A reader who wished to remain anonymous suggested to me that if I want to go long on oil (so as to make its price collapse and end the suffering), I should take the route in plain sight: buy the ETF with ticker symbol OIL. Apparently, its value stays very close to 1.68 times the current spot price of oil. In fact, since neither Yahoo nor any of the finance sites I go to actually let you chart the history of the price of oil, you should use that chart when you want to compare something to oil's price history.
(The reason is that the quoted price of a barrel of oil is actually the price for a delivery in the near future, so expanding the time history of that just gets you the price of a briefly-traded security. But when you want the *history* of oil's price, you don't want a plot of the price of an "August 08 delivery"; you want a plot of "August 07 delivery as valued in July 07, September 07 delivery as valued in August 07 ...".)
Why you'd want to remain anonymous about that, I have no idea. :-/
5 comments:
Silas,
You can get histories of various spot prices (for West Texas Intermediate, etc.) at the EIA. Also, a data source like Bloomberg or something will be able to give you the constantly-adjusted near term futures price. (They call it "front end contract" or something but I'm drawing a blank at the moment.) I.e. you can get a history of what the newspapers would've reported as "the price of oil" going back in time, so long as you are careful to avoid the mistake you mention in your post.
As far as the ETFs, be careful. They haven't gone up nearly as much as oil in the last 18 months or so, because (the managers claim) of this weird phenomenon where they lose money every time they roll over the futures contracts.
I don't really understand the exact mechanics of it, so I can't tell if this is a legit excuse or not. But it really is the case that oil ETFs have not tracked oil very well since its price exploded.
I just check OIL's chart, and it looks like it did pretty well over the last year. But I know for a fact there was a big hubbub maybe 6 months ago about how the oil ETFs weren't appreciating nearly as much as oil itself.
Thanks for the comment Bob. But keep in mind, I can find the price history of oil just fine; it's plotting that history against other securities that I couldn't find. (And for an extra bonus, maybe they could account for reinvestment of dividends.) Of course, I probably should have tried the Scottrade account too :-P
Plus, whatever these fund managers are losing by rolling over contracts, I'd lose a lot more since I'm investing with so little.
I notice your advice the government about how to get oil prices down didn't mention the possibility of making unofficial promises to me of beer and women if I were to go long on oil. That was just an oversight, I'm sure.
I guess I don't understand what you want then. You can get daily prices in Excel format from EIA. Why can't you compare that to whatever your stock info is?
Do you just mean, it would be nice if the Yahoo finance or whatever, allowed you to d/l compatible oil price while you were grabbing IBM shares?
Anyway, if that's what you meant, you might try contacting whoever runs those sites, or maybe posting a question on a public forum where geeks answer questions. Because on Bloomberg, I know there is a way to bring up the price history of the front end contract for oil (or whatever they call it), which is what you are talking about here. So it wouldn't surprise me if the free sites have such an asset as well.
Do you just mean, it would be nice if the Yahoo finance or whatever, allowed you to d/l compatible oil price while you were grabbing IBM shares?
No, I mean, I can't go to the yahoo and say, "plot spot price of oil" on their charts like I can with stocks.
you might try contacting whoever runs those sites, or maybe posting a question on a public forum where geeks answer questions.
Well, I did try that to get what I wanted, and yes people have asked the oil question before, and, believe it or not, "Just use 1.68 times ticker:OIL" *was* the best answer :=[
Oh, and btw, what I'd really want to see is an ETF that uses leverage to amplify the return and loss due to changes in the price of oil. The more I have to gain from higher oil prices, the stronger my fate will press down the price of oil.
Yeah, yeah, roll your eyes. I can't wait to see the reaction when I go through with this. IF I do.
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