MSN Strategy Lab Journal – Initial Positions
August 3, 2008 7:00 am
Didn’t it used to be easier? I mean it seems that there are obstacles everywhere these days. From currency and commodities to consumers and credit…when will it end?
Maybe it won’t and this will be the environment we will have to adjust to. So, perhaps now is the time to turn those obstacles into opportunities.
With that in mind, we are adding to the portfolio a position that goes contrary to popular opinion that oil prices will provide unlimited profits to companies within the Oil & Gas sector. One of the best ways to do this is to take a shotgun approach rather than trying to pinpoint a particular stock. This way, the sector is covered and if the thesis holds, that will give the best exposure. Since the portfolio has $100,000 to invest, the purchase of DUG, an “Ultra” ETF from Proshares, essentially provides a 200% inverse exposure that tracks the Dow Jones U.S. Oil & Gas Index.
In essence, for every dollar invested, two dollars are working. If the index moves higher by 5%, this will move lower by 10%. If the index falls 5%, this will rise by 10%.
Positions: (DUG) (UUP) (ADBE) (ANSS) (ESI) ( SDS)
Read the Full Journal Entry – HERE.