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I remember when the Peak Oil Theory was being propagated and everybody said "This time it is different" and "We will never see oil below $100 again". There is still a glut of oil and oil reserves are high. I jumped off the oil train, but I am waiting for another opportunity.
You're 5 months late John. The time to load up on energy-heavy funds was in February when oil bottomed around $26. By my crude calculation it's now up about 70% from those lows. As I wrote on May 3: "I suspect the big gains in NR & energy are over for the year, but remain optimistic for PRNEX (and natural resources in general) looking out two or three years." http://www.mutualfundobserver.com/discuss/discussion/comment/77459/#Comment_77459
On that day (May 3) oil closed around $43-44 and PRNEX (the fund mentioned in the post) was sitting at about $32. That's about where both are today. So neither has moved much. In the intervening months since that post, oil touched $50 and PRNEX approached $35. I sold another 25% of PRNEX at the higher prices, so now have only a small position.
Energy analysts are divided of course, but there seems to be some consensus that oil will be in the $60 range in a couple years. Unfortunately, a 2-year time horizon seems very long for some. So John, you'll probably get paid to wait - but your gains will come in drips and drabs.
I strive to maintain at least a five percent weighting in the minority sectors (materials, real estate, communication services and utilities) and at least a nine percent weighting in the majority sectors (consumer cyclical, financial services, energy, industrials, technology, consumer defensive & healthcare) within my portfolio. Since, I am at about a nine percent weighting in energy and energy now accounts for about a seven percent weighting in the S&P 500 Index this puts me at about a +2% overweight in the sector as compared to the Index and in a neutral position within my portfolio according to my allocation weightings. This leaves me with about seventeen percent that can be move around and overweight accordingly as to how I wish to allocate sector weighting within my portfolio.
@ron & MFO Members: It appears the oil patch is headed for if not a train wreck, at least a derailment, as WTI crude heads towards under $40. Regards, Ted
Waiting for oil to hit $37 a barrel then will start buying. Looking at RDSB at over 7% dividend, FENY for diversity and EPD. Recently bought KMIPRA convertible for high yield.
Still early to another entry point. Been trading VDE several times this year for modest gain. Slow global growth is a concern. Exxon Mobil reported poor earning this morning, down over 40% from same period of a year ago.
@MFO Members: After briefly touching bear market territory earlier in the session, crude oil prices have caught a bounce intraday, taking WTI out of bear market territory (20% decline from closing high of $51.23). Despite the bounce, though, crude oil is still down 19.5% from its 2016 high, so it’s still very close to entering a new bear. Regards, Ted Crude Catches A Bounce Out Of Bear Territory: https://www.bespokepremium.com/think-big-blog/crude-catches-a-bounce-out-of-bear-territory/
Since 1986, energy as part of a simple, seasonal three sector switching strategy has had it's best statistical profitability in the winter / spring months. 2016 was exceptional .
Comments
On that day (May 3) oil closed around $43-44 and PRNEX (the fund mentioned in the post) was sitting at about $32. That's about where both are today. So neither has moved much. In the intervening months since that post, oil touched $50 and PRNEX approached $35. I sold another 25% of PRNEX at the higher prices, so now have only a small position.
Energy analysts are divided of course, but there seems to be some consensus that oil will be in the $60 range in a couple years. Unfortunately, a 2-year time horizon seems very long for some. So John, you'll probably get paid to wait - but your gains will come in drips and drabs.
Regards,
Ted
Oil Futures:
http://www.marketwatch.com/investing/future/clu6
$35 Crude:
http://www.marketwatch.com/story/heres-the-key-factor-pushing-oil-prices-toward-35-a-barrel-2016-07-27/print
at RDSB at over 7% dividend, FENY for diversity and EPD. Recently
bought KMIPRA convertible for high yield.
Returns: 1/3/5/10 yrs:
+9.87% +11.80% +12.91% +10.58%
YTD:
23%
Regards,
Ted
Crude Catches A Bounce Out Of Bear Territory:
https://www.bespokepremium.com/think-big-blog/crude-catches-a-bounce-out-of-bear-territory/
https://docs.google.com/spreadsheets/d/1NrMJ1hs2zhLrXc-WgjdbA_0uf0KUPzvKdgKUJZvyFCM/edit?usp=sharing