Author Topic: "Big Oil" shares as 2015 IRA Contribution on Jan 1?  (Read 4203 times)

frugaliknowit

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"Big Oil" shares as 2015 IRA Contribution on Jan 1?
« on: December 18, 2014, 01:12:13 PM »
Maybe I should stick with index shares, but was thinking that on Jan 1, instead of adding $6500 worth of Vanguard Total Market (75%) and Vanguard Total International (25%), I would buy $6500 worth of Exxon, Chevron or one of the other big oils that have been hammered some 40% as my Roth contribution for 2015.  It seems the risk/reward is worth it.  I'm not sure that I want to expand into individual value stocks, but this "feels good".

Background:

Cash $46K (6500 goes into Roth on 1/1/15)
Roth $130K (all VG index shares)
IRA rollover $50K (Wonderful cheap, slimy employer did away with 401K in 2010; all VG index shares)
Non-IRA Vanguard Total Market $3500 (Cash reserves getting too large so started this bucket)

This value play would be a small percentage of my assets.  Am I thinking too much?

MDM

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Re: "Big Oil" shares as 2015 IRA Contribution on Jan 1?
« Reply #1 on: January 04, 2015, 11:37:50 PM »
If you could find a stock "hammered by 40%" then it could possibly be oversold and it might be a worthwhile speculation.  Neither XOM nor CVX, however, have dropped anywhere near that much.

Anyway, Jan.1 has passed - did you do it?

Self-employed-swami

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Re: "Big Oil" shares as 2015 IRA Contribution on Jan 1?
« Reply #2 on: January 05, 2015, 12:06:03 AM »
I've got some reduced Canadian oil companies in my TFSA, but none of them were down 40% either.

kudy

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Re: "Big Oil" shares as 2015 IRA Contribution on Jan 1?
« Reply #3 on: January 11, 2015, 11:36:16 AM »
I am tempted to go against my IPS and try to time the market with some energy purchases as well. Someone talk me off the ledge?

I know nothing about buying individual stocks, and I don't know how to evaluate a buy, but for some reason it seems like a good idea to buy Exxon Mobil, ConocoPhillips, etc. right now!

I guess I should rest assured that my index funds already own large percentages of energy stocks.

surfhb

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Re: "Big Oil" shares as 2015 IRA Contribution on Jan 1?
« Reply #4 on: January 11, 2015, 11:47:11 AM »
This is not investing, you're speculating.   

You don't know where the bottom is and you don't know where the top will be.   Futhermore, have you ever considered the fact that post tax profits on a paltry $6500 investment will be eaten up once gas prices return to normal?   

IF I were going to invest in energy stocks I'd bring a lot to the table since I drive daily.    Seems silly to invest in a commodity you think will increases in price.... At the same time knowing the price of this product will increase your outflow of budgeted cash because it's a product you use on a daily basis. 

If you bike everywhere then fine :)

SIDE NOTE:
It's absolutely mind boggling that the American public is now ramping up their purchases of larger trucks and SUVs because gas prices have dropped.    Wait!    Not so mind boggling at all.  :)  Were pretty stupid
« Last Edit: January 11, 2015, 12:01:32 PM by surfhb »

surfhb

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Re: "Big Oil" shares as 2015 IRA Contribution on Jan 1?
« Reply #5 on: January 11, 2015, 11:52:48 AM »
I know nothing about buying individual stocks, and I don't know how to evaluate a buy, but for some reason it seems like a good idea to buy Exxon Mobil, ConocoPhillips, etc. right now!

You're answering your own question ;)

DutchMustachian

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Re: "Big Oil" shares as 2015 IRA Contribution on Jan 1?
« Reply #6 on: January 11, 2015, 11:57:19 AM »
Just purchased vanguard energy eft where some of the companies mentioned are in. Less risk if you want to speculate anyway.

For me it is in my "high risk" scope of the portfolio

kudy

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Re: "Big Oil" shares as 2015 IRA Contribution on Jan 1?
« Reply #7 on: January 11, 2015, 12:08:01 PM »
I am answering my own question... I answered it a while back when I wrote up my policy statement ;)

Still seems like a fun way to gamble a bit. Maybe I'll give myself some play money to try out some speculating.

frugaliknowit

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Re: "Big Oil" shares as 2015 IRA Contribution on Jan 1?
« Reply #8 on: January 11, 2015, 12:29:48 PM »
Thanks all, decided against this.

Earthling

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Re: "Big Oil" shares as 2015 IRA Contribution on Jan 1?
« Reply #9 on: January 11, 2015, 02:38:54 PM »
This is not investing, you're speculating.   

SIDE NOTE:
It's absolutely mind boggling that the American public is now ramping up their purchases of larger trucks and SUVs because gas prices have dropped.    Wait!    Not so mind boggling at all.  :)  Were pretty stupid

People choosing what vehicle they want to drive is each person's rational choice, made through the exercise of free will based upon an assessment of their own self interest. I'm not smart or cocky enough to make those choices for anybody other than myself. Some of those choices may be enlightened and wise, and others not so, based upon point of view. But it is not my role to judge. And I don't want to live in a society where somebody else, typically through governmental action, limits my choices.

No free lunch. Hybrids contain batteries that pose disposal issues. Electric vehicles are powered by the grid. And on and on and on.

I think it is wonderful that gas prices have dropped, thanks to the spouting plethora of energy created by the U.S. private sector, not the government. The "Peak Oil" crowd has certainly been put at bay, and lower energy prices provide Americans with an effective tax break. Energy prices are regressive, too, so the current scenario is preferentially helping the poor.

Cwadda

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Re: "Big Oil" shares as 2015 IRA Contribution on Jan 1?
« Reply #10 on: January 11, 2015, 03:24:02 PM »
Quick question, not meaning to take away from the topic...but how do you purchase the Vanguard ETF index VDE for a Roth IRA? Do you have to have a brokerage in order to buy that?

Bob W

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Re: "Big Oil" shares as 2015 IRA Contribution on Jan 1?
« Reply #11 on: January 11, 2015, 03:26:06 PM »
I'd wait till barrel prices hit below 30 for awhile and start back up.  Timing is everything.   Buy at the bottom or off the bottom not on the way down.   Then back the truck up.   Buying on sale and selling at later high prices is how people get rich.   It isn't speculation so much as value buying.  IMHO

BooksAreNerdy

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Re: "Big Oil" shares as 2015 IRA Contribution on Jan 1?
« Reply #12 on: January 11, 2015, 05:07:14 PM »
I agree with Bob W. Wait until prices stabilize and start heading up. Buy Vanguards energy index fund. Prices WILL go back up. Supply and demand. SUV and truck sales just went up, gas consumption will follow, then too will oil prices.

Just give yourself an out. Say, buy when oil is $45, sell at $75. Or $30-80. Whatever makes you feel safe.

Edit- I disagree with whoever said your gains will be eaten by higher prices at the pump. I saw an article that speculates that the average American will save $550 this year on gas. I strongly believe you will have much larger gains than that in an energy fund with $5500 invested.
« Last Edit: January 11, 2015, 05:09:35 PM by BooksAreNerdy »

BooksAreNerdy

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Re: "Big Oil" shares as 2015 IRA Contribution on Jan 1?
« Reply #13 on: January 11, 2015, 05:13:20 PM »
Also, for those speculating about Exxon or chevron, keep in mind that technology companies, like SLB, are global and support drilling, not just the oil itself. Make sure you understand what you are buying. Stocks are down across the board, but the international technology companies will come out much further ahead than the domestic oil drillers.