Oil used to be $100 a barrel and then it went all the way down to about $30. Right now it’s hovering around $45 a barrel. I started paying attention to oil stocks and energy funds when I realized the low prices were driving investors crazy. I won’t go into the facts of the situation which you may or may not be aware of, but I can summarize my feelings:
Oil stocks are down with the oil price and some oil companies may not recover due to them not being able to deal with the loss of income needed to service debt and write paychecks. But no company is making new oil and I am not considering bio fuel at this point. This means that at some point the glut of cheap oil is going to wain and the price of oil is going to continue to rise over time.
So oil stocks and energy funds are a pretty sure thing in my opinion, but you may need to hold on to them for some time depending on what your goals are. I do recommend that most active investors have goals, buy something pretty sure to rise in price, and just be prepared to wait for an extended time to reach your goal or at least turn some kind of profit. If I think it’s going to take too long to reach my current goal of 10% profit, I will sell at 5% or even less. I just want to avoid taking a loss if at all possible, which I realize that without extend time of paper trading may be impossible to avoid. I have a few stocks that I expect to have to hold for several years to avoid taking a loss. Sure, there is a percentage of my portfolio that is tied up, but I have enough cash currently that I don’t need to sell at a loss.