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Is oil a good buy right now using ETFs? USO USL UCO DBO

May 30, 2021
Hello everyone, my name is Anisa, thank you for joining me in the recent drop in oil prices. A lot of investors thought, "Oh my gosh, this is the great opportunity of a lifetime," and they went in and then they bought these oil ETFs and Chico, they were in for a big surprise, so let's look at exactly what happened, why it happened and also how it would have happened to them. gone. These investors would be fair if they had instead bought energy ETFs or energy stocks, so let's get to it with the massive drop in oil prices, I mean oil prices even went negative which is a crazy, investors look at this investment in oil ETFs this way, it seems like it makes sense, but it has a twist, okay, so the whole second ETF sled USO example came down from the top about 83% and then , when you look at oil prices, they also went down around that same price, so if I look at the second oil future, it went down from the top about 81% and then, here you go, you're like Okay, I know that prices Oil prices are not going to be in low single digits or negative prices forever.
is oil a good buy right now using etfs uso usl uco dbo
Oil prices are going to come back because the economy is going to come back at some point and therefore this is the opportunity of a lifetime that I can take advantage of. so much money to own oil and because these oil ETFs and oil are down about the same 80 percent, let's call it, you would reasonably expect that on the way up they will go up the same and that's where the problem is and that's exactly what that I have put together in all the videos that you will see in the description because I try to warn you that you must understand what you are buying and this is the big surprise.
is oil a good buy right now using etfs uso usl uco dbo

More Interesting Facts About,

is oil a good buy right now using etfs uso usl uco dbo...

What if I told you that from April? This year's number 21, the boy, is above one hundred and fifty-six percent, which means that oil more than doubled. Why guess what's wrong with all of us? The USO ETF is actually down four percent, so think about it, it's crazy,

right

? Oil is up more than 150 percent and then USO, on the other hand, is down 4 percent, so let's understand what exactly is happening. I'm here to help you know there's a saying on the street: there's dumb money versus smart money when I told this to my wife and she couldn't.
is oil a good buy right now using etfs uso usl uco dbo
Believe it, but Google smart money vs. Dubb money. I promise you that you want to educate yourself because you want to be on the smart money side, so let's dive in to understand exactly why investors who should have expected to actually be over a hundred. fifty percent is actually down four percent, so let's go to the board to figure this out, so one very important thing that we need to understand about this oil ETF, like USO, is that they don't trade the physical product that they don't They own and then store. and then sell it later know that everything they do is true the futures market now how the futures market works in simple terms instead of buying

right

now you commit to buying oil in the future for example you can commit to buying oil at $30 and then add in two months, this is how the futures market works now, the biggest mistake retail investors make is that they think they are buying or at ten dollars, which is the current price, instead at buy these ETFs, they are indirectly buying oil, let's say at $30 two months from now, so that's the question you need to ask yourself when you buy these ETFs, you need to look at the future that we call the future curve and see what prices you are paying correctly.
is oil a good buy right now using etfs uso usl uco dbo
Are you happy buying $30 oil in two months? As of now, if you are not happy, then it is not a

good

idea to buy this ETF. If you are, then that is the case, so now you are going to ask me, Abdel, why is the price of oil at ten dollars today and in the future? The price in two months is thirty dollars, which can be explained by supply and demand. Imagine if there is so much oil available right now, because there is so much supply, oil prices are low, and in two months production will increase. will reduce and therefore we do not expect as much supply and then oil prices will rise.
Another way to think about it is to look at the cost of storage when we look at the price of oil and say okay, like it's ten now. dollars we do not take into account the cost of storing oil for two months. What if the cost of storing oil is really high? So let's say storing oil for two months costs twenty dollars, that means your equilibrium price is actually thirty dollars because you have to buy oil right now for ten dollars and then store it for twenty dollars for two months and then you can sell it for thirty dollars. to break even, so there is another very important thing to consider, which is whether these ETFs are trading. at a premium or at a discount, so let me explain to you that this ETF has a navigation net asset value, so let's say you own futures that are worth nine dollars, that is navigation, however, they could trade at the price of ten dollars, it is well, because everyone wants to own this ETF, so they pay a premium to own this ETF, in this case the premium is eleven point eleven percent, that's because there is a lot of demand, so you end up owning oil for worth nine dollars, but you're actually paying more. because you know you're trading it at a premium, so you might wonder if you would have fared if you had invested in energy stops or energy ETFs instead of these oil ETFs.
I'm not saying these oil ETFs should never be bought, obviously not. but before buying them you have to look at the future curve and then you have to cut to see if there are premium and discount trades that I recommend, that is at least a minimum analysis that you should do, okay? with energy stocks, an energy ETF has done much better, so since the bottom of the market on March 23 and energy ETFs like XLE, which I mentioned in my other video, see the description below, they're up 57%, okay if you look at the stocks, like overseas, they're up 64%, then you'll say, "Oh, I've done what's going on," like why are these energy stocks up so much compared to oil ETFs that fell, so with energy stocks the

good

thing is that they discount. future cash flows all the way into the future, so they don't just take into account all the prices one month from now two months from now, no, they take into account the forecasted oil prices all the way into the future and that's why you might be better off investing in energy stocks instead of investing in these oil ETFs.
I hope you enjoyed today's session. My goal is to really help you learn how to invest like a professional. I want you to definitely be a part of the smart money and then if you like what I've given you, make sure you like it, subscribe and then hit that notification bell. I really appreciate it, thank you very much for your support and I will see you next time.

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