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$40.47 0.66 (1.66%)
9/5/2008 4:15 PM

PROSHARES TR (DUG)

CAPS Rating:
**

Exchange traded fund

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Recs

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Avatar TheGarcipian (99.00) Submitted: 5/19/08 8:43 PM : Underperform Start Price: $48.28 DUG Score: 2.70

Shorting gas and petroleum products is not a good idea right now for several reasons: (1) Consumption during the summer always drives demand (and thus prices) up; (2) As long as Helicopter Ben continues cutting interest rates, the price of a barrel of oil will continue rising (all else considered the same) because oil is currently priced in American dollars, so as Uncle Ben devalues our money, the price of this commodity will rise in exact opposite fashion to counterbalance that perturbance of the currency exchange rates in the international market. I suspect we will see $4.50/gallon gasoline by the end of the summer (Aug/Sept. 2008) and perhaps higher if Bernanke keeps cutting rates, a needless and foolish action in my opinion.

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Avatar palaim (51.83) Submitted: 7/25/08 2:25 AM

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Just a humble opinion, since I'm only 2 days into CAPS...

You may be right medium term as people realise that oil won't be falling forever.
Short term however, I'm in the bubble bear camp as far as oil is concerned...

The correction in energy stocks, while SPARKED by the recent oil price correction, will continue for some time no matter what, more as a function of the general bear market. Oil stocks as a group had a tremendous run the past years, and now are coming in line with the rest of the market.

Once an uptrend is broken, it's not so easy to mend. Good earnings won't help, since people will argue it's the 'last gasp' and hammer them all the same...

Plus DUG is a good hedge if you do own oil stocks in your portfolio and want to last out the correction rather then outright sell them...

I think that refiners are a better way to play energy right now: people will still need their products as you say, and hopefully lower oil price will reduce their losses...

Good luck!

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