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We made two buys yesterday in the oil and natural gas sector which we have detailed in that section today. We will look to add to all of our positions in the portfolio moving forward, but yesterday we wanted to diversify a bit and that is exactly what we did. To be clear with readers, we have diversified our portfolio and structured it to protect us somewhat in this environment, however we are still vulnerable to a downturn should the fiscal cliff not be averted. We do not foresee that event, but we recognize its possibility and will keep a close eye on positions in case some risk needs to be taken off of the table.

Oil & Natural Gas

Today we want to provide readers with an update on what we did yesterday in our portfolios. First we will discuss our retirement portfolio where we purchased shares of PDC Energy (NASDAQ:PDCE) which is another play in Ohio's Utica shale. The company is in the same area where many of the great results have been pouring in and we had hoped to make this purchase in the high $20s rather than here in the mid $30s, but we received drilling results from another player in the Utica and that gave shares a serious pop as investors were reminded of the promise of the company's property. This is not a one trick pony, as they have attractive properties in other plays, but our focus in the short-term is on the Utica as the company should have results to report in the not too distant future. We will provide more color on the other areas of operation for readers in the next few days. We are not finished purchasing shares, as we plan to add to the position over time and make this a long-term play.

In our personal portfolio which is taxable we added Rosetta Resources (NASDAQ:ROSE) during yesterday's session. We missed out on getting shares at the lows for the day, but saw an attractive enough entry point to pull the trigger and actually turn a profit for the day. The shares fell below $44/share yesterday before quickly bouncing back and we like these levels to play a bounce higher in both the short and long-term. The Eagle Ford is one of our favorite shale plays, but should this one rally significantly from here in the short-term we would be quick to book the gains and redeploy the capital elsewhere.

Copper

Freeport-McMoRan (NYSE:FCX) investors have seen shares set up camp around this $38/share level. The stock just kind of sits there, waiting on news to make a move and that is exactly what we think it is waiting for. Looking at a chart, it sure appears that the shares have positioned themselves for a breakout move in one direction or the other. Based off of the calendar and near-term catalysts, we think that the fiscal cliff resolution will be that news event and that the direction will be up. Call it a guess, estimate or even a guesstimate but that is how we see it at this time and barring any negative news out of Asia or Africa concerning the company's assets we believe this is probable.

Refiners

Valero (NYSE:VLO) saw shares rise $0.32 (1.00%) yesterday to close at $32.21/share after setting a new 52-week high yesterday. Many thought that the company's bullish streak was coming to an end a month or so ago, but the stock found support as we discussed then and has rallied back to push into new territory. Refiners should benefit long-term from new oil production in the lower 48, and those lower prices domestically should continue to support high margins for the refiners' business for years to come. We believe that the east coast refiners are about to see margin expansion as their input costs begin to fall as oil from the Utica begins to flow and becomes available to them over the next few years in growing quantities.

Coal

James River Coal Company (JRCC) saw shares back off yesterday, and although many did not like our call to take profits in the play we realize that sometimes we have to act as the parent in these situations. One cannot fall in love with a stock, and it is our experience that if you should it is best to simply sell the position the moment you realize that love as making decisions regarding the stock is difficult when the attachment is made. We have given readers two names today which were new buys for our portfolios and believe both would make excellent plays for transferring capital from this trade to the oil and natural gas trade. It still may not be the popular call at this time, even after the move downwards, but it is the right trade after the huge rally.

Disclosure: I am long PDCE, ROSE. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.