One word: OIL

[HereWeGo]

No no no.

SDS (or maybe better yet OTM Jan SPY puts) is fine, but just say no to UCO (or USO for that matter.)

[34f3f3f]

[quote=socrattt]I have a quick question for any of you gurus. If the dollar continues its’ free fall, how will that affect the oil prices? Wouldn’t the cost of oil essentially increase?

What is the short and long term possibilities that Euro becomes the new currency of oil trade? I am a bit curious to see what happens as I believe there has to be some sort of dramatic overhaul of how oil is bought sold due to the current volatility of the US Dollar.[/quote]

In think the relationship between oil and the dollar is inverse. Rather it’s oil that affects the dollar more than the other way round, hence the term the ‘oil standard’ or Petrodollars, but I forget how this works now. Basically OPEC countries sell oil for dollars which they then use to buy US treasuries. I don’t see a wholesale flight to Euro’s. Recently, we’ve seen a flight to dollars when panic hit the markets, so investors obviously still see the dollar as a safe(r) bet. How long that will last, will possibly depend on Asia’s confidence in the US ability to bring back some stability the to the markets.

[34f3f3f]

[quote=socrattt]I have a quick question for any of you gurus. If the dollar continues its’ free fall, how will that affect the oil prices? Wouldn’t the cost of oil essentially increase?

What is the short and long term possibilities that Euro becomes the new currency of oil trade? I am a bit curious to see what happens as I believe there has to be some sort of dramatic overhaul of how oil is bought sold due to the current volatility of the US Dollar.[/quote]

In think the relationship between oil and the dollar is inverse. Rather it’s oil that affects the dollar more than the other way round, hence the term the ‘oil standard’ or Petrodollars, but I forget how this works now. Basically OPEC countries sell oil for dollars which they then use to buy US treasuries. I don’t see a wholesale flight to Euro’s. Recently, we’ve seen a flight to dollars when panic hit the markets, so investors obviously still see the dollar as a safe(r) bet. How long that will last, will possibly depend on Asia’s confidence in the US ability to bring back some stability the to the markets.

[34f3f3f]

[quote=socrattt]I have a quick question for any of you gurus. If the dollar continues its’ free fall, how will that affect the oil prices? Wouldn’t the cost of oil essentially increase?

What is the short and long term possibilities that Euro becomes the new currency of oil trade? I am a bit curious to see what happens as I believe there has to be some sort of dramatic overhaul of how oil is bought sold due to the current volatility of the US Dollar.[/quote]

In think the relationship between oil and the dollar is inverse. Rather it’s oil that affects the dollar more than the other way round, hence the term the ‘oil standard’ or Petrodollars, but I forget how this works now. Basically OPEC countries sell oil for dollars which they then use to buy US treasuries. I don’t see a wholesale flight to Euro’s. Recently, we’ve seen a flight to dollars when panic hit the markets, so investors obviously still see the dollar as a safe(r) bet. How long that will last, will possibly depend on Asia’s confidence in the US ability to bring back some stability the to the markets.

[34f3f3f]

[quote=socrattt]I have a quick question for any of you gurus. If the dollar continues its’ free fall, how will that affect the oil prices? Wouldn’t the cost of oil essentially increase?

What is the short and long term possibilities that Euro becomes the new currency of oil trade? I am a bit curious to see what happens as I believe there has to be some sort of dramatic overhaul of how oil is bought sold due to the current volatility of the US Dollar.[/quote]

In think the relationship between oil and the dollar is inverse. Rather it’s oil that affects the dollar more than the other way round, hence the term the ‘oil standard’ or Petrodollars, but I forget how this works now. Basically OPEC countries sell oil for dollars which they then use to buy US treasuries. I don’t see a wholesale flight to Euro’s. Recently, we’ve seen a flight to dollars when panic hit the markets, so investors obviously still see the dollar as a safe(r) bet. How long that will last, will possibly depend on Asia’s confidence in the US ability to bring back some stability the to the markets.

[34f3f3f]

[quote=socrattt]I have a quick question for any of you gurus. If the dollar continues its’ free fall, how will that affect the oil prices? Wouldn’t the cost of oil essentially increase?

What is the short and long term possibilities that Euro becomes the new currency of oil trade? I am a bit curious to see what happens as I believe there has to be some sort of dramatic overhaul of how oil is bought sold due to the current volatility of the US Dollar.[/quote]

In think the relationship between oil and the dollar is inverse. Rather it’s oil that affects the dollar more than the other way round, hence the term the ‘oil standard’ or Petrodollars, but I forget how this works now. Basically OPEC countries sell oil for dollars which they then use to buy US treasuries. I don’t see a wholesale flight to Euro’s. Recently, we’ve seen a flight to dollars when panic hit the markets, so investors obviously still see the dollar as a safe(r) bet. How long that will last, will possibly depend on Asia’s confidence in the US ability to bring back some stability the to the markets.

[MadeInTaiwan]

[quote=stockstradr]MadeInTaiwan,

I do agree with the implied message of your post, that I need to look carefully at UCO and understand better how they mimic 2X that Dow Jones Index, and I need to better understand what that DJ index itself is.

Good points. Let me look into it.[/quote]

I actually had no implied message. With the current credit bubble bursting, I’ve been conditioned to question anything that claims to beat an index long term with the exception of Berkshire and a few like it.

In my simple mind, the only way the fund can accomplish this is either leverage or hedge. Leverage increases you gains when you win, but also increases your losses when you loose. Hedging when done right protects you against loss, but it comes at a price. You must use some capital to bet the other way, which would lessen your gain compared to “all in”.

Also, the maintenance cost of “rolling” futures should be higher than a fund that holds equity and only adjust to reflect composition change in the index it tracks. The fund has to continuously buy futures contracts, and sell or collect on the matured contract. Gains – losses will also be continuously calculated and any tax burden will be passed to the individual investor.

Still, a rolling fund like this seems to be the only way for an individual to bet on commodities without being a day trader. Without knowing more, I would lean towards a “vanilla” tracking fund without any “multipliers”.

Very cool information. Thanks again for educating the list (and me in particular)

MadeInTaiwan

[MadeInTaiwan]

[quote=stockstradr]MadeInTaiwan,

I do agree with the implied message of your post, that I need to look carefully at UCO and understand better how they mimic 2X that Dow Jones Index, and I need to better understand what that DJ index itself is.

Good points. Let me look into it.[/quote]

I actually had no implied message. With the current credit bubble bursting, I’ve been conditioned to question anything that claims to beat an index long term with the exception of Berkshire and a few like it.

In my simple mind, the only way the fund can accomplish this is either leverage or hedge. Leverage increases you gains when you win, but also increases your losses when you loose. Hedging when done right protects you against loss, but it comes at a price. You must use some capital to bet the other way, which would lessen your gain compared to “all in”.

Also, the maintenance cost of “rolling” futures should be higher than a fund that holds equity and only adjust to reflect composition change in the index it tracks. The fund has to continuously buy futures contracts, and sell or collect on the matured contract. Gains – losses will also be continuously calculated and any tax burden will be passed to the individual investor.

Still, a rolling fund like this seems to be the only way for an individual to bet on commodities without being a day trader. Without knowing more, I would lean towards a “vanilla” tracking fund without any “multipliers”.

Very cool information. Thanks again for educating the list (and me in particular)

MadeInTaiwan

[MadeInTaiwan]

[quote=stockstradr]MadeInTaiwan,

I do agree with the implied message of your post, that I need to look carefully at UCO and understand better how they mimic 2X that Dow Jones Index, and I need to better understand what that DJ index itself is.

Good points. Let me look into it.[/quote]

I actually had no implied message. With the current credit bubble bursting, I’ve been conditioned to question anything that claims to beat an index long term with the exception of Berkshire and a few like it.

In my simple mind, the only way the fund can accomplish this is either leverage or hedge. Leverage increases you gains when you win, but also increases your losses when you loose. Hedging when done right protects you against loss, but it comes at a price. You must use some capital to bet the other way, which would lessen your gain compared to “all in”.

Also, the maintenance cost of “rolling” futures should be higher than a fund that holds equity and only adjust to reflect composition change in the index it tracks. The fund has to continuously buy futures contracts, and sell or collect on the matured contract. Gains – losses will also be continuously calculated and any tax burden will be passed to the individual investor.

Still, a rolling fund like this seems to be the only way for an individual to bet on commodities without being a day trader. Without knowing more, I would lean towards a “vanilla” tracking fund without any “multipliers”.

Very cool information. Thanks again for educating the list (and me in particular)

MadeInTaiwan

[MadeInTaiwan]

[quote=stockstradr]MadeInTaiwan,

I do agree with the implied message of your post, that I need to look carefully at UCO and understand better how they mimic 2X that Dow Jones Index, and I need to better understand what that DJ index itself is.

Good points. Let me look into it.[/quote]

I actually had no implied message. With the current credit bubble bursting, I’ve been conditioned to question anything that claims to beat an index long term with the exception of Berkshire and a few like it.

In my simple mind, the only way the fund can accomplish this is either leverage or hedge. Leverage increases you gains when you win, but also increases your losses when you loose. Hedging when done right protects you against loss, but it comes at a price. You must use some capital to bet the other way, which would lessen your gain compared to “all in”.

Also, the maintenance cost of “rolling” futures should be higher than a fund that holds equity and only adjust to reflect composition change in the index it tracks. The fund has to continuously buy futures contracts, and sell or collect on the matured contract. Gains – losses will also be continuously calculated and any tax burden will be passed to the individual investor.

Still, a rolling fund like this seems to be the only way for an individual to bet on commodities without being a day trader. Without knowing more, I would lean towards a “vanilla” tracking fund without any “multipliers”.

Very cool information. Thanks again for educating the list (and me in particular)

MadeInTaiwan

[MadeInTaiwan]

[quote=stockstradr]MadeInTaiwan,

I do agree with the implied message of your post, that I need to look carefully at UCO and understand better how they mimic 2X that Dow Jones Index, and I need to better understand what that DJ index itself is.

Good points. Let me look into it.[/quote]

I actually had no implied message. With the current credit bubble bursting, I’ve been conditioned to question anything that claims to beat an index long term with the exception of Berkshire and a few like it.

In my simple mind, the only way the fund can accomplish this is either leverage or hedge. Leverage increases you gains when you win, but also increases your losses when you loose. Hedging when done right protects you against loss, but it comes at a price. You must use some capital to bet the other way, which would lessen your gain compared to “all in”.

Also, the maintenance cost of “rolling” futures should be higher than a fund that holds equity and only adjust to reflect composition change in the index it tracks. The fund has to continuously buy futures contracts, and sell or collect on the matured contract. Gains – losses will also be continuously calculated and any tax burden will be passed to the individual investor.

Still, a rolling fund like this seems to be the only way for an individual to bet on commodities without being a day trader. Without knowing more, I would lean towards a “vanilla” tracking fund without any “multipliers”.

Very cool information. Thanks again for educating the list (and me in particular)

MadeInTaiwan

[stockstradr]

I’m going to spend a week doing some research on the best ways to invest long in crude oil

I’ll report what i find.

Here are a few interesting links:

http://www.buyupside.com/articles_other/oiletfknowjan08.htm

http://www.buyupside.com/sample_portfolios/oiletfsjun08.htm

[stockstradr]

I’m going to spend a week doing some research on the best ways to invest long in crude oil

I’ll report what i find.

Here are a few interesting links:

http://www.buyupside.com/articles_other/oiletfknowjan08.htm

http://www.buyupside.com/sample_portfolios/oiletfsjun08.htm

[stockstradr]

I’m going to spend a week doing some research on the best ways to invest long in crude oil

I’ll report what i find.

Here are a few interesting links:

http://www.buyupside.com/articles_other/oiletfknowjan08.htm

http://www.buyupside.com/sample_portfolios/oiletfsjun08.htm

[stockstradr]

I’m going to spend a week doing some research on the best ways to invest long in crude oil

I’ll report what i find.

Here are a few interesting links:

http://www.buyupside.com/articles_other/oiletfknowjan08.htm

http://www.buyupside.com/sample_portfolios/oiletfsjun08.htm

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