Originally posted by bfw:
Originally posted by g-man:
you guys are both talking mid-long term projections on oil.
Whereas i'm talking about alternatives to buying stocks if there is a market correction in the immediate short term.
you'll see the price of oil and oil companies are pretty tightly correlated with drops in the market especially with current inventory levels/production levels I gave. so I will restate, it's a very bad buy for so little potential upside in the short term as a hedge against stocks.
A couple thoughts
(1) SPY down about 5% last 5 days. WTI price essentially flat
(2) Total crude inventories in US were up by 56 million barrels in first 3 months last year. The projection for this year is minimal to no build.
So, short term, crude could (and has) definitely outperform the market. What would be really interesting is if at the end of the market correction, some sector rotation occurred and money flowed in to XLE and XOP.
Perhaps Goldman is anticipating this with their recent call for Brent to hit $82.
But, in the interim, if you expect a market correction.....just short the market.