Oil...Black gold....Is it time to go buy?
Discussion
Claudia Skies said:
DonkeyApple said:
Ergo buy on the upside and dial out risk.
Can we have a translation into English, please.Are you saying, "don't buy in a falling market?".
I expect to be buying energy and natural resources next week.
There isn't anything on the economic horizon that suggests that demand for resources is going to increase (China just warned again this weekend) so oil rises will be dependent on supply reductions. Natural reduction takes quite a long time as production goes off line. The quick fix is for OPEC to artificially cut but that wouldn't be investment but a gamble as you would know so you'd use an option strategy to cover a bet like that.
So in short. We may be at the bottom but there is so much upside that there is absolutely no purpose served in trying to call the bottom when you can simply go long when the sentiment changes. It's not like it has a yield either!
DonkeyApple said:
Exactly. When you buy in the down cycle most of what you are buying is risk.
There isn't anything on the economic horizon that suggests that demand for resources is going to increase (China just warned again this weekend) so oil rises will be dependent on supply reductions. Natural reduction takes quite a long time as production goes off line. The quick fix is for OPEC to artificially cut but that wouldn't be investment but a gamble as you would know so you'd use an option strategy to cover a bet like that.
So in short. We may be at the bottom but there is so much upside that there is absolutely no purpose served in trying to call the bottom when you can simply go long when the sentiment changes. It's not like it has a yield either!
As the old adage goes: Man who tries to pick bottom gets only smelly finger.There isn't anything on the economic horizon that suggests that demand for resources is going to increase (China just warned again this weekend) so oil rises will be dependent on supply reductions. Natural reduction takes quite a long time as production goes off line. The quick fix is for OPEC to artificially cut but that wouldn't be investment but a gamble as you would know so you'd use an option strategy to cover a bet like that.
So in short. We may be at the bottom but there is so much upside that there is absolutely no purpose served in trying to call the bottom when you can simply go long when the sentiment changes. It's not like it has a yield either!
Burwood said:
Fittster said:
At the start of the year did any of this team predict the 40% fall? If they didn't why should any future prediction be given credibility?
lol exactly, the experts speak. oil is cheap, it will go up. when is anyones guess. it's the futures market not spot that mattersAll that is happening at present is the dumb or youth money is trying to call the bottom and getting topped and tailed. But there will be free money when it does turn and there is absolutely no rush.
I've trade oil twice before in my life. I tested it in 2007 from 54 to 100 and paid off my mortgage and again in 2009 from 40 to 78 and filled my pension. I aim to trade it again.
For me the key to trading is to wait until a genuine asset gets properly over sold and when the momentum turns to scale in at set stages over a long period. I've done it with oil and indices after enormous sell offs.
It's not about predicting anything or being smart. Just about being patient. In the twenty or so years I've been trading I've realised that these events appear every few years or so.
1 said:
Is now the right time Donkey?
Ive just put the house on it being the right time, if I'm right I'll pay off the mortgage, if I'm wrong I wont have a home to pay off the mortgage on. Either way I'll be mortgage free!
As plans go, it seems fool proof. Ive just put the house on it being the right time, if I'm right I'll pay off the mortgage, if I'm wrong I wont have a home to pay off the mortgage on. Either way I'll be mortgage free!
For me, I suspect the earliest point in some months away, probably q4 at best. I want to see the floor set firm and at the moment it could go to 40 as easily as 60.
Mike22233 said:
hidetheelephants said:
Stupid question; other than simply buying O&G shares or stashing a barrel of WTI in the shed, how do you invest in gamble on the oil price craziness?
LOIL or Buy into a major who are already trading low.
Mid caps and oil services offering some deep value opportunities.
Yup. I don't know of an etf in oil that would do the job.
The problem with the mid cap stocks is that as soon as sentiment turns the ones that have survived will be rushing out placings at big discounts to get hold of cash.
For the trade that I do which is staged buy-ins over set price points then far quarter spreadbets work out the most cost effective way, even when you roll them.
The problem with the mid cap stocks is that as soon as sentiment turns the ones that have survived will be rushing out placings at big discounts to get hold of cash.
For the trade that I do which is staged buy-ins over set price points then far quarter spreadbets work out the most cost effective way, even when you roll them.
DonkeyApple said:
Yup. I don't know of an etf in oil that would do the job.
The problem with the mid cap stocks is that as soon as sentiment turns the ones that have survived will be rushing out placings at big discounts to get hold of cash.
For the trade that I do which is staged buy-ins over set price points then far quarter spreadbets work out the most cost effective way, even when you roll them.
Interesting stuff.The problem with the mid cap stocks is that as soon as sentiment turns the ones that have survived will be rushing out placings at big discounts to get hold of cash.
For the trade that I do which is staged buy-ins over set price points then far quarter spreadbets work out the most cost effective way, even when you roll them.
I bought mid-caps on the upside break of the bear pennant in brent on the 30th.
Locking in gains today.
DonkeyApple said:
Yup. I don't know of an etf in oil that would do the job.
The problem with the mid cap stocks is that as soon as sentiment turns the ones that have survived will be rushing out placings at big discounts to get hold of cash.
For the trade that I do which is staged buy-ins over set price points then far quarter spreadbets work out the most cost effective way, even when you roll them.
As an amateur I've always been reluctant to get involved in spread betting, although I think I understand their appeal I used ETF's, why aren't you keen on them? The most obvious way to invest is shares in the larger oil companies but you are then risk other variables such as accounting scandals, oils spills etc. It seems to me that I can negate a lot of this risk by investing in an ETF.The problem with the mid cap stocks is that as soon as sentiment turns the ones that have survived will be rushing out placings at big discounts to get hold of cash.
For the trade that I do which is staged buy-ins over set price points then far quarter spreadbets work out the most cost effective way, even when you roll them.
1 said:
As an amateur I've always been reluctant to get involved in spread betting, although I think I understand their appeal I used ETF's, why aren't you keen on them? The most obvious way to invest is shares in the larger oil companies but you are then risk other variables such as accounting scandals, oils spills etc. It seems to me that I can negate a lot of this risk by investing in an ETF.
Im afraid it's not that simple.Oil ETFS, or ETCS as we should really call them, are based on derivitives. You are introducing many complications I shall not bore you with right now (perhaps read up on the effects of a contango market on ETCS).
As an example using the popular USO ETC:
Since USO launched in April 2006, it has returned -71 percent, while the spot price of oil returned -26 percent. The last time oil roared back from a bottom was in 2009, when it returned 78 percent on the year. USO returned just 14 percent.
If you aren't aware of this stuff you should not be using the product imho.
GT03ROB said:
DoubleSix said:
I bought mid-caps on the upside break of the bear pennant in brent on the 30th.
You what?? 
A pennant is a common charting pattern that could be clearly observed forming in Brent since the beginning of the year.
http://www.trending123.com/patterns/bearish_pennan...
Normally a continuation pattern, most would have expected a breakout of this patterm to the downside. The break to the upside was a clear signal to go long for me.
Edited by DoubleSix on Wednesday 4th February 12:02
DoubleSix said:
GT03ROB said:
DoubleSix said:
I bought mid-caps on the upside break of the bear pennant in brent on the 30th.
You what?? A pennant is a common charting pattern that could be clearly observed forming in Brent since the beginning of the year.
http://www.trending123.com/patterns/bearish_pennan...
Normally a continuation pattern, most would have expected a breakout of this patterm to the downside. The break to the upside was a clear signal to go long for me.
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