Going long on WTI

Jeffrey A. Ogilvie on

We had a member of PIG (Pennsylvania Investment Group)
mention that we should start building a position in crude
oil. First, is USO an approved ETF with Bivio? We do not
want any tax headaches.
Second, are we just better off with E&P companies such as
Exxon, Chevron, etc. Any opinions, thoughts, or advise would
be greatly appreciated.

Jeff Ogilvie
Pennsylvania Investment Group

Laurie Frederiksen on

Hi Jeff,

It's a good thing you asked because USO is an investment that you would not be able to use bivio to handle accounting and tax reporting for:

The first clue is in its actual name which I found on Yahoo:

United States Oil Fund LP

The LP as part of its name stands for Limited Partnership. Anything with the word Partnership in its name is a problem.

The second clue you can find if you go to the website put together by the funds owners:

http://www.unitedstatescommodityfunds.com/fund-details.php?fund=uso

First, their name: unitedstatescommodityfunds.com. Commodity ETF's are a problem.

Second, in the lower left side of the webpage you'll see this box:

Inline image 1

Any investment that issues a K-1 is a problem.

The energy field is certainly interesting now, but it is full of investments that are partnerships (not stocks). If you or anyone else has any further questions about tickers, we're happy to do the research to let you know if they will cause your club any problems before you purchase them.

You can find many of the problem tickers listed on our Before You Invest page and on the links that are shown on that page:

Before You Invest

Fortunately there are also many interesting companies that are not partnerships like XOM, COP, PSX, NOV, SLB etc.. They provide your investment club lots of opportunities to invest in this sector without causing accounting and tax reporting problems.

Let us know your thoughts. I'm sure there are many clubs who are considering whether this is a good time to take a long term position in energy companies. They certainly seem to be on sale!

Laurie Frederiksen
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On Fri, Jan 9, 2015 at 7:19 AM, Jeffrey A. Ogilvie <jaogilvie@atlanticbb.net> wrote:

We had a member of PIG (Pennsylvania Investment Group)
mention that we should start building a position in crude
oil. First, is USO an approved ETF with Bivio? We do not
want any tax headaches.
Second, are we just better off with E&P companies such as
Exxon, Chevron, etc. Any opinions, thoughts, or advise would
be greatly appreciated.

Jeff Ogilvie
Pennsylvania Investment Group

Noah J. Ronquillo on

Buying Oil now is wrong. Oil continues to be pumped, estimates are to high, and downgrades will continue on Oil companies. Wait another couple of earnings reports.

Hari Krishna
Noah J Ronquillo

On Friday, January 9, 2015 4:20 AM, Jeffrey A. Ogilvie <jaogilvie@atlanticbb.net> wrote:

Mike Jones on

My club sold Chevron to lock in a large gain a year ago because earnings declined for 3 consecutive quarters. We purchased Suncor this year and it has now demonstrated a similar drop in earnings. I agree with Noah.

Mike Jones

Wall$treet Wannabees'

Bloomington, MN

From: Noah J. Ronquillo via bivio.com <user*13075900001@bivio.com>
To: "club_cafe@bivio.com" <club_cafe@bivio.com>
Sent: Friday, January 9, 2015 9:10 AM
Subject: Re: [club_cafe] Going long on WTI

Buying Oil now is wrong. Oil continues to be pumped, estimates are to high, and downgrades will continue on Oil companies. Wait another couple of earnings reports.

Hari Krishna
Noah J Ronquillo

On Friday, January 9, 2015 4:20 AM, Jeffrey A. Ogilvie <jaogilvie@atlanticbb.net> wrote:

Roy Chastain on

Where does your crystal ball tell you when we'll hit the bottom, and at what price?

This seems a perfect time for a Buffett-like purchase, but then I'm not a market timer nor do I have a crystal ball. Which company to buy seems to me to be the main question.

Roy
"We make a living by what we get, we make a life by what we give." (Ronald Reagan, 8/8/1992)

On Jan 9, 2015, at 7:10 AM, Noah J. Ronquillo via bivio.com <user*13075900001@bivio.com> wrote:

Buying Oil now is wrong. Oil continues to be pumped, estimates are to high, and downgrades will continue on Oil companies. Wait another couple of earnings reports.

Hari Krishna
Noah J Ronquillo

On Friday, January 9, 2015 4:20 AM, Jeffrey A. Ogilvie <jaogilvie@atlanticbb.net> wrote:

We had a member of PIG (Pennsylvania Investment Group)
mention that we should start building a position in crude
oil. First, is USO an approved ETF with Bivio? We do not
want any tax headaches.
Second, are we just better off with E&P companies such as
Exxon, Chevron, etc. Any opinions, thoughts, or advise would
be greatly appreciated.

Jeff Ogilvie
Pennsylvania Investment Group

Noah J. Ronquillo on

Crystal ball? Ha ha. Do your home work, listen to the conference calls. What I have heard oil companies are cutting back on capital expenditures but continue to pump like mad from their cost effective operations. The more oil pumped, the lower energy companies earnings go down.

Hari Krishna
Noah J Ronquillo

On Friday, January 9, 2015 8:51 AM, Roy Chastain <roy12@me.com> wrote:

Where does your crystal ball tell you when we'll hit the bottom, and at what price?

This seems a perfect time for a Buffett-like purchase, but then I'm not a market timer nor do I have a crystal ball. Which company to buy seems to me to be the main question.

Roy
"We make a living by what we get, we make a life by what we give." (Ronald Reagan, 8/8/1992)

On Jan 9, 2015, at 7:10 AM, Noah J. Ronquillo via bivio.com <user*13075900001@bivio.com> wrote:

Buying Oil now is wrong. Oil continues to be pumped, estimates are to high, and downgrades will continue on Oil companies. Wait another couple of earnings reports.

Hari Krishna
Noah J Ronquillo

On Friday, January 9, 2015 4:20 AM, Jeffrey A. Ogilvie <jaogilvie@atlanticbb.net> wrote:

We had a member of PIG (Pennsylvania Investment Group)
mention that we should start building a position in crude
oil. First, is USO an approved ETF with Bivio? We do not
want any tax headaches.
Second, are we just better off with E&P companies such as
Exxon, Chevron, etc. Any opinions, thoughts, or advise would
be greatly appreciated.

Jeff Ogilvie
Pennsylvania Investment Group

Mike Jones on

When the petroleum company insiders stop selling their shares and either buy or hold, it might be time to reconsider. Otherwise, you are betting that world economic markets and the price of oil are going to rise and carry you to the heavens. That seems unlikely right now.

Warren Buffett doesn't try to time the market and guess at lows, so neither should we. He looks for companies with earnings that should grow but whose stock is presently undervalued. The petroleum companies do not appear to be undervalued by much.

Mike Jones

From: Roy Chastain <roy12@me.com>
To: club_cafe@bivio.com
Sent: Friday, January 9, 2015 10:51 AM
Subject: Re: [club_cafe] Going long on WTI

Where does your crystal ball tell you when we'll hit the bottom, and at what price?

This seems a perfect time for a Buffett-like purchase, but then I'm not a market timer nor do I have a crystal ball. Which company to buy seems to me to be the main question.

Roy
"We make a living by what we get, we make a life by what we give." (Ronald Reagan, 8/8/1992)

On Jan 9, 2015, at 7:10 AM, Noah J. Ronquillo via bivio.com <user*13075900001@bivio.com> wrote:

Buying Oil now is wrong. Oil continues to be pumped, estimates are to high, and downgrades will continue on Oil companies. Wait another couple of earnings reports.

Hari Krishna
Noah J Ronquillo

On Friday, January 9, 2015 4:20 AM, Jeffrey A. Ogilvie <jaogilvie@atlanticbb.net> wrote:

We had a member of PIG (Pennsylvania Investment Group)
mention that we should start building a position in crude
oil. First, is USO an approved ETF with Bivio? We do not
want any tax headaches.
Second, are we just better off with E&P companies such as
Exxon, Chevron, etc. Any opinions, thoughts, or advise would
be greatly appreciated.

Jeff Ogilvie
Pennsylvania Investment Group

Nicolas Kochnitzky on

Oil is still expensive. It's heading South. Working in Geneva, Switzerland, where most of the physical oil trade takes place. We currently budget oil prices (WTI) between $40 and $45 this year. Over supply, slow demand, slowing economies in large non producing countries... Outlook is negative for a while still. Also factor in geopolitical issues. Low oil means that Russia, which is already experiencing a deeper recession than in 2008, will be bankrupt in 8 months. This is one way to get Putin to revisit his case about Ukraine. Why would Saudis let oil slip this low? It allows them to prevent the re-emergence of Iran as a power player in the M-E. As a compensation to them accepting to tighten their belt some more by not lowering their output, the US will continue to ensure their security.

Last but not least, beware of shale oil, frackers etc which have entered the game late. Read their balance sheets carefully as myriads have unreasonably loaded up on debt with oil price forecasts at approx 100/bbl... Trillions of high yield debt is outstanding in this sector and will cause a seismic shock for the sector if oil prices stay so low for too long.

Cheers.

Nicolas

Envoye de mon iPhone

Le 9 janv. 2015 a 16:10, "Noah J. Ronquillo via bivio.com" <user*13075900001@bivio.com> a ecrit :

Buying Oil now is wrong. Oil continues to be pumped, estimates are to high, and downgrades will continue on Oil companies. Wait another couple of earnings reports.

Hari Krishna
Noah J Ronquillo

On Friday, January 9, 2015 4:20 AM, Jeffrey A. Ogilvie <jaogilvie@atlanticbb.net> wrote:

We had a member of PIG (Pennsylvania Investment Group)
mention that we should start building a position in crude
oil. First, is USO an approved ETF with Bivio? We do not
want any tax headaches.
Second, are we just better off with E&P companies such as
Exxon, Chevron, etc. Any opinions, thoughts, or advise would
be greatly appreciated.

Jeff Ogilvie
Pennsylvania Investment Group

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