Timmothy Posey

Oil: Something I Have to Own Again

USO is based on the front month futures contract. It is horrible for holding long term due to "contango" (where the futures is more than the spot price). USL is a 12-month rolling ETF for crude and its best suited for those holding it more than 30 days. However, USO is best suited for "backwardation" (where the spot is higher than the futures)

DXO isn't great for holding long-term due to the leverage performance decay (2% minus 2% plus 2% isn't break-even.)

I'm holding USL long-term for the next 2-3 years. I think it will take longer than most expect for the reflation trade to occur. But when it happens we can see oil at $200/barrel due to the Fed monetization necessary for the gov't to buy Treasuries with the left hand while the right hand is selling it.