Gas prices are pretty low and oil company stock is pretty low. Exxon-Mobile is around 65, down from 52 week high of 95. PE is in 7s. You can hedge future gas price increase by buying the stock now. No whining if you pass on the opportunity.
You know, I have been thinking about this but am a bit nervous about investing. Seems like global demand is going to stay low for as long as we are in this recession, which will probably prevent the typical jump in prices. Also, it seems like stores of fuel are high and tankers are sitting full and idle not wanting to unload because of low prices. So with that much of a surplus out there and a less than typical bump in seasonal demand, is this still a smart move?
Something a little riskier that I was looking into was DB Crude Oil Double Long ETN (DXO). I am still not entirely sure I understand it, but it’s an ETN that tracks the movement of oil (at a double rate). But I know the shares value is based on the comparative value of future contract. Obviously a double has twice as much risk, but looking at where it was certainly intrigues me. My friend got in around $1.76 a couple weeks ago so he seems to be in a good spot. And the reason I am even considering it is because he is the most risk averse person I know so I’m thinking, geez, if he is willing…
Also, I guess if Duetsche Bank goes under so does the fund, so there is that risk too.
Yeah, until the global warming scientists turn their attention to the economy, the future remains unknown. Certainly there is risk with a purchase now, as market could still go down for a while or stay flat. XOM does have a great balance sheet and has about 2.5% dividend yield currently, so I feel pretty safe, but committed to hold for long term.
You know, I have been thinking about this but am a bit nervous about investing. Seems like global demand is going to stay low for as long as we are in this recession, which will probably prevent the typical jump in prices. Also, it seems like stores of fuel are high and tankers are sitting full and idle not wanting to unload because of low prices. So with that much of a surplus out there and a less than typical bump in seasonal demand, is this still a smart move?
Something a little riskier that I was looking into was DB Crude Oil Double Long ETN (DXO). I am still not entirely sure I understand it, but it’s an ETN that tracks the movement of oil (at a double rate). But I know the shares value is based on the comparative value of future contract. Obviously a double has twice as much risk, but looking at where it was certainly intrigues me. My friend got in around $1.76 a couple weeks ago so he seems to be in a good spot. And the reason I am even considering it is because he is the most risk averse person I know so I’m thinking, geez, if he is willing…
Also, I guess if Duetsche Bank goes under so does the fund, so there is that risk too.
DXO is not for the weak of stomach! It is an extremely volatile ETN. Before investing in this, you really need to understand what you are investing in; i.e. the share price is not necessarily tied to the price of Crude oil that you see or hear every morning per barrel. Rather, price movements as you said, are tied to the rates of change of futures contracts, and DXO stands to gain if the current contango situation reverses itself. Read up on it, and don’t be afraid to play the swings to make your money on DXO (take profits instead of holding long, and buy back in on dips)
With that said, there is certainly a TON of potential money to be made.
Gas prices are pretty low and oil company stock is pretty low. Exxon-Mobile is around 65, down from 52 week high of 95. PE is in 7s. You can hedge future gas price increase by buying the stock now. No whining if you pass on the opportunity.
$40/share would be an ok deal…
The recent spike in oil was due to market manipulation, and I don’t expect it to happen again any time soon. The “real” price of oil is <$30/bl, and will be for many years to come. If you base your purchase on expectations of a higher price than this, you are taking quite a gamble IMO.
Thanks for the info, that’s what I don’t entirely understand, contango vs. backwardation.
Think I may deposit some money with Scottrade and just have a small account to play with a bit. There was that dip about a month ago down to $1.75 and then last week it fell back below $2.00. Now it’s close to $2.50, not sure if this is still a good value or if there is hope we may see another dip in the next month or so back towards the $2.00 range.