Oil – the Slippery Slope Continues but USO looks Attractive
Oil is now at $38 a barrel. It has been trading the $38-$42 range for the last month or so. One can complain about the Dow falling 50% over 12 months, but how about Oil falling 75% in 6 months? It fooled a good many who were betting it would keep going up and maybe rising to $200. It certainly fooled T. Boone Pickens, who many consider to be the best oil trader around. He had predicted oil would end the year at $150.
Now, 6 months after an all time high, oil sits at under $40 despite the recent events in the middle-east. Gas prices at the pump hit a low not seen in over 8 years last month. At some point though, the markets will get sane again, and the smoke will clear. At the point, I expect oil to move up to a more normal $60-70 range. Things have already started to even out with prices at the pump now moving higher from their December lows. So with the understanding that there may be some more short-term downside to oil prices, I recommend the start of a USO long position at current levels.
– Faisal Laljee
Full Disclosure: I do not own USO but my position can change anytime without notice.
P.S.: Israel sure picked a good time for their “excursion” with oil at multi-year lows, thus, making sure the US doesn’t react too negatively. Imagine the chayos if they had done this back in June.
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Jim Rogers Interview on Stock Shotz January 15,2009
I am so pleased to have legendary investor Mr. Jim Rogers back on our show. Jim talks about anamolies in the markets today and the long term outlook for inflation. I asked him about future growth in China and whether or not the Chinese will continue to finance our debt. He argues that we are still seeing deleveraging and does not term the current situation as DEFLATION.
Go to http://www.stockshotz.blogspot.com to view the interview and go to http://www.stockshotz.tv to view previous interviews with other industry leaders.
Can you please provide an insight on the tax implications of holding USO long term.