If the theory is that automobile industry goes in cycles, then when that cycle goes back up, there will be a high demand for oil to fuel all those cars. Any thoughts on loading up on Oil stocks along with automobile stocks? Along that same reasoning: tires (rubber), glass, car audio, GPS navigation devices, even car tune-up companies (Jiffy Lube, et. al.) with all the increased amount of cars to come. Thoughts?
Dean
Goodyear Tire is over $6/share up from $4 change just a few weeks ago.
Oil prices are in free fall and raw rubber futures are doing the same.
Those are the two BIGGEST ingredients (plus steel) in a tire.
I don;t know about you guy’s but I sure haven’t seen tire prices dropping like OIL or Steel prices…That means…HIGHER MARGINS!!!
What’s funny is that OPEC has nearly no influence anymore on the price of oil. They made a historical claim that they were going to cut production of 4.2 barrels per day, and oil tanks further! Of course if they restrict production enough that supply-demand will pull prices back up, but what more can they do at this point short of starting a war? I think we’re overshooting the bottom on some commodities and that eventually we will begin to inflate another commodities bubble. People are always going to need oil/ other raw commodities.
I think the root of problem is the GLOBAL recession/depression. If countries like China & India halt construction/industrial projects, people consume less because they’ve been laid off and need to put pay their necessities like food & shelter and the entire worldwide economy just keeps retracting, then there will be little that OPEC can do. Besides, you said OPEC is only cutting production by 4.2 BARRELS :shocked ( I know you meant 4.2 Billion) :biggrin Seriously though. I think oil will stay relatively low for a while because this global recession will probably last into late 2010. Oil may rise a little due to a market overshoot but not another oil bubble.
Just for clarification, oil production and these recent cuts are measured in millions of barrels of oil per day - not billions.
http://www.foxnews.com/story/0,2933,466807,00.html
In the immortal words of Ed McMahon, “YES! YOU ARE CORRECT SIR!” :biggrin
Yeah, I don’t know why I forgot to put millions. Oil and other commodities are going to have their day again soon. We’re just in a deflationary/ disinflationary period right now. Look at every other sector and tell me what you NEED and look at commodities and tell me what people NEED. We need commodities, not ps3s and Aeropostale jeans. The commodities markets just got caught in the wrong place at the wrong time with the housing market crisis and being in their own bubble. When markets adjust to burst bubbles, they always tend to undershoot the bottom, as they overshot the top with the bubble.
Trying to figure out what would be the best way to get my hands on some oil stock, I stumbled across this:
PowerShares DB Commodity Idx Trking Fund (DBC)
Its holdings are thus:
Corn (Fut) 13.13%
Gold 100 Oz (Fut) 10.42%
Heating Oil (Fut) 23.22%
Lme Pri Alum (Fut) 11.79%
Wheat (Fut) 10.97%
Wti Crude (Fut) 35.45%
Not half bad, huh? Not only could I get oil with this, I could get gold and some food commidities in one shot.
Over the short run, and in bad economic times, this ETF seems to parallel SPY. Over the longer run, its more volatile, but seems to outdo the general market, for the most part.
Thoughts comments?
Dean
Read up on DXO thats an oil only play.
I made some money on last week. i got out and its still moving up :banghead
i want it to fall back some
Yeah, I watched it drop to the lows and almost got in. Kicking myself for not, but hindsight is 20/20. I’ll get in when it comes down a bit.
Just as a warning, DXO is a ETN and can go to zero, or pretty damn near close even without the price of oil dropping to dramatic lows. Oil futures reset, but DXO does not.
a 50% drop in the contract price of july will make it go to zero. its a 2X % mover. man loading the boat up @ 1.70 woulda nice huh. i made some money on it but got out to early. 2.70’s. stupid end of the day had it drop from its high of 3 to end @ 2.55. bids were 2.70’s after hours so i got out.
:crying2 3.6o’s today :evil
Yeah, it would have been really nice! Here is another one that was pointed out only the day before it took off, KOG. It was .35 the other day, and climbed nearly 40 percent yesterday and some more today. It had formed a nice bottom and took off for some really decent gains. I guess you just have to watch some of these oil related stocks, especially now that they have been beaten down so much in the previous months and with this middle east conflict going on.