Alright already … I get it. The market is crazy, absolutely crazy. Trading it right now is crazy, unless you have some insight to a trade, a good trade that, well, can’t miss in this market. Maybe a reader’s question leads us to that trade.
- I lost $3,000 on oil advice from an oil guru. He said oil was going up when it dropped into the $70. I got in then. Could I short oil now or is it too late?
That would be oil going down. You can short it, which is a seemingly good bet. It could be that oil simply hangs around here for a while $(45), it bounces around in a $45-$50 range, it rises back up above $50 because the Saudis and their allies have a change in heart regarding production. Given the current market crazies, the glut, and the slowing global economic numbers, my guess is the latter is out. So, the question is, in the immortal words of Dirty Harry, “Do you feel lucky?”
A surer play on oil could be the price, but indirectly so. Given that lots of money is flowing into hedging oil as the price drops, it might make sense to look at how that is being done. One way traders are hedging oil is putting it up until a future date when the price of oil goes back up (if it does) or it plays against futures prices.
Either way, storing oil means a boon to those who have the capacity to do so, and those who do will play the capitalist card of, “You want it. I got it, but it will cost you.”
- Among the biggest beneficiaries are likely to be some midstream firms like Plains All American (PAA), who can buy extra crude to fill up storage tanks that they already own. Others will be trying to lease more, likely driving up rates to the benefit of big owners such as Canada’s Enbridge Inc (ENB), Magellan Midstream (MMP) and NuStar Energy (NS).
Trade in the day; invest in your life …
