Author Topic: Crude Oil ETF Recommendation?  (Read 1223 times)

JenniferW

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Crude Oil ETF Recommendation?
« on: January 10, 2019, 07:47:57 AM »
I'd like a crude oil ETF which has a low expense ratio and follows the price/barrel of oil well.   I presume a higher market capitalization is better as well?

I've been eying USO -- but it's the only one I know of so far.  What do you think of this one?

(e.g. I thought SPDR GLD was a good ETF for gold but then I found out about IAU which has a lower expense ratio.)

I'd like to trade the ETFs for free on Vanguard.

MrOnyx

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Re: Crude Oil ETF Recommendation?
« Reply #1 on: January 10, 2019, 07:57:32 AM »
Hi, I'm sure you've spent a long time considering this, and know what you're doing, but all the same, I can't help but wonder why you'd choose crude oil to invest in?

With the rise of the electric car as well as efficient, clean and infinitely renewable electricity, the extremely finite, inefficient and environmentally harmful crude oil is looking less and less attractive, no? I'm not the police on such things, and am definitely not the arbiter of good ethics, but are you comfortable investing in an industry that uses fracking?

Cromacster

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Re: Crude Oil ETF Recommendation?
« Reply #2 on: January 10, 2019, 07:59:48 AM »
Hi, I'm sure you've spent a long time considering this, and know what you're doing, but all the same, I can't help but wonder why you'd choose crude oil to invest in?

With the rise of the electric car as well as efficient, clean and infinitely renewable electricity, the extremely finite, inefficient and environmentally harmful crude oil is looking less and less attractive, no? I'm not the police on such things, and am definitely not the arbiter of good ethics, but are you comfortable investing in an industry that uses fracking?

If you own any total stock market funds, s&p500 funds, etc, you are investing in this.

JenniferW

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Re: Crude Oil ETF Recommendation?
« Reply #3 on: January 10, 2019, 08:10:27 AM »
Hi, I'm sure you've spent a long time considering this, and know what you're doing, but all the same, I can't help but wonder why you'd choose crude oil to invest in?

With the rise of the electric car as well as efficient, clean and infinitely renewable electricity, the extremely finite, inefficient and environmentally harmful crude oil is looking less and less attractive, no? I'm not the police on such things, and am definitely not the arbiter of good ethics, but are you comfortable investing in an industry that uses fracking?

Not interested in long term investment at the moment.  Things are shaky right now with stock market -- seems highly volatile -- and the only way I feel comfortable investing right now is in short term investments.  Right now crude oil prices are really low and seems like a good short term investment.

My goal this year is to turn the $5500 I put into Roth IRA into $6000, doing short term trades, then just leave the entire cash balance in money market account for remainder of year to earn another 2.25%+.  Just started my retirement account and only has $5500 in it so far.  Never saved for retirement before.

I'm very bearish right now.  Once the market has gone down quite a bit more (Shiller PE ratio of around 21 or so), I'll start buying VTI each and every month (DCA) and not bother with the short term trades.  I'll then follow JL Collins advice in the Simple Path to Wealth book I've read. 
« Last Edit: January 10, 2019, 08:34:01 AM by JenniferW »

MrOnyx

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Re: Crude Oil ETF Recommendation?
« Reply #4 on: January 10, 2019, 08:33:51 AM »
If you own any total stock market funds, s&p500 funds, etc, you are investing in this.

Fair point, however investing in the total market index funds is standard best advice. The day that oil is no longer one of the biggest industries in the world (yeah, it's a big IF), it'll no longer be in the index funds. There are ethically sound funds out there, too, but their growth isn't as good, reportedly.

What I'm getting at, however, is that if you're going to go against the standard advice of investing in everything, why would you choose - of all industries, oil?

OP has now provided a response to this, now.

Not interested in long term investment at the moment.  Things are shaky right now with stock market -- seems highly volatile -- and the only way I feel comfortable investing right now is in short term investments.  Right now crude oil prices are really low and seems like a good short term investment.

My goal this year is to turn the $5500 I put into Roth IRA into $6000, doing short term trades, then just leave the entire cash balance in money market account for remainder of year to earn another 2.25%+.  Just started my retirement account and only has $5500 in it so far.  Never saved for retirement before.

I'm very bearish right now.  Once the market has gone down quite a bit more and gone sideways for a while, I'll start buying VTI every month DCA and not bother with the short term trades.  I'll basically be following JL Collins advice after the Shiller PE ratio drops down more.  Say down to 21 or so.

Makes sense, however most people combat volatility with bonds. Again, just a suggestion. I don't have an answer to your original question, however, so I won't continue here.

JenniferW

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Re: Crude Oil ETF Recommendation?
« Reply #5 on: January 10, 2019, 08:35:38 AM »
Sorry a made a few edits to the post you replied to :). Yeah I ultimately want to do like 80% VTI and 20% BND but just don't feel it's time to do that now.  I know I am not supposed to try and time the market but I have a gut feeling it is going to go down a lot more due to the over 10 year bull run, high shiller pe ratio, interest rate hikes, political instability, government shutdowns, trade tarrifs, depressed AAPL/AMZN sales etc..  On the bright side: the recent positive employment report.
« Last Edit: January 10, 2019, 08:42:11 AM by JenniferW »

JenniferW

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Re: Crude Oil ETF Recommendation?
« Reply #6 on: January 10, 2019, 08:57:42 AM »
I just want the best ETF which follows oil price in my set of ETF tickers, which I monitor and choose from each day, to buy/sell.   I'll hedge two or three of the 10 or so in the list, and sell the ones which are currently giving me desired gains.   I will never sell any ETF at a loss, will just hold until I make at least 1-2% on the ETF.  Hoping to gain about 10% in 2019 on my $5500 -- sooner than later so I can stop having to do this because it's stressful watching the market each day.

My ETF list so far I'm watching:  VOO, VTI, BND, IAU, SLV, USO

MrsWolfeRN

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Re: Crude Oil ETF Recommendation?
« Reply #7 on: January 10, 2019, 08:59:01 AM »
You could buy shares in an oil company such as BP, or oil services such as SLB. No commission if you have a Robin Hood account, and these track pretty well with the price of oil. If you don't have an account there is a referral thread where you and the person whose code you use will both get a free stock.

JenniferW

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Re: Crude Oil ETF Recommendation?
« Reply #8 on: January 10, 2019, 09:01:20 AM »
You could buy shares in an oil company such as BP, or oil services such as SLB. No commission if you have a Robin Hood account, and these track pretty well with the price of oil. If you don't have an account there is a referral thread where you and the person whose code you use will both get a free stock.

Thanks, I wish Robinhood offered IRA accounts.  These are IRA funds.  And well for non-tax-sheltered investment accounts, like Robinhood, I'll stick with long term capital gains trades of VTI, doing capital gains harvesting each year, to minimize taxes further. Short term capital gains tax is too much for me. 

EDIT: Actually I think I'll probably use Vanguard for regular investment account for VTI instead of Robinhood, because it allows you to pick and sell specific shares (which is good for capital gains harvesting).

Car Jack

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Re: Crude Oil ETF Recommendation?
« Reply #9 on: January 10, 2019, 09:42:10 AM »
Sorry, but this is a bad idea.  Choosing oil because "you think it will go up" with no evidence or insider information is a setup to turn your $5500 into $4000.  Think about what's going on.  Years ago, OPEC ruled the world and could easily reduce production and drive prices up.  Today, the price goes up at all and more rigs are put up in the US and Canada, the Canadian crap tar sands up production and the US drives the price right back down.  Big consumption in the us.....power plants has gone the way of the coal industry.  Everything's natural gas.  Fracking has opened up the industry and converted coal and oil plants to gas since it's plentiful and cheap.

Where's the source of a driver to ramp up oil prices?  I don't see it.  Going from about $50 today to $40 would not surprise me at all.  To $60?  I don't see it.  Maybe you know something I don't.

Eric

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Re: Crude Oil ETF Recommendation?
« Reply #10 on: January 10, 2019, 11:13:09 AM »
Not interested in long term investment at the moment.  Things are shaky right now with stock market -- seems highly volatile -- and the only way I feel comfortable investing right now is in short term investments.  Right now crude oil prices are really low and seems like a good short term investment.

Are you retiring in the next year or two?  If not, then you should definitely be interested in long term investments.

My goal this year is to turn the $5500 I put into Roth IRA into $6000, doing short term trades, then just leave the entire cash balance in money market account for remainder of year to earn another 2.25%+.  Just started my retirement account and only has $5500 in it so far.  Never saved for retirement before.

Yes, that's pretty obvious because your posts scream BAD IDEA to anyone with experience.

I'm very bearish right now.  Once the market has gone down quite a bit more (Shiller PE ratio of around 21 or so), I'll start buying VTI each and every month (DCA) and not bother with the short term trades.  I'll then follow JL Collins advice in the Simple Path to Wealth book I've read.

So you'll start making good decisions right after you get the bad ones out of your system?  It might be time to give that Jim Collins book another read through.  Or The Bogleheads Guide to Investing.  Or A Random Walk Down Wall Street.  Or The Four Pillars of Investing.  Because no one would recommend your current course of action. 

Rob_bob

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Re: Crude Oil ETF Recommendation?
« Reply #11 on: January 10, 2019, 12:16:51 PM »
I'm seeing an ER of 0.31% for USO and 0.13% for XLE.  For short term trading oil is fine, it's been moving up lately, how do you know you haven't missed the boat and it won't go down after you buy?

You wish to make a short term profit then go to cash because you believe the economy will go down later this year then invest near the market bottom.  However suppose the market goes up from here?  We already hit the bear market level.  So how would you feel if the market went high enough that the next correction would have a low that is higher than prices today?  Would you get back in the market then, or would you hold out until it returned to today's level?

If you are just starting to invest then why not establish some core positions now then dollar cost average into the market going forward?

JenniferW

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Re: Crude Oil ETF Recommendation?
« Reply #12 on: January 10, 2019, 04:48:07 PM »
.. It might be time to give that Jim Collins book another read through.  Or The Bogleheads Guide to Investing.  Or A Random Walk Down Wall Street.  Or The Four Pillars of Investing.  Because no one would recommend your current course of action.

I've read Jim Collins book twice.  I have both Bogleheads Guide and Random Walk both sitting at the library for me to pick up within the next couple days -- along with every other book mentioned by Mr. Money Mustache (have like 6 books to pick up).

Even Bogle himself suggested putting more in bonds recently.  Also Mr. Money Mustache recently even suggested slowing down on investment in stocks (this is where I learned about Shiller PE Ratio).

I'll start investing all my money in the stock market when prices become reasonably priced.. right now they are ridiculously inflated and I anticipate the market dropping more the next couple years.  I might be wrong, but I am going to be careful and do cyclical trading for now in this highly volatile market.

Anyways, I was just asking for a ticker I so I could watch crude oil.  Looks like USO is the most popular one I see mentioned in various articles.  Btw, Mexico has a gas shortage right now and Saudi Arabia is going to increase price of oil I've read.  I just want to make like 5% or so out of this USO and I won't lose a dime because I'll never sell it until I make my desired profits.. it will go back up eventually to what I paid for it or much higher.
« Last Edit: January 10, 2019, 04:51:51 PM by JenniferW »

frugledoc

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Re: Crude Oil ETF Recommendation?
« Reply #13 on: January 10, 2019, 04:54:49 PM »
Hi, I'm sure you've spent a long time considering this, and know what you're doing, but all the same, I can't help but wonder why you'd choose crude oil to invest in?

With the rise of the electric car as well as efficient, clean and infinitely renewable electricity, the extremely finite, inefficient and environmentally harmful crude oil is looking less and less attractive, no? I'm not the police on such things, and am definitely not the arbiter of good ethics, but are you comfortable investing in an industry that uses fracking?

Not interested in long term investment at the moment.  Things are shaky right now with stock market -- seems highly volatile -- and the only way I feel comfortable investing right now is in short term investments.  Right now crude oil prices are really low and seems like a good short term investment.

My goal this year is to turn the $5500 I put into Roth IRA into $6000, doing short term trades, then just leave the entire cash balance in money market account for remainder of year to earn another 2.25%+.  Just started my retirement account and only has $5500 in it so far.  Never saved for retirement before.
o
I'm very bearish right now .  Once the market has gone down quite a bit more (Shiller PE ratio of around 21 or so), I'll start buying VTI each and every month (DCA) and not bother with the short term trades.  I'll then follow JL Collins advice in the Simple Path to Wealth book I've read.

Ahh I remember the days of being a foolish young investor and making all the mistakes in the book. 

Trust me, just buy the index and forget about it.  $5500 dollars may seem like a lot of money now.  But if you are mustachian and save hard chances are one day you will have a portfolio that can fluctuate by more than that in one day.

You need to take "feelings" and all emotions out of investing.  It is obvious from your posts that you are at the "don't know what you don't know" stage of your investing knowledge.  It's a dangerous stage and most lose a lot of money at this point before experience increases and confidence drops.

What you are doing is gambling/speculating, not investing.
« Last Edit: January 10, 2019, 05:03:11 PM by frugledoc »

Eric

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Re: Crude Oil ETF Recommendation?
« Reply #14 on: January 10, 2019, 06:50:36 PM »
.. It might be time to give that Jim Collins book another read through.  Or The Bogleheads Guide to Investing.  Or A Random Walk Down Wall Street.  Or The Four Pillars of Investing.  Because no one would recommend your current course of action.

I've read Jim Collins book twice.  I have both Bogleheads Guide and Random Walk both sitting at the library for me to pick up within the next couple days -- along with every other book mentioned by Mr. Money Mustache (have like 6 books to pick up).

Even Bogle himself suggested putting more in bonds recently.  Also Mr. Money Mustache recently even suggested slowing down on investment in stocks (this is where I learned about Shiller PE Ratio).

I'll start investing all my money in the stock market when prices become reasonably priced.. right now they are ridiculously inflated and I anticipate the market dropping more the next couple years.  I might be wrong, but I am going to be careful and do cyclical trading for now in this highly volatile market.

I happen to agree that allocating a portion of your portfolio to bonds is a great idea for nearly all investors.  I have no idea how that relates to Crude Oil ETFs though.

Current PE of the S&P 500 is right about 20.  This is as cheap as stocks have been for 4 years.  Imagine if you would've decided in January 2015 that stocks were "ridiculously inflated" and stopped investing in them.  You'd have missed out on gains of 24%, a CAGR of 5.8% (and that's even after this latest ~20% drop).

https://dqydj.com/sp-500-return-calculator/

You cannot time the market.  Really.  It's the truth.  You cannot time the market.  Don't feel bad.  No one can.  But until you realize this, you will not be a successful investor.

JenniferW

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Re: Crude Oil ETF Recommendation?
« Reply #15 on: January 10, 2019, 08:41:44 PM »
We'll see. I'll let you know in this thread later on if I make my 10% gains this year on the $5500.  Once I get 10% it's all going into money market, unless of course the market tanks a lot more in the next few months.. then I'll go all in.

JenniferW

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Re: Crude Oil ETF Recommendation?
« Reply #16 on: January 10, 2019, 08:44:27 PM »
Crude OIL will just be one sector I keep my eyes on. Will have a list of about 10 ETF and I won't invest more than 33% of my retirement cash in one particular ETF.  If I get locked in then fine, I'll stay locked in until my ultimately get my desired gains.  I'll have 66% of the other cash to work with with other ETFs while locked into that particular one.

MustacheAndaHalf

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Re: Crude Oil ETF Recommendation?
« Reply #17 on: January 10, 2019, 09:12:34 PM »
Hi, I'm sure you've spent a long time considering this, and know what you're doing, but all the same, I can't help but wonder why you'd choose crude oil to invest in?

With the rise of the electric car as well as efficient, clean and infinitely renewable electricity, the extremely finite, inefficient and environmentally harmful crude oil is looking less and less attractive, no? I'm not the police on such things, and am definitely not the arbiter of good ethics, but are you comfortable investing in an industry that uses fracking?

If you own any total stock market funds, s&p500 funds, etc, you are investing in this.
The entire energy sector (which includes solar, etc) is 5% of the total stock market, as compared to 100% invested in a crude oil fund.

gpyros85

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Re: Crude Oil ETF Recommendation?
« Reply #18 on: January 11, 2019, 12:12:40 AM »
Noticed a few key words here, bonds and short term.

First of all, I would NOT recommend bonds in this rising interest rate enviroment

Secondly, if you are investing in oil short term it is unpredicatable. Long term 3-5 years it is very low at these prices and a lot of governement budgets can not be met. With this being said, I would not recommend investing in crude itself but rather an E&P if you are bullish oil, choose a company that is the lowest cost producer and historically always driven costs down as we could be in for another year of low prices.

gpyros85

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Re: Crude Oil ETF Recommendation?
« Reply #19 on: January 11, 2019, 12:15:33 AM »
On a side note, I did almost exaclty as you were planniing January 2nd I invested my 6,000 roth and already have 11%.  Like somebody here mentioned it is small $$.

However, your brain is like an encyclopedia, and investing is having the knowledge BEFOREHAND and scanning the market for these pockets of deals. Keep learning and educating yourself.

frugledoc

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Re: Crude Oil ETF Recommendation?
« Reply #20 on: January 11, 2019, 02:18:50 AM »
Can somebody please link to the old mrpercentage thread to give Jennifer one of the numerous examples of people who think they can beat the market.

Jennifer, the worst thing that can happen right now if you buy USO, is that the oil price spikes allowing you to sell out with a profit.  If that happens it will take till your next mistake goes wrong before you learn your lesson.

You are already saying you are finding it stressful watching the markets.  Long term investing shouldnít be stressful at all.

Clearly you are very risk averse so why not just buy a balanced 60:40 index fund and just keep throwing money at it.  You can be confident you are not buying at the top because we are already down from there.  If the index goes down that is perfect for a beginner investor like yourself.  Donít try and wait for the bottom. 

Usually people donít listen to the advice given, and when their plan goes wrong they slink off embarrassed and never to be heard from again.  Donít be that woman.

appleshampooid

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Re: Crude Oil ETF Recommendation?
« Reply #21 on: January 11, 2019, 06:59:06 AM »
...and I won't lose a dime because I'll never sell it until I make my desired profits.. it will go back up eventually to what I paid for it or much higher.
First off, there is absolutely no guarantee it will go back up to what you paid. There is a non-zero chance that this is the top for oil prices. It's a small chance, sure, and likely it will eventually go back up. But that's never a guarantee.

And while you're waiting for it to go back up so you don't lose a dime, you suffer the opportunity cost of not having your money in a broad index fund which is where it belongs.

There is a lot of experience on this board, much of it from making the same mistakes as you. Make your own decisions, but listen and learn. If you think the market is too pricey, just go straight to the money market fund. That's more defensible than this trading strategy you are going after.
« Last Edit: January 11, 2019, 07:56:42 AM by appleshampooid »

maizeman

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Re: Crude Oil ETF Recommendation?
« Reply #22 on: January 11, 2019, 07:49:01 AM »
My goal this year is to turn the $5500 I put into Roth IRA into $6000, doing short term trades, then just leave the entire cash balance in money market account for remainder of year to earn another 2.25%+.
...
I just want the best ETF which follows oil price in my set of ETF tickers, which I monitor and choose from each day, to buy/sell.   I'll hedge two or three of the 10 or so in the list, and sell the ones which are currently giving me desired gains.   I will never sell any ETF at a loss, will just hold until I make at least 1-2% on the ETF.  Hoping to gain about 10% in 2019 on my $5500 -- sooner than later so I can stop having to do this because it's stressful watching the market each day.

It sounds like you are describing an investment philosophy that is related to the gambler's ruin concept. As with the gambler's ruin, the thing to understand is that "Persistently taking even beneficial chances is never beneficial at the end."

Each trade you make starts out with an expected value that is positive (if extremely small if we're talking days or weeks rather than years or decades) for stocks, and zero for commodities and a big dispersion of outcomes, so we might as well approximate each transactions as a 50/50 chance of winning or losing money. Your goal is to keep playing the game until you've won a fixed amount.

Since the amount of money you want to win is relatively small relative to your overall bankroll ($550 vs $5500), the odds that your final outcome is "I made my 10%" are significantly higher 50%. However, the way you achieve that majority of scenarios outcome of gaining 10% is a willingness to continue playing the game even as you lose more and more money, so the majority outcome a 10% gain is balanced out by a non-trivial chance that you end up going to $0.

You could establish a higher threshold of "if I lose this much money I stop playing" which would limit your potential losses, but doing so would decrease your odds of finishing up 10% and increase your odds of finishing at a loss even as it decreased the potential size of that loss. Actually that may be what you're doing by not being willing to sell one of your investments for a loss. It would be interesting to try to model the relative odds of success and the maximum potential losses of this strategy computationally, but the key thing to remember is that with extremely short term stock trading and all commodity trading the expected value is zero.

There are lots of expected value zero strategies where the median outcome is that you make money, sometimes significant amounts of money, but the way those strategies achieve that outcome is by knowingly or unknowingly accepting a smaller probability of much larger losses.

Now that said, I spent my first year or two of trying to serious save for FIRE actively investing. (I steered clear of commodities thankfully.) You feel like a genius for a few months or a year (I did), and then sooner or later you take a bath that your portfolio doesn't quickly bounce back from. If nothing I or anyone else has convinced you, much better than you find this out for yourself now than later when you've got six or seven figures on the line.

Eric

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Re: Crude Oil ETF Recommendation?
« Reply #23 on: January 11, 2019, 09:42:49 AM »
Can somebody please link to the old mrpercentage thread to give Jennifer one of the numerous examples of people who think they can beat the market.

Here it is:

https://forum.mrmoneymustache.com/investor-alley/here-it-comes-red-dow/

JenniferW

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Re: Crude Oil ETF Recommendation?
« Reply #24 on: January 11, 2019, 12:07:59 PM »
Fortunately it's only my tax advantaged IRA account I can do this investment strategy.  I can only put $500 per month into that.

My savings rate is about $2000 per month, so $1500 of that will be going into regular investment account (not tax-sheltered).   I'll be forced to buy and hold VTI and do capital gains harvesting with that.   No trading week to week due to short term capital gains.

Again, eventually I will go to all VTI (and some BND) between the two accounts.  This might be sooner than later, even before the market sinks to what I "think it should be".

Thanks for all the advice, I'll probably just do what you guys, Bogle and JL Collins says, we'll see.  I need to learn my lesson and fortunately I don't have a lot invested yet so the overall loss will be minimal.  But then again I don't think there will ever be a loss because I will hold onto a particular ETF like oil indefinitely, setting a 60 day limit order like 10% above of what I paid for it.  Going to ignore daily fluctuations so they don't depress me.

I did buy USO and I'm down 2% today but I'm not worried and never selling until I get my desired profit.  But I only risked 1/3rd of my retirement assets (around $1500).  I still have more cash to buy other ETF which become bargains over the next few days.
« Last Edit: January 11, 2019, 12:10:33 PM by JenniferW »

maizeman

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Re: Crude Oil ETF Recommendation?
« Reply #25 on: January 11, 2019, 01:49:14 PM »
About buy and hold until you can sell at a profit:

Are you considering selling at a loss relative to cash under the mattress or relative to VTI in terms of what counts as a loss?

JenniferW

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Re: Crude Oil ETF Recommendation?
« Reply #26 on: January 11, 2019, 02:10:36 PM »
About buy and hold until you can sell at a profit:

Are you considering selling at a loss relative to cash under the mattress or relative to VTI in terms of what counts as a loss?

My goal is to beat the VTI index this year.  I'll go in and out of VTI as well.  I have a 60 day limit order for $1500 for VTI at 5% less than it is now.

JenniferW

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Re: Crude Oil ETF Recommendation?
« Reply #27 on: January 11, 2019, 02:43:34 PM »
Sorry guys for all these posts. I know I'm probably being ridiculous.  I should just throw all I have into VTI now ($5500) and leave it alone forever.   And keep buying it each month at market price.

It's just I am so afraid to do that now because of the 10 year bull run, and the significant drop in the market lately.  The rising interest rates, global instability, government shutdown, AAPL & Amazon earnings estimates were not met, etc..  Seems like a recession is starting but I don't know.

It's really stressful having to think about the market fluctuations.  I rather be doing other things.  That's why blindly investing into VTI is so appealing.. But is now really the right time after this 10 year bull run?  This is so stressful.

I suppose I need to just look at the long run (19 years before retirement at 67).  If the market drops a lot in the next year or two, then I am only down for the money I invested those two years.. I'll continue to buy it at a lower price for perhaps many years after that in a bear market and it will all work itself out.

frugledoc

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Re: Crude Oil ETF Recommendation?
« Reply #28 on: January 11, 2019, 03:01:22 PM »
Yes, now is the time but I think 100 % VTI is too volatile for your risk appetite.  You are obviously very nervous and the answer is to increase your allocation to bonds, to smooth the ride.

JenniferW

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Re: Crude Oil ETF Recommendation?
« Reply #29 on: January 11, 2019, 03:25:25 PM »
Yes, now is the time but I think 100 % VTI is too volatile for your risk appetite.  You are obviously very nervous and the answer is to increase your allocation to bonds, to smooth the ride.

Is BND really better than money market right now? Money Market is getting 2.29% or so.

Telecaster

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Re: Crude Oil ETF Recommendation?
« Reply #30 on: January 11, 2019, 04:11:44 PM »

It's really stressful having to think about the market fluctuations.  I rather be doing other things.  That's why blindly investing into VTI is so appealing.. But is now really the right time after this 10 year bull run?  This is so stressful.

I suppose I need to just look at the long run (19 years before retirement at 67).  If the market drops a lot in the next year or two, then I am only down for the money I invested those two years.. I'll continue to buy it at a lower price for perhaps many years after that in a bear market and it will all work itself out.

If you really want to jack your stress levels, start speculating in crude oil ETFs. 

Not only is the short term in doubt, the long term is too.   


maizeman

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Re: Crude Oil ETF Recommendation?
« Reply #31 on: January 11, 2019, 07:03:02 PM »
It's just I am so afraid to do that now because of the 10 year bull run, and the significant drop in the market lately.  The rising interest rates, global instability, government shutdown, AAPL & Amazon earnings estimates were not met, etc..  Seems like a recession is starting but I don't know.

Well but the same argument that says it's okay to gamble on picking sector and commodity ETFs, because even if you lose a lot it's only $5500 also says it's okay to buy VTI because if it drops a bit it's only $5500.

Quote
If the market drops a lot in the next year or two, then I am only down for the money I invested those two years.. I'll continue to buy it at a lower price for perhaps many years after that in a bear market and it will all work itself out.

The other thing to consider is that it is an AWFUL lot easier psychologically to just ignore a recession and continue making your monthly purchases than it is to start investing in the middle of a big crash. And if you're not able to force yourself to start investing during the crash, you miss a lot of the good returns during the post-crash run up.

DreamFIRE

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Re: Crude Oil ETF Recommendation?
« Reply #32 on: January 11, 2019, 07:59:53 PM »

I put a nice chunk into an energy fund several years ago because energy was down while the broader market was up, and it's gone no where, while the broader market continued to rise.

JenniferW

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Re: Crude Oil ETF Recommendation?
« Reply #33 on: January 11, 2019, 10:01:38 PM »
Yeah this all is too much stress for me.  I'll just invest 70% into VTI and 30% into BND the 3rd of every month for the rest of my life.

My savings rate is high at 70%, so I have nothing to worry about.  I need to quit worrying about money, I'll be fine.   This takes too much time out of my life.  I rather focus on my health and other things to improve my life.
« Last Edit: January 11, 2019, 10:11:09 PM by JenniferW »

frugledoc

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Re: Crude Oil ETF Recommendation?
« Reply #34 on: January 12, 2019, 02:06:24 AM »
Yeah this all is too much stress for me.  I'll just invest 70% into VTI and 30% into BND the 3rd of every month for the rest of my life.

My savings rate is high at 70%, so I have nothing to worry about.  I need to quit worrying about money, I'll be fine.   This takes too much time out of my life.  I rather focus on my health and other things to improve my life.

Great.  Really glad to hear this.

Now make sure you ignore the noise.

If the market goes down it is a wonderful thing for somebody in your position.  Just stick to your plan and chuck money at it as soon as you have funds.

JenniferW

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Re: Crude Oil ETF Recommendation?
« Reply #35 on: January 12, 2019, 03:40:56 AM »
Yeah I'll look forward to the market dropping soon since I'll get shares at discount price :) It's all good.  I won't need this money for at least 19 years.  Why would I sell when the market is down? THat doesn't make sense... it means buy more at discount price :)

I ideally would not look at any business news nor stock tickers .. but I do read the news and they like to throw stockmarket crashes on the headlines, sigh.   I'll ignore it.  I don't care.  I'll just keep consistently socking 70% of my net income into it each month.
« Last Edit: January 12, 2019, 03:44:51 AM by JenniferW »

frugledoc

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Re: Crude Oil ETF Recommendation?
« Reply #36 on: January 12, 2019, 10:41:44 AM »
Yeah I'll look forward to the market dropping soon since I'll get shares at discount price :) It's all good.  I won't need this money for at least 19 years.  Why would I sell when the market is down? THat doesn't make sense... it means buy more at discount price :)

I ideally would not look at any business news nor stock tickers .. but I do read the news and they like to throw stockmarket crashes on the headlines, sigh.   I'll ignore it.  I don't care.  I'll just keep consistently socking 70% of my net income into it each month.

In 19 years time you will be wealthy enough to do anything you want (within reason) for the rest of your life. 

JenniferW

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Re: Crude Oil ETF Recommendation?
« Reply #37 on: January 12, 2019, 10:50:54 AM »
I'm thinking maybe I should put 100% into VTI since I don't plan on retiring for 19 years.   Maybe in the last few years, especially when Shiller PE Ratio is high, I'll go to 30% BND.   That way my 3 to 4% per year drawn will be from BND and not from VTI when it is down.

Radagast

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Re: Crude Oil ETF Recommendation?
« Reply #38 on: January 12, 2019, 02:34:53 PM »
I hear Vanguard makes sweet, sweet Target Date funds that take away the decision making and emotional turmoil, and allow people to just dump their money in and forget about it. They stay 90% stocks until the last 10 years or so. Maybe choose a fund with a date between your 70th and 75th birthday.

JenniferW

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Re: Crude Oil ETF Recommendation?
« Reply #39 on: January 12, 2019, 03:28:34 PM »
Yeah I was considering that but I save about $2000 per month.  I can only put $500 per month into Roth IRA .. rest will be in non-tax-sheltered investment account.  I think ultimately my IRA will contain 100% BND and my Vanguard investment account will have 100% VTI .. about a 25/75 asset allocation respectively.

That way interest from bonds is tax sheltered.  The VTI stock is tax sheltered with a combo of long term capital gains and capital gains/loss harvesting.

Telecaster

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Re: Crude Oil ETF Recommendation?
« Reply #40 on: January 13, 2019, 12:02:03 PM »
  Maybe in the last few years, especially when Shiller PE Ratio is high, I'll go to 30% BND.   That way my 3 to 4% per year drawn will be from BND and not from VTI when it is down.

I cannot emphasize enough what a bad idea this is.   The Shiller PE Ratio does not, repeat, does not predict market declines.  The Shiller PE Ratio is somewhat predictive of market returns over 20 year periods.   

Radagast

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Re: Crude Oil ETF Recommendation?
« Reply #41 on: January 13, 2019, 06:02:18 PM »
Yeah I was considering that but I save about $2000 per month.  I can only put $500 per month into Roth IRA .. rest will be in non-tax-sheltered investment account.  I think ultimately my IRA will contain 100% BND and my Vanguard investment account will have 100% VTI .. about a 25/75 asset allocation respectively.

That way interest from bonds is tax sheltered.  The VTI stock is tax sheltered with a combo of long term capital gains and capital gains/loss harvesting.
When you say it like that I understand... Target Date Funds will eventually result in very high taxes. At this point I am thinking that you should indeed try and keep it simple.

That said, you may be able to mimic BND and leave some space in the Roth for rebalancing by using a combination of VWAHX in taxable to mimic corporate bonds, I bonds in taxable to mimic short term and treasury bonds, and VGLT or EDV in the Roth to account for long term and treasury bonds. This way you would be able to approximate BND in a tax efficient manner while keeping just 20% of the bonds in the IRA.

phildonnia

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Re: Crude Oil ETF Recommendation?
« Reply #42 on: January 14, 2019, 10:56:08 AM »

If you really want to jack your stress levels, start speculating in crude oil ETFs. 


I see that USCF Investments also offers a 3x leveraged oil fund...

chasesfish

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Re: Crude Oil ETF Recommendation?
« Reply #43 on: January 14, 2019, 12:35:23 PM »
@JenniferW You came here asking for advice on an oil ETF...

Oil is a tough commodity to invest in, storage costs deteriorate your value.  The leveraged ETFs use options that deteriorate in value.  There are some volatile choices too. 

Personally I'd just buy a basket of the major oil stocks, Chevron, Exxon, and Shell.  If its in a regular account, consider a pipeline or two.  I think production and throughput will continue to be a good business.  I just can't pick the winners/losers

JenniferW

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Re: Crude Oil ETF Recommendation?
« Reply #44 on: January 14, 2019, 02:16:15 PM »
Thanks.

Well I just deleted all my investing apps, stock ticker monitors etc.  I plan to just put my money into VTSAX/VTI each month on the 3rd, without even looking at the price.  I just want to ignore it all and keep putting the money in.  I have 19 years before I retire, I should be fine.  In the last few years before retirement I'll allocate more to bonds.

appleshampooid

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Re: Crude Oil ETF Recommendation?
« Reply #45 on: January 14, 2019, 02:50:45 PM »

Eric

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Re: Crude Oil ETF Recommendation?
« Reply #46 on: January 14, 2019, 04:44:42 PM »
Thanks.

Well I just deleted all my investing apps, stock ticker monitors etc.  I plan to just put my money into VTSAX/VTI each month on the 3rd, without even looking at the price.  I just want to ignore it all and keep putting the money in.  I have 19 years before I retire, I should be fine.  In the last few years before retirement I'll allocate more to bonds.

You're going to be a lot happier with that.  And as a bonus, you'll most certainly be a lot richer as well.

Good work.  Seriously!

Radagast

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Re: Crude Oil ETF Recommendation?
« Reply #47 on: January 14, 2019, 07:29:11 PM »
Thanks.

Well I just deleted all my investing apps, stock ticker monitors etc.  I plan to just put my money into VTSAX/VTI each month on the 3rd, without even looking at the price.  I just want to ignore it all and keep putting the money in.  I have 19 years before I retire, I should be fine.  In the last few years before retirement I'll allocate more to bonds.

You're going to be a lot happier with that.  And as a bonus, you'll most certainly be a lot richer as well.

Good work.  Seriously!
+1

Evildunk99

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Re: Crude Oil ETF Recommendation?
« Reply #48 on: January 15, 2019, 11:00:45 AM »
Didn't read all of the replies, but ETFs often do a poor job of tracking the exact price of a commodity due to a concept called roll yield.  There are several articles written on the subject via google to get a better understanding.

frugledoc

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Re: Crude Oil ETF Recommendation?
« Reply #49 on: January 15, 2019, 03:24:37 PM »
Thanks.

Well I just deleted all my investing apps, stock ticker monitors etc.  I plan to just put my money into VTSAX/VTI each month on the 3rd, without even looking at the price.  I just want to ignore it all and keep putting the money in.  I have 19 years before I retire, I should be fine.  In the last few years before retirement I'll allocate more to bonds.

Great move.

I remember I used to have the Bloomberg app with 50 - 100 stocks on my watch list.  It was exhausting