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Energy funds or stock picks?


silverharp

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I bailed out my Merril Lynch energy fund a month ago, which in the short run was a good thing. however over the next 3-6 months would like to have an energy element to my portfolio . I am on board with the peak oil issue and listening to Matt Simmons on FSN focused my mind again. among the issues I am trying to work though are

 

-Will large cap stocks be able to grow their reserves or will the sector be hit with additional profits tax

-split my money with say the ML world energy fund and new energy fund and be done with it.

-focus on a basket of medium size Gas instead of oil stocks

-go for the oil tech stocks

- buy physical gold, as it will track oil anyway and needs less research

 

any thoughts?

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Most tracker/index funds beet the stock pickers. Unless you are a full time trader with experience and time for proper research etc, I would go for some sort of tracker. It saves a lot of hassle and you can get on with your life. However, i think many investors are quite macho about this and going for trackers is seen as a cop out - a bit like buying a compilation album rather than an album by one band. Maybe put 3/4 into some sort of tracker and a quarter into juniors.

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Most tracker/index funds beet the stock pickers. Unless you are a full time trader with experience and time for proper research etc, I would go for some sort of tracker. It saves a lot of hassle and you can get on with your life. However, i think many investors are quite macho about this and going for trackers is seen as a cop out - a bit like buying a compilation album rather than an album by one band. Maybe put 3/4 into some sort of tracker and a quarter into juniors.

 

This is good advice, I guess given that oil stocks are still valued at $40 long term pricing then there will be significant upside either way. I would prefer though not to own stocks like BP as they would behave the equivalent of IBM in the 90's. The flip side of course is that it is easier to explain to the wife that I'm putting 50K into an energy fund then into exploration companies.

 

Longer term there is a cap on oil prices, at current exchange rates I can't see an oil price plateau greater then $150 , there maybe spikes above this but at 3-5£ a ltr. people will cut their driving in half.

Gold on the other hand can go up in price several times in real terms as it is not a consumption item.

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  • 4 months later...

British Energy may now have bottomed out.

Broker outlooks more +ve and some large buys.

 

If the oil prices rises this stock will soar again provided they keep those old reactors going!!

Nuclear power = fixed costs.

Sales price = electricity price = function of gas price = function of oil price.

 

Also possibility of a takeover by EDF / EON to gain UK reactors sites.

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