Two Coal Funds That Add Octane
You have probably heard that the U.S. is the Saudi Arabia of coal, which makes an argument for preferring the Market Vectors product. If the U.S. is where the coal is, it stands to reason that as the world comes to need more energy, it will need more coal. Whether because of perception or reality, this could cause U.S. coal companies to outperform their foreign peers.
Either fund should be expected to be volatile. The chart shows that, as the broader energy sector -- as measured by the Energy Select SPDR (XLE) -- has gone down 25% at its worst, KOL dropped 45% at its trough. This can work on the upside too. In 2007, XLE was up 40% and BTU, as a proxy for coal stocks, jumped 60%.
As the current bear market works through the process of finding a bottom, which could take several months, it may not make sense to add a lot of octane to a diversified portfolio. But if that's your aim, natural resources might trump technology.
| Power of Investing
Coal vs Coal
|Click here for larger image.|
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV