Monday, November 10, 2008
Just Bought Oil
Actually, I bought DXO a *double long* oil ETF. Bought it at $4.92 per share this morning.
I didn't buy too much since I am already long some gold stocks and the oil service sector ETF OIH.
Also, these ETFs, particularly the leveraged ones, do scare me. They aren't structured for long term investment but rather for intraday trading. As such there's been notable underperformance for the lot of them many times this year. While they may be imperfect, they are still useful proxies for small bets. Ideally, I would have bought oil in my commodities account as margin there is only around 1/8th of market value. It just so happens that I have a whole lot more *free capital* in my brokerage account these days.
This DXO hasn't even been around that long. In fact, it debuted close to the peak of the oil run in this summer. Veteran traders will no doubt insist that was a warning for an overdue correction.
Though I've been bullish on oil for some time now, I have to self-congratulate for not buying AT ALL on this drop from July's $148 top until today's bargain level of roughly $61 per barrel.