Fantasy Oil League Investing

Disclaimer: this is not an investment site. Do not make any investment decisions on your own. Listen to Jim Cramer. Oh, wrong disclaimer. Sorry. This is not an investment site. Do not make any investment decisions based on what you read here or what you think you may have read here.

But if you want to play Fantasy Oil Patch Investing, click here. 

My third category would be for the timid investor, one who wants to make a little money in the oil market, but not bet the farm.

The Milquetoast investor wants mainly blue chip stocks, ones with great dividends and little downside, which can often exclude volatile oil industry shares.

For this investor I would put together an ETF of major oil companies from the US, Canada, the UK and Norway. I would throw in a couple of big service companies and some larger E&P companies with proven output.

Then I would hedge the whole thing by adding a large oil price element that is controlled by a clever trading algorithm.

The algo would turn on a dime and go short when oil prices are dropping (for more than, say, a couple of hours), then reverse itself when they go back up. This provides instant, and practically constant, balance to your portfolio, but necessarily constrains profits.

Still, even the Milquetoast ETF would let an investor get close to the excitement of the oil industry without getting his hands dirty– or having to sleep in an RV in 40 degrees below zero weather (think North Dakota).

The story is done "tongue-in-cheek," but if you read it closely there are some interesting bits of trivia that confirm my thoughts on the Niobrara.

This Platts article is much better than it might seem. I recommend it be read two or three times. Slowly.

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That's all ice in the parking lot. 

Outside Snowbucks, Grapevine, TX.

December 6, 2013

28 degrees