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Take a look at this chart, and you will so how bearish oil is when winter time comes around. Take this as a buying opportunity to get into oil commodities to create a large gain on your portfolio.

Like i’ve said in the past, oil is not going anywhere, for a while. I don’t care who’s in the office, we won’t wake up one day and fill our tanks with water, its just NOT happening. So until then, take advantage.

Here is a chart of the bear and bull cycles, just like any other stock oil is cyclical. You need to buy when its ugly and sell when its nice.

Not the best editing skills, frankly cause i don’t care. But you get the point. oil is a buy! DONT BE FOOLED by the “girly men” democrats pushing for alternative energy, or big oil taxes, makes no difference. Without oil, we cannot function. take advantage.

How to make money in a oil (the easy way)

I have been getting so many questions repeatedly about oil, and how to play it. I am going to briefly show you how I do it so you can get a hang of it and do the same. It is pretty simple.

 

Find a stock/ETF that is tied to oil services or owns oil fields. When the price of oil goes up, the stock or ETF will go up as well.

 

Here is the problem. Some people are too cheap to understand that 0.80% management fees on an ETF is NOT expensive. Looks at it as insurance rather than an expense. The problem with investing in a single company or something like XLE is that if any of the companies miss earnings, or have any sort of bad news, the stock will drop WAY more than it will go up. You will lose 10% in minutes. Oil is very very volatile. This is why I stay with USO. I know it doesn’t sound the best, but I’ve made a killing on USO.

 

Here is why:

 

With USO, you pay them 0.80% (a year) to manage oil futures for you. So instead of actually trading stocks or options or features, USO will do everything for you, all you have to do is invest into USO. Just think of USO as the barrel of oil, it goes up.. you make money, it goes down you lose. That’s all. No expiration dates, no earnings, no PE, no EPS,  I cannot seem to stress this enough.

 

So, how do I do it?

 

Here is an example of my recent trades. Lets start from the top. Oil is now around $60 a barrel. I anticipate that it can go either way.. Which is FINE.

 

So I start of slow… buy some shares (enough that if it goes up you can make a little) don’t buy too much. And don’t buy too little, because if it goes up you will hit yourself why you didn’t buy enough.

 

So I start buying…. Here is my trade history:

 

10/30/2006  10:09:24 Bought 45 USO @ 52.91

I make a starting position. And I HOPE that oil will go lower.

 

10/30/2006  14:05:18 Bought 90 USO @ 52

After 4 hours, oil goes lower so I rebuy

 

10/31/2006  11:21:49 Bought 150 USO @ 51.41

The next day, I’m all in RED.. it looks so ugly.. but be strong and buy some more.

Now your average cost is going lower and lower

 

10/31/2006  11:54:15 Bought 320 USO @ 50.98

Oil is still tanking, I still buy more. Why? Because oil is going to $100!!!!!!!!! (read my post about that)

11/08/2006  10:37:31 Sold 605 USO @ 54.5736

 

I sold.. Because I liked my return. And I anticipate for it to fall again, so I will restart my position all over again.

 

Transaction amount: $31,086.05

My average cost:  $51.38

My sale: $54.57

Return Rate: 6.21%

Profit: $1,930

  

Cheers!