[Eli]

I have placed most of my investments in an oil eft it has done 20% this year so I am very happy.

I think however the market is going to absolutely tank and we are seeing that beginning right now.


should I get completely out? sell half and hold the rest?
then what should I move my cash into during the melt down?

[mkwin]

Oil won't tank. Most majors trade on p/e ratios of less than 10. This will increase to 25 when the market knows the oil cycle is over forever. Also the Oil price will hit $200 dollars. So forget a 20% return, get ready for a 400% return.

Diversify your assets between gold/silver (both actual coins and certificates), inflation linked government bonds, land and oil.

Within oil, diversify between the majors and smaller service companies.

[threadbear]

$this->bbcode_second_pass_quote('mkwin', 'O')il won't tank. Most majors trade on p/e ratios of less than 10. This will increase to 25 when the market knows the oil cycle is over forever. Also the Oil price will hit $200 dollars. So forget a 20% return, get ready for a 400% return.

Diversify your assets between gold/silver (both actual coins and certificates), inflation linked government bonds, land and oil.

Within oil, diversify between the majors and smaller service companies.

[NTBKtrader]

stagflation

[mkwin]

$this->bbcode_second_pass_quote('threadbear', '')$this->bbcode_second_pass_quote('mkwin', 'O')il won't tank. Most majors trade on p/e ratios of less than 10. This will increase to 25 when the market knows the oil cycle is over forever. Also the Oil price will hit $200 dollars. So forget a 20% return, get ready for a 400% return.

Diversify your assets between gold/silver (both actual coins and certificates), inflation linked government bonds, land and oil.

Within oil, diversify between the majors and smaller service companies.

[mmasters]

Hang tight. Oil's where it's at, especially oil services. My fave oil services ETF is OIH.

My thinking is to have 1/3 Oil and Oil Services for the energy crisis, 1/3 gold for any possible currency crisis and 1/3 cash in euros to keep handy for short term plays that pop up (and to offer some protection from the crashing dollar).

[fonzcad3]

I don't think that the UK in WWII is a very apt example of our current situation. Consumer goods did come to a halt, but oil consumption by the military was astronomical. German U-boats were sinking tankers left and right to add to oil demand. In addition, military building and the navy used plenty of fuel oil.

[threadbear]

$this->bbcode_second_pass_quote('mkwin', '
')
We are already at or close to $80 oil. No monetary measure could possibly put a ceiling on the price of oil. The risks to oil investments are severe demand destruction and nationisation of the oil companies. Diversifying into smaller service companies will take care of the latter problem. The former is highly unlikely IMO. The government transition plans will require lots of oil so they should easily make-up for any recession led demand drops.

Silver has a good correlation with the price of gold if you look at the historic price indices and it has a very good growth story anyway as we are going to hit a large supply shortfall soon and it is less likely to be confiscated by the government.

As for the economic landscape following peak, I don't think stagflation is likely.

If you look at the UK in WW2 we had a massive reduction in oil supplies, almost complete ending of consumer goods consumption and rationing but we had an average GDP of approximately 7%. Building a new energy system will cause a lot of economic activity.

[mkwin]

$this->bbcode_second_pass_quote('fonzcad3', 'I') don't think that the UK in WWII is a very apt example of our current situation. Consumer goods did come to a halt, but oil consumption by the military was astronomical. German U-boats were sinking tankers left and right to add to oil demand. In addition, military building and the navy used plenty of fuel oil.

[mkwin]

$this->bbcode_second_pass_quote('threadbear', '')$this->bbcode_second_pass_quote('mkwin', '
')
We are already at or close to $80 oil. No monetary measure could possibly put a ceiling on the price of oil. The risks to oil investments are severe demand destruction and nationisation of the oil companies. Diversifying into smaller service companies will take care of the latter problem. The former is highly unlikely IMO. The government transition plans will require lots of oil so they should easily make-up for any recession led demand drops.

Silver has a good correlation with the price of gold if you look at the historic price indices and it has a very good growth story anyway as we are going to hit a large supply shortfall soon and it is less likely to be confiscated by the government.

As for the economic landscape following peak, I don't think stagflation is likely.

If you look at the UK in WW2 we had a massive reduction in oil supplies, almost complete ending of consumer goods consumption and rationing but we had an average GDP of approximately 7%. Building a new energy system will cause a lot of economic activity.

[threadbear]

$this->bbcode_second_pass_quote('mkwin', '')$this->bbcode_second_pass_quote('threadbear', '')$this->bbcode_second_pass_quote('mkwin', '
')
We are already at or close to $80 oil. No monetary measure could possibly put a ceiling on the price of oil. The risks to oil investments are severe demand destruction and nationisation of the oil companies. Diversifying into smaller service companies will take care of the latter problem. The former is highly unlikely IMO. The government transition plans will require lots of oil so they should easily make-up for any recession led demand drops.

Silver has a good correlation with the price of gold if you look at the historic price indices and it has a very good growth story anyway as we are going to hit a large supply shortfall soon and it is less likely to be confiscated by the government.

As for the economic landscape following peak, I don't think stagflation is likely.

If you look at the UK in WW2 we had a massive reduction in oil supplies, almost complete ending of consumer goods consumption and rationing but we had an average GDP of approximately 7%. Building a new energy system will cause a lot of economic activity.

[mkwin]

I've had this argument with different posters.

The US deficit is not dependant on the Chinese buying the bonds. Public deficits have been around for 150 years long before a bond investment market existed. Governments have always 'printed' capital in times of war to fund projects. This capital is debt backed. UK government debt is currently 400 billion, which costs us about 25 billion a year in interest payments. Hardly a bank breaking sum for a government who has a revenue of half a trillion pounds a year. The problem with increasing the money supply is it causes inflation but as I previously said demand destruction will be causing deflation so there could be some kind of balance.

US debt is currently approximately 70% of GDP which isn't that bad. Japan’s is now close to 200%. The weakness of the dollar is caused to a significant degree by the trade deficit which is caused by excess imports over exports. This problem could reduced post-peak as foreign imports reduce due to demand destruction.

[threadbear]

$this->bbcode_second_pass_quote('mkwin', ' ')Governments have always 'printed' capital in times of war to fund projects. This capital is debt backed.

US debt is currently approximately 70% of GDP which isn't that bad. Japan’s is now close to 200%. The weakness of the dollar is caused to a significant degree by the trade deficit which is caused by excess imports over exports. This problem could reduced post-peak as foreign imports reduce due to demand destruction.

[MrBill]

mkwin wrote:
$this->bbcode_second_pass_quote('', 'T')he problem with increasing the money supply is it causes inflation but as I previously said demand destruction will be causing deflation so there could be some kind of balance.

[mkwin]

What oil service companies do you have in your portfolio Mr Bill?

[IrrationalExuberanceMonky]

My advice is to not take financial advice from people on the internet.
My second piece of advice is to go see how oil stocks performed in the 73-74 bear market energy crunch.
Thirdly to go look at how things play out in a deflationary environment,
I wouldn't look at 1929-1933 as a definitive example because co-ordinated worldwide intervention should be expected, I also wouldn't look at Japan 1990-present as a definitive example as exports could likely dry up unlike they did in Japan.

Everything else is pure conjecture...

[eastbay]

Inflationary pressures will exert upward pressure on oil and gasoline too thereby somewhat offsetting downward price pressure likely in the event of demand destruction due to the expected recession.

With that confidently in mind, I'm sticking with my existing plan which is roughly 1/3 in oil and oil service (40/60 split), 1/3 in cash, and 1/3 in land (my paid-for house). Temporary 10, 20, or even 30% market corrections or more are meaningless for me because the black stuff will eventually rise in price beyond anything we can imagine therefore I'll ride out these coming hair-raising corrections and price-spikes.

I have no interest in collecting bullion at this time because IMO it's premature to move in that direction, plus, due to obvious storage and protection issues.

This safe strategy sounds like what was mentioned earlier, and is based largely on my readings here at PO.com. Thanks to those who helped... you know who you are.

[pogoliamo]

Eli, why are you looking for an investment advice in an Internet forum?
If it is only to hear other people opinion it is fine. If you actually think
to take literally a recommendation to buy/sell here you have broken
the very first rule of investing - to take responsability of your own actions.

the second rule you did not respect is not to put all your egs in one basket
You could have indeed invested some part of your money in oil stocks
but why not in other commodity stocks or gold stocks or emerging
markets etc? This is risky and not very smart.

Next, what is your investment horizont? 1 year ? 2? 20? 50?
Conventional wisdom is to withdraw 1/3 of your position on 20% gain
in an uptrend and to reinvest on correction/consolidaion.

And finally if the reasons behind a fall of the stocks you own are
caused by drop in the price of gasoline, considering the fact you
are going to profit from the low gasoline price as a consumer may
stil make you a winner in the situation.

[mmasters]

$this->bbcode_second_pass_quote('IrrationalExuberanceMonky', 'M')y advice is to not take financial advice from people on the internet.
My second piece of advice is to go see how oil stocks performed in the 73-74 bear market energy crunch.
Thirdly to go look at how things play out in a deflationary environment,
I wouldn't look at 1929-1933 as a definitive example because co-ordinated worldwide intervention should be expected, I also wouldn't look at Japan 1990-present as a definitive example as exports could likely dry up unlike they did in Japan.

Everything else is pure conjecture...

[threadbear]

$this->bbcode_second_pass_quote('pogoliamo', 'E')li, why are you looking for an investment advice in an Internet forum?
If it is only to hear other people opinion it is fine. If you actually think
to take literally a recommendation to buy/sell here you have broken
the very first rule of investing - to take responsability of your own actions.

the second rule you did not respect is not to put all your egs in one basket
You could have indeed invested some part of your money in oil stocks
but why not in other commodity stocks or gold stocks or emerging
markets etc? This is risky and not very smart.

Next, what is your investment horizont? 1 year ? 2? 20? 50?
Conventional wisdom is to withdraw 1/3 of your position on 20% gain
in an uptrend and to reinvest on correction/consolidaion.

And finally if the reasons behind a fall of the stocks you own are
caused by drop in the price of gasoline, considering the fact you
are going to profit from the low gasoline price as a consumer may
stil make you a winner in the situation.