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Public Service Message from Da Rat


Regionrat1

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I knows dat last summer da high prices of gasoline kinda put a damper on some folks summer wraslin adventures. How would you like to lock in gas prices dis cheap for da summer grappling season ? If you know da rat I have one of does big f-250 wit da dulluy dat sucks da gas up. Also got have deem big boy toys. What you do is buy DXO or USO on a dip now. Dees two ETF?s is like buyin oil. So for example last summer when oil was $145 USO was $119. Today USO is like $33. So if gas goes up your USO covers da extra cost cause it goes up. Sell it and go do your summer grappling. If oil stays down low enjoy your summer drivin and keep your USO. Whit does crazy arabs and knuckle head ruskie we are bound to spike up for da summer.

 

One of my millrat buddies turned me on to dis last year and it work real $$$. for da rat. 

Dare are a lot of smart boys out here at Mital.

 

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I am stock stupid. The adage of having money to make money applies in my case.  If I could convert cheap debt into invested money, I would have me a portfolio, for sure.  Then again, I am not so sold on the legalized gambling that is called the market. 

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DXO is an ETF (exchange-traded fund) and I?m not sure but I think USO is an ETF also.  These are ?funds? comprised of various actual oil companies that actually and simply trade just like individual stocks.  Instead of just buying Exxon for instance, you can buy one of these and, in essence, buy a whole group of oil company stocks just like a mutual fund.

 

:-\They?re very positively correlated to the price of crude oil and, as a result, to gasoline as well.  And yes, if you buy these and the price of gas goes up, it is likely, but not assured, that this equity-market play/hedge will offset that rise.  By the same token, if gas continues to fall and you?re paying less at the pump, you will likewise likely lose money on the hedge.  And even in the event of wanting to try and hedge your gas-pump exposure, there?s the issue of ?how much? of these ETFs to buy relative to how much gas you buy.  This is called a hedge ratio.  Then there?s also the correlation of either of these to the gas-pump price (i.e. do they go up at the same rate?).  So, theoretically, yes, these can be used as hedges against a return to high gas prices.  But there?s a lot of other considerations that go into an effective hedging strategy and the risk management thereof.

 

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DXO is an ETF (exchange-traded fund) and I?m not sure but I think USO is an ETF also.  These are ?funds? comprised of various actual oil companies that actually and simply trade just like individual stocks.  Instead of just buying Exxon for instance, you can buy one of these and, in essence, buy a whole group of oil company stocks just like a mutual fund.

 

:-\They?re very positively correlated to the price of crude oil and, as a result, to gasoline as well.  And yes, if you buy these and the price of gas goes up, it is likely, but not assured, that this equity-market play/hedge will offset that rise.  By the same token, if gas continues to fall and you?re paying less at the pump, you will likewise likely lose money on the hedge.  And even in the event of wanting to try and hedge your gas-pump exposure, there?s the issue of ?how much? of these ETFs to buy relative to how much gas you buy.  This is called a hedge ratio.  Then there?s also the correlation of either of these to the gas-pump price (i.e. do they go up at the same rate?).  So, theoretically, yes, these can be used as hedges against a return to high gas prices.  But there?s a lot of other considerations that go into an effective hedging strategy and the risk management thereof.

 

 

Da rat could not had said it better !!!

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Rat,

 

I believe that USO is an ETF that follows the price of oil from The United States, not the oil companies themselves.  How much to invest in USO to hedge your expense at the pump is tough to figure out, depending on how much gas you actually use. 

 

Actually since your first post the price of USO is down 10%.  A $1,000 investment would only be worth $900 today.

 

I think a much safer investment would be to open a JJ's Pizza on the north side of Indy.  I've been down here five years and haven't found a good pizza yet.  You'd make millions when the folks down here got their first stuffed chunk sausage and mushroom pie.

 

 

 

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Don't worry Eddie our goverment is making da doller like monopoly money so commotities is a good ole hedge. Buy summer it will 60-70 a barrell. 

 

tALK eith your buddy from CIA NW he used to be known as da chicken king- maybe you could team up with him put a pizza oven at cia indy

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I agree Rat that upside potential is higher than downside risk.  To many countries that don't like us need it to be 60-70 at the cheapest.

 

I don't know if I want to get into the restaurant business with my buddy up north.  If I can steal one of my favorite Tharp quotes, "That's like putting the chubby kid in charge of the candy store"

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