Oil is still at an all-time low. And everything still pretty much runs on oil. Even if everybody goes electric car, the cars still require oil to produce. AND there's only so much of the stuff in the ground.
I've done some research. The $GSG iShares Commodities ETF has been utterly brutalized over the past 10 years (seen here), so investing in something related to commodities does indeed give me pause.
However, here's 10 years of past performance of the SPDR Oil and Gas ETF vs. the S&P 500 (June 1 to June 1):
| Year | S&P500 | SPDR Oil&Gas |
|---|---|---|
| 2006-2007 | 23.30% | 36.30% |
| 2007-2008 | -8.50% | 39.30% |
| 2008-2009 | -31.90% | -43.80% |
| 2009-2010 | 4.38% | 11.66% |
| 2010-2011 | 22.70% | 49.30% |
| 2011-2012 | -2.78% | -22.78% |
| 2012-2013 | 27.60% | 32.80% |
| 2013-2014 | 17.86% | 27.57% |
| 2014-2015 | 9.70% | -35.43% |
| 2015-2016 | 0.60% | -27.63% |
| 2016-2017 | 15.75% | -8.08% |
| ---- | ---- | ---- |
| Average | 7.16% | 5.38% |
| Median | 9.70% | 11.66% |
| Minimum | -31.90% | -43.80% |
| Maximum | 27.60% | 49.30% |
| Std dev | 0.174 | 0.339 |
In summary:
- Oil stocks are at an all time low
- Everything still runs on oil
- It is a non-renewable resource
- Past performance is somewhat respectable when seen side by side with the S&P 500.
Let's say my retirement fund is this:
- 40% $VTI (Vanguard total stock market ETF)
- 20% $VXUS (Vanguard total international stock market ETF)
- 40% $BND (Vanguard total bond ETF)
What about diversifying into an Oil ETF like SPDR Oil & Gas $XOP like this:
- 37% $VTI (Vanguard total stock market ETF)
- 18% $VXUS (Vanguard total international stock market ETF)
- 5% $XOP (SPDR Oil & Gas ETF)
- 40% $BND (Vanguard total bond ETF)
And then rebalancing into that 5% target weighting once per year, as the prices change. I know this "trying to time the market" in that it is motivated by oil's ridiculous low. But I'm willing to take the chance as I'm in my mid 30s and it has the possibility to boosting my overall return.
What do you guys think?
Submitted July 25, 2017 at 08:43PM by ThePastIsPrelude http://ift.tt/2uXtndC
