Oil ETF
On CNBC, they were discussing the pros and cons of the new oil ETF that was released today. The comments were mainly to the negative because they said that the oil market is too risky and that an investor would be better off investing in a single oil company. In my opinion, for an inactive investor, there couldn't be a better way to get into the oil market. But, if you trade on a regular basis, it would be better to get into an oil stock with a higher BETA because there is no question that the oil market will continue to rise based on the world's current state. Higher BETA means (with all factors remaining the same) the stock will outperform the market. Foreign policy will, by itself, continue to feed this oil market.
posted by Stock Administrator @ 3:26 PM
1 Comments:
At 10:31 AM ,
Grant said...
I have to agree with you. Yes, the oil market is volatile, but tell me something I don't know!
I like the ETF because it takes the corporate risk out of the equation. If you invest in one oil and gas producer, and they report some irregularities in their business, your stock drops regardless of where the price of oil goes.
With the ETF, you spread your risk over more territory.
Besides, what's the difference in investing in the ETF and buying 10 different oil and gas stocks?
I like the ETF idea, and yes it's risky, but the entire oil market is risky.
Great post!
-Grant
www.TheCornerOfficeBlog.com
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