Vanguard VDE

[brotatochip]

With the price of oil being so low and now the Keystone Pipeline being Obama blocked, anybody else considering purchasing some of Vanguard's energy pack (VDE)?  It seems like a good price based on historical values and oil always pays dividends.  Since most are fearful of big oil right now, should I be greedy?  Thoughts from my fellow MMM'ers??

[mjones1234]

I have been watching UWTI, a triple leveraged ETF for oil. If you're really into gambling on the price per barrel, then a fortune can be made. As you know, investing in oil is pure speculation, so good luck to you. I personally think it's going to remain close to current levels for quite some time.

[protostache]

It seems weird to me that VDE's underlying index only tracks in the US domestic oil industry. The oil majors are all global players and VDE misses three of the biggest companies in the world (Total S.A., Royal Dutch Shell, and BP).

Oil is not a short term play. Joshua Kennon wrote an in-depth article on how one should think about investing in the oil industry recently, which seems like a good introduction to the topic. It shows how the industry thinks about returns on long-term, multi-decade-length cycles, and how they pay their investors very well to buy and hold through thick and thin.

[protostache]

I have been watching UWTI, a triple leveraged ETF for oil. If you're really into gambling on the price per barrel, then a fortune can be made. As you know, investing in oil is pure speculation, so good luck to you. I personally think it's going to remain close to current levels for quite some time.

I would be very wary of that product. UWTI is a 3x leveraged ETN* with a daily reset. It is intended to be held for a single trading session, not long-term.

*ETN = an exchange-traded senior debt instrument, whereas an ETF is an exchange-traded mutual fund share. They are very different things.

[brotatochip]

It seems weird to me that VDE's underlying index only tracks in the US domestic oil industry. The oil majors are all global players and VDE misses three of the biggest companies in the world (Total S.A., Royal Dutch Shell, and BP).

Oil is not a short term play. Joshua Kennon wrote an in-depth article on how one should think about investing in the oil industry recently, which seems like a good introduction to the topic. It shows how the industry thinks about returns on long-term, multi-decade-length cycles, and how they pay their investors very well to buy and hold through thick and thin.

Good read!  And I did overlook VDE being domestic only, so thanks for pointing that out.