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Why An Oil ETF May Offer Extraordinary Rewards For The Risk

03 January 2012 at 1:08 pm by Staff     Bookmark and Share    Follow EtfExpert on Twitter

It’s not unusual for optimism to reign supreme on the first trading day of a new year. What’s more, considering just how far U.S. treasury yields have dropped, one might expect a shift out of the “panic room” and into the “risk trade.”

That said, there are many reasons to rein in one’s enthusiasm. For instance, even if Europe unites in a comprehensive effort to quell its credit crisis, the region is likely to battle economic contraction (a.k.a. recessionary forces) for most of 2012.

Of course, in spite of limited growth in Europe, slow growth in the U.S. and slowing growth in the emerging nations, the operative word is still “growth.” That means there will be demand for energy. And with ongoing uncertainty in the oil-producing countries of the Middle East, one should not be surprised by price spikes in Brent crude oil.

Consider the following: Extraordinary changes to European leadership and slower growth in Asia caused iPath DJ Total Commodity (DJP) to lose -13% year-over-year. Yet the U.S. Brent Oil Fund (BNO) gained 23% over the same period. In other words, “black gold” may still rise in price, even with geopolitical uncertainties.

Can Middle East Rumblings Push Brent Crude Higher? – Staff, Money Control
ETF Focus: Corporate Bonds – Tom Lydon, ETF Trends
Why This Agriculture ETF Could Outperform In 2012 – Brian Pacampara, Motley Fool
Three Micro Cap ETFs To Play The January Effect – Best Performing ETFs – Staff, Stock Market Review
Does It Still Make Sense To Diversify Internationally? – Richard Band, Investor Place

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Disclosure Statement: ETF Expert is a web log (”blog”) that makes the world of ETFs easier to understand. Gary Gordon, MS, CFP is the president of Pacific Park Financial, Inc., a Registered Investment Adviser with the SEC. Gary Gordon, Pacific Park Financial, Inc, and/or its clients may hold positions in the ETFs, mutual funds, and/or any investment asset mentioned above. The commentary does not constitute individualized investment advice. The opinions offered herein are not personalized recommendations to buy, sell or hold securities. At times, issuers of exchange-traded products compensate Pacific Park Financial, Inc. or its subsidiaries for advertising at the ETF Expert web site. ETF Expert content is created independently of any advertising relationships. You may review additional ETF Expert disclosure details here.

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