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I have XLE as part of my long-term portfolio and that's good enough for me.
I'd like to point out that the demand for oil doesn't really depend on Chinese supercycle stuff, but middle class demand for automobiles.
As I wrote in another forum:
Many of the world's largest producers ( ie. Venezuela, Mexico & Iran ) don't allocate enough of their oil revenues to maintain output so their production is in long-term decline.
Look out 5 years or even 10 years. Do you really see the price of oil going down? The population of the world continues unbounded. The population of the people in the world owning automobiles is increasing even faster. Maybe "Peak Oil" isn't here yet, but the only places that are likely to see large increases in production are the US, Canada, and maybe Mexico.
All the talk in here seems to be about trading in the short-term.
I like bmw335xi's posture. Most of the dividends in the XLE are probably safe since they come from companies like Exxon, Chevron, Marathon and others with well-covered dividends.
Oil is fine long-term, I can't imagine it being lower than it is now within 5 years from now. I actually expect a rebound to happen sooner than later. The point I've been pushing is for people who are looking to buy the dip, to simply wait until a floor has been established first. Why tie your money up with something that's headed South? You're better off waiting for the floor or putting your money in a different industry. I like XLE because most of it is made up of quality energy companies, with a decent dividend from strong companies. I personally am waiting for a bounce, it looked like we were close to one in the middle of October, but it clearly wasn't breaking out of the trading range, so those that jumped the gun got hammered unless they used a stop. I see further decline and that's not a revolutionary prediction, it's simply looking at the chart. People who have been guessing the top of the market since 2009 have been getting raped in their wahoo instead of just going with the flow. OIL is going down, so those trying to guess a bottom before there are any signs are also getting raped in their wahoo. I agree with those that think OIL will be higher 10 years from now, but why lock your money into something that's falling now.
The shale oil industry is built on a lot of leveraged debt. At what price point do shale oil startups begin to go bellyup and start defaulting and creating a new debt liquidity crisis.
15% of high-yield bonds are supposedly energy company issuance. Junk bonds haven't been confirming the Nasdaq for awhile. They usually move in lockstep.
Sorry to beat a dead horse (not sure if that's the correct expression), but yeah... see why trying to catch a falling knife is bad?
Yes, and no. If you were playing the market and need the cash for other investments, then yes. But if you are buying now and selling years from now, it doesn't matter what happens in between. The only thing that matters is the buy price and the sell price. Could you get it at a better price by waiting? Maybe. In this case, yes. But then you are trying to time the market.
Yes, and no. If you were playing the market and need the cash for other investments, then yes. But if you are buying now and selling years from now, it doesn't matter what happens in between. The only thing that matters is the buy price and the sell price. Could you get it at a better price by waiting? Maybe. In this case, yes. But then you are trying to time the market.
While I agree with if your time frame is long-term it doesn't matter much, but the very fact someone is looking to add a lot more during this free fall shows they are still somewhat interested in timing the price, which goes against the long-term mantra.
Yes, and no. If you were playing the market and need the cash for other investments, then yes. But if you are buying now and selling years from now, it doesn't matter what happens in between. The only thing that matters is the buy price and the sell price. Could you get it at a better price by waiting? Maybe. In this case, yes. But then you are trying to time the market.
Just timing one stock...BP.
As mentioned previously, this knee jerk reaction was anticipated back in October. We should expect oil to be back up to $90 by the middle of next year. FWIW
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