.
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Old 02-22-2008, 02:54 PM   #17
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http://www.pkverlegerllc.com/PKV%20F...%20Article.pdf

There is alot of bearish oil sentiment around now, on this board and out in media-land. And, with the last Philly Bank Reporrt it is hard not to expect a recession, and hard to get used to the idea that oil demand may not suffer much even in teh event of a US recession.

But here is a short bullish article.

Personally, it was a lot easier for me to be bullish at $15-$20 around the millennium. But now I am agnostic, and I am keeping my energy and service equities though I do expect that there may be intermediate term weakness.

If I held any in tax deferred accounts, I might sell down a little.

IMO, something is different in oil land, and it very likely it is that supply is pushing close to its limits. That and the fact that the only production capable of being increased is in OPEC.

IMO, our ass is in a sling.

Ha
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Old 02-22-2008, 03:29 PM   #18
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A slight clarification, ha. There is production capable of being increased outside OPEC. Problem is that it is places that make drilling for and producing hydrocarbons expensive, technically challenging, or both.I am thinking about stuff like Petrobras' mammoth offshore find. So there is oil out there, but it will cost you.
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Old 02-22-2008, 03:49 PM   #19
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My PCRIX allocation is at about 15%. It didn't start that high, but being up over 34% in four months makes it hard to hold down.

I know, what goes up...

But it's surely been a nice counter-correlation to equities since beginning of the year.
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Old 02-22-2008, 03:56 PM   #20
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A slight clarification, ha. There is production capable of being increased outside OPEC. Problem is that it is places that make drilling for and producing hydrocarbons expensive, technically challenging, or both.I am thinking about stuff like Petrobras' mammoth offshore find. So there is oil out there, but it will cost you.
I agree completely with what you are saying. I am not sure however that this new production can overcome natural field depletion in non-OPEC fields.

So while there is definitely new production, there may not be any net new production.

Ha
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