mikejd4020 - 1/20/2016 20:34

Oil isnt really a great hedge out against fuel prices. Probably USO would be a good hedge, for oil.

I am going to respectfully disagree with Nortsman... uWTI is a horrible, horrible long term hedge.

Something else to consider with efts is the rollover.

So let's take oil as an example of a market in deep contango.

So an etf* such as uso or uwti. Plays the front two contract months. So let's say February is at 28 March is 30 and April is 32. uwti trades at 2.00. ( these are all horribly fictitious numbers) on contract expiration from February to March oil goes from 28 to 30 bucks but Uwti due to roll over, STAYS at 2.00. Then starts in its currently down down down mantra. You lose money fast. Plus you take a 3x beating just from up down action. STAY AWAY from Uwti. Coming from a guy that has played and lost in UWTI. I personally think in a contango oil market it's the absolute perfect short.



Uso behaves the same way on contract expiration.

Plus sometimes oil can go down and due to refinery shut down, maintanience, refined products can go up.

You know what I would invest in, if you don't want to play futures. Is XOM Exxon, Chevron and some other STABLE oil company. Or 5 so if one ****s your ok. Then cash dividend checks. And when you need to buy fuel sell some stock.
That's my 2 cents.