How to play the oil market on a budget.

[kilroy69 995]

UCO is tanking today. Down 6 percent. However as this is a long term investment in the price of oil don't panic. The market is searching for a floor

[Bert 1,092]

8 bucks a share is too much of a risk 10 years out from retirement? That's ultra conservative

I am lazy. I only allocate investments in 25k blocks. So no the risk isn't worth it to me. And yes I am very conservative. Working for two fortune 500 companies that no long exist will do that to a man.

[patweisers44 697]

8 bucks a share is too much of a risk 10 years out from retirement? That's ultra conservative

If you saw the way Bert dressed walking the streets in Vegas you would know he is far from conservative.

[kilroy69 995]

I am lazy. I only allocate investments in 25k blocks. So no the risk isn't worth it to me. And yes I am never conservative. Working for two fortune 500 companies that no long exist will do that to a man.

I can understand that. 25k is in fact a chunk.

[Bert 1,092]

If you saw the way Bert dressed walking the streets in Vegas you would know he is far from conservative.

Vegas is different!

[WhiteWonder 2,172]

UCO is tanking today. Down 6 percent. However as this is a long term investment in the price of oil don't panic. The market is searching for a floor

 

like i said, oil is going to fluctuate in this range for a bit. the jump on wednesday was a lot of short covering, i think. there may even be a new bottom in the next few weeks. still i like oil as a long term (2-3 year) investment. if its UCO or individual oil based stocks, either way.

 

ill be making a play on it just have not yet.

[frank 2,147]

In Soviet Russia, oil market plays you.

[kilroy69 995]

 

like i said, oil is going to fluctuate in this range for a bit. the jump on wednesday was a lot of short covering, i think. there may even be a new bottom in the next few weeks. still i like oil as a long term (2-3 year) investment. if its UCO or individual oil based stocks, either way.

 

ill be making a play on it just have not yet.

I think we're approaching the bottom and there is some money to be made on oils upward swing to 80&

[WhiteWonder 2,172]

I think we're approaching the bottom and there is some money to be made on oils upward swing to 80&

 

yes. i am agreeing with you.

 

my point was more that a 7% gain or 6% drop on a certain day right now is not going to matter. unless you're looking to day trade it

[kilroy69 995]

 

yes. i am agreeing with you.

 

my point was more that a 7% gain or 6% drop on a certain day right now is not going to matter. unless you're looking to day trade it

Heck no. I made it clear this was a long term play with a reasonable goal of the 40s over the next year or so. Daytrading is for suckers and rich people insulated against any real losses. I was just using the rise to show how little movement in the price of oil is going to make this etf profitable

[WhiteWonder 2,172]

Well it's back in the 7.50 range. I have not yet bought in. If it goes up tomorrow I'll feel good that 7.50ish is the floor and I'll buy on the next dip.

 

I won't day trade it although 8-10% daily gains are nice even after short term cap gains tax.

 

I just always look to get in as low as possible.

[WhiteWonder 2,172]

Also day trading certain stocks can work for average investors as well. I did it a few years ago successfully with bank of america. Before they had a reverse split.

 

I'd buy, let it go up a buck fifty and sell. Then wait for the dip and buy back more shares using my original investment plus my profit.

 

I think of it more like real short term trading but I think it's technically day trading

[mmmmm...beer 691]

So how much is the short term cap gains on something like that?

 

I almost bought another $1K worth today at 7.52... got busy at werk and forgot to do it. We'll see what happens with it tomorrow. I maybe do it tomorrow.

[WhiteWonder 2,172]

Short-term capital gains are taxed at the same rate as your ordinary income. For 2014, ordinary tax rates ranged from 10 percent to roughly 39 percent....... depending on your total taxable income.

If you sell an asset you have held for one year or less, any profit you make is considered a short term capital gain

holding an asset for more than 1 year (and 1 day i believe) makes it a long term investment and subject to lower tax rates... basically, they tax you less because they feel you invested in the economy rather than loooked to turn a quick profit (thats how I see it, at least)

so from the standpoint of how much of your gains the government will take, its always better to sell a long term asset, if you can help it. but in some scenarios, you might ant to get out of a stock while the gettin's good and suck it up and pay the short term tax. Good example of this is when i bought a few blocks of FNMA shares at various prices at the start of 2014. I think I bought 3 times in the 2-3.15 range. It spiked over 6 and then dropped like a rock on Obamas big mouth. I sold as quickly as I could to lock on a nice profit but i'll be paying the tax this year and it will be a short term capital gain. But I consider it worth the 14k I made on the trade.

[patweisers44 697]

Bought another 1,000 early this morning at 7.70. WA of 7.95 on 2500 shares of this mofo. Gonna be a fun ride with this thing.

[kilroy69 995]

I really feel like this stock is just waiting to take some big strides to the upside. It seems that anytime it surges profit takers get out and it falls on the back of that.

[WhiteWonder 2,172]

And down again. I'm starting to get the itch to day trade this.

 

 

One thing that worries me about UCO as a long term, even 2 year investment is its correlation history to the price of oil.

 

Back in 2009, oil dropped from like 140 to 40 right? Or something roughly in that range? It only took about 2 years to rebound if I recall. In that same time, UCO only fell to a low of roughly 25 dollars per share. It quickly rebounded (much quicker than oil) to levels above 50. It reached a peak in 2011 above 63 dollar but has been down since then.... even though oil hit a high this past summer? During all that time, UCO was hovering between 25 and 39. In essence never reaching close to its previous highs and not really coinciding with oil hitting its highest levels sonce 2009.

 

The latest oil drop is something like 104 to 45? And UCO has tanked with it. But i question wetter or not a rebound in oil price will ever actually get this particular etf back to that 35+ level. If oil gets to 75 can we expect uco to even get to 15 or 16?

 

Dont mistake this for me saying uco is a bad investment, I just wanted to share what looks to me like a fact that uco only mirrors oil on the big drops. Not so much on the rebounds.

 

Ofcourse as I said, UCO did rebound after the 2009 crash it just didn't seem to follow the pattern of oil in its own rebound.

 

 

Sorry. I like to analyze

[WhiteWonder 2,172]

glad i didnt buy yet. still waiting for what feels like the right entry point

[kilroy69 995]

I still think it has good upside

[WhiteWonder 2,172]

I still think it has good upside

 

same, just saying im still waiting to buy

[kilroy69 995]

Its up to 7.77 today after a surge of 13% today. Is this a legit break to the upside or is this just shorts covering?

[WhiteWonder 2,172]

bah i was so close to buying mid day thursday around 6.75

[WhiteWonder 2,172]

Bah. Could be up almost 2 grand

[kilroy69 995]

looks like the floor was 6.61

[patweisers44 697]

kilroy69, on 02 Feb 2015 - 3:39 PM, said:

looks like the floor was 6.61

Hope you're right. I am $1.34 over that on my weighted cost, but I am not complaining. I stopped trying to figure out exact bottoms a long time ago. Small fish, trading online, has no chance to get the true bottom anyway even if you did nail the number.

 

up 0.42 to 8.88 today.

[MTSkiBum 1,594]

He is just saying that so there is less investment in shale. There are scenarios that could have the price of oil above 100 dollars by next summer. It is unlikely, but certainly possible.

 

 

Most likely scenario is oil around 70 by end of the summer with 80 as the average over the next couple years.

Oil might hit 60 dollars today. I think I was way too conservative. I think oil will be over 80 this summer.

[WhiteWonder 2,172]

still kicking myself for not buying mid day last thursday around 6.70... but i think UCO pulls back a little. would have worked perfectly too, like i said i was interested in
"day trading this" and a weeks profit of 45% or so would have been nice.

[kilroy69 995]

I hope this thing goes to 40 and makes you guys a ton of cash.

[WhiteWonder 2,172]

glad to see it down big today. another down day and i might finally jump in.

[patweisers44 697]

WhiteWonder, on 04 Feb 2015 - 6:42 PM, said:

glad to see it down big today. another down day and i might finally jump in.

Shiot or get off the pot. Either way, stop rooting for down days.

[kilroy69 995]

I think the drop yesterday was profit taking

[WhiteWonder 2,172]

Shiot or get off the pot. Either way, stop rooting for down days.

I'm rooting for an overall positive outcome. Nothing wrong with rooting for a better entry point

[kilroy69 995]

Looks like it's gonna open up positive tomorrow. It's up 1 percent in after hours trading.

[patweisers44 697]

I'm rooting for an overall positive outcome. Nothing wrong with rooting for a better entry point

I hear ya, mostly just looking for some company on this rollercoaster.

[Franknbeans 46]

I believe day trading refers to buying and selling on the same day

[WhiteWonder 2,172]

I believe day trading refers to buying and selling on the same day

Eh. Day traders are really just guys who look to buy and sell on dips. Often times it's mid day and sometimes it's a few days. They are also often shorting the stock while they wait for the dip.

 

I'm by no means a day trader but uco and oil in general looks like a sock you can ride some nice 15-20 percent swings. Pay short term capital gains yes, but worth it.

[kilroy69 995]

up 4 % today

[mayhem39 3]

I have a very small position in UCO, reason is that it seems everyone is saying oil has to rebound, etc. I almost want to bet the other way.

[patweisers44 697]

mayhem39, on 06 Feb 2015 - 6:44 PM, said:

I have a very small position in UCO, reason is that it seems everyone is saying oil has to rebound, etc. I almost want to bet the other way.

You would be looking for the SCO thread then.

[kilroy69 995]

Uco is up 5% today.