wobatus

In Light of Peak Oil, Financial Diversification Is a Bad Idea

I think it is dangerous to assume that oil will go up forever. Maybe it has a ways to go, but to go undiversified due to a belief in peak oil could be very dangerous. There is a lot of recoverable oil which starts to come on line at current prices or higher. And whether due to short-sightedness or environmental concerns, the U.S. is in essence hordeing reserves off-shore, in Alaska and in shale. At some price of oil, the political will may emerge to tap that oil. There is also the large Brazil find, tar sands, etc.

One of the big reasons for the current oil increase is large amounts of institutional money being allocated in that area, partially due to the dollar, but also because more investors now go where few used to go.

But if you look at history of oil, there have been boom and bust cycles for years. It is a commodity after all.

Go all in if you like, but be careful out there.