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Is it Finally Time to Invest in Oil?

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Back in December I asked , "Time to Start Buying Oil?" I followed that up by investing in oil, specifically this oil ETF: USO at around $19. I proceed to watch the price of oil plummet to $7.67. Yikes!

I've been dollar cost averaging they whole way down. I have bought shares 10 times in total, with the most recent being in January when it was trading at $8.79. As I write this today, the oil ETF is up to $10.20. I just need it to get to around $13.75 before I break even. It's sad to think that I need it to write another 30%, but it was once at $120 and spent years around $40. At $10, it still looks like a relative bargain.

This CNN Money article makes the argument that oil prices might have reached a bottom and things are may be going up from here. That's not a particularly hot take as oil would have to drop 33% to get its lows.

There are a number of other ways to capitalize on the oil's price recovery. They might be safer than betting on the oil ETF directly. For example, you could purchase Chevron (ticker:CVX) or ExxonMobil (ticker:XOM). Another option would be this Oil like financial placement.

I wish I could tell you were oil prices are heading. Even if I could, I think it is clear, based on my record, that you shouldn't listen to me. I'm the same person who invested in such wonderfully performing stocks as Twitter and IBM last year. Unlike those stocks, I'm invested in oil for the long haul. I have no problem holding it for 20 years.

My only fear is that solar or another alternative energy will make oil less important. Maybe at some point the demand for oil drops off completely and it doesn't rebound. This is not a very big fear for me though. It seems to me that oil is a huge part of the global economy and many countries rely on it. I can't imagine what might happen to them if oil prices stayed down for the long term.

Where do you think the price of oil is heading?

Last updated on March 13, 2016.

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