I did short oil, too early, at about $90/bbl. Within 45 days I was up 25% on that position, net, but that was thanks to the overall decline in the stock markets of about 20%. I should have sold that position THEN. FYI, it wasn't technically a short oil position but more a short position on the Oil & Gas Index, as I bought the ProShares short ETF, "DLG" which is 2X leveraged for inverse gains against the Oil & Gas Index.
Now with oil having touched $120/bbl, i'm getting my butt kicked by still holding that DLG position. Of course, I'm not stupid. I never put more than 10% of my portfolio into that risky bet.
HOwever, oil has fallen $10/bbl in the last few days. Let's hope that trend continues. There are A LOT of people much smarter than I who are experts on the oil sector and who are currently talking SPECULATIVE BUBBLE in oil, and are shorting oil.
I think he meant "DUG", not "DLG". DLG doesn't exist.
Second, there are smarter people "shorting oil" in the strictest sense.
But buying DUG shares is hardly shorting oil,the commodity.
With DUG, you're betting against the profitability of oil and energy companies that produce the end product. I think this was extensively mentioned here by others as well, some actually being pro commodity traders.
Consequently, I don't think you can say that DUG and crude oil prices will always move in lock-step. The later has a portion depending on other things, such as profit expectations on wall street.
In fact if there's any indication, with oil still be high, we see some energy companies like Exxon/Mobil getting blasted in the short run for coming short on profit expectations. Hence why I think DUG has risen 9% from $29-30 over the past couple of days, which I'm not complaining. But DUG is hardly a "short" crude oil position, no more so than is VGPMX (vanguard precious metal and mining) really tracking price of gold.
Now, if only Steve Balmer would hurry up and walk away from that deal, I'd be a happy person to watch MSFT go up from the $28 level and to see Yahoo crater to the low twenties again (no I'm not shorting the later nor do I have a financial position in the company. It's just personal).
