I guess I’m obliged toss my opinion into the ring, as I’ve been the Oil Bear on this Forum for over a year now.
I incorrectly predicted that $85/bbl was the top, and I started shorting the Oil and Gas Index then. I slightly redeemed myself later by RE-guessing that $135/bbl was the actual top. I got that right, telling several friends correctly to short oil at $140/bbl. They have made some good money already. I didn’t double-down my short oil index position at $140 on the basic principle of not throwing more good money at a bad bet, and because I would have been elevating my portfolio risk to an insane level.
My short Oil Index position is now almost flat even, which is nothing to brag about for 7% of my portfolio sitting doing nothing for a year.
Also, I must credit the overall stock markets for falling 20%, further depressing oil stocks, so putting me near a net flat position, even though oil has come nowhere near the original $85/bbl price at which I starting shorting oil and gas industry stocks.
I no longer am confident (no surprise) that oil will hit $60/bbl. When oil hits about $100/bbl, I plan to SELL my short Oil & Gas Index ETF (“DUG”) and START BUYING oil stocks.
There are countless scary risk factors that could appear at any moment and double the price of oil within a few weeks. Of these, I’m most afraid that Israel will attack Iran which I believe would almost immediately send oil over $200/bbl.
Those risk factors are why I just want to GET OUT of my short oil index positions as soon as I’m net flat on that risky “investment”
I credit our wise and experienced financial Sage, Rich Toscano, for having warned me long ago not to take short positions on oil at $85/bbl. Rich’s advice, as always, is spot-on.
