360 Degrees of the U.S. Oil Fund

Gregg Greenberg, Roger Nusbaum and Howard Simons examine the new oil ETF.
Author:
Publish date:

Editor's Note: This special edition of "360 Degrees" highlights the new oil exchange-traded fund.

TheStreet.com

has always believed that offering a wide variety of opinions and viewpoints -- rather than a monolithic "house view" -- helps readers make better-informed investment decisions. In that spirit, we bring you "360 Degrees."

This feature takes advantage of our stable of reporters and contributors, who will offer analysis of specific stocks from all angles -- fundamental vs. technical, short-term trader vs. long-term investor.

Click on the following link for information about a free trial to

RealMoney.com.

Amex Launches Oil ETF, by Gregg Greenberg

The following is an excerpt from an April 10

Street.com

article.

The Amex struck black gold Monday with the release of the first U.S.-listed exchange-traded fund designed to track the price of oil.

The

United States Oil Fund

(USO) - Get Report

began trading Monday morning, opening at a price of $68.25, which was the closing price of the May oil futures contract on the New York Mercantile Exchange. Victoria Bay Asset Management, an Alameda, Calif., commodity-pool operator, will manage the new fund.

The objective of the USO is to reflect the spot price of West Texas Intermediate light, sweet crude delivered to an Oklahoma-based storage facility. The fund will invest in oil futures contracts traded on the New York Mercantile Exchange or other U.S. and foreign exchanges. It will also hold other interests, such as cash-settled options and forward contracts, in order to gain exposure to the price of oil.

Although the USO is traded on an exchange and can be sold short like an ETF, it is technically structured as a commodity pool, not a mutual fund.

To read the rest of the article, click here

.

Wait and Watch, by Roger Nusbaum

This was originally published in

RealMoney's Columnist Conversation

on 4/10/2006 at 10:10 AM EDT

The United States Oil ETF is trading today, finally. There have been plenty of articles on the product over the weekend, some telling us it's too risky, some explaining the nuts and bolts.

Should you buy it? I have no plans to buy this myself or for my clients today or tomorrow. I waited a long time before buying

streetTRACKS Gold Shares

(GLD) - Get Report

for clients. I wanted to get a feel for how the ETF traded (this is a squishy thing and not any sort of statistical measure I am talking about). I held on to a mining stock and only recently switched to GLD when I thought the ETF was the better hold.

Right now, I think the oil stocks are generally a better hold than the commodity. Oil has had a big move of late -- how much is left? Could be a lot, but I don't know. However, if oil stays where it is, $65-$70, for a while, earnings for the oil companies will be fantastic; this might cause stock prices to go up a lot more and dividends to be raised.

Occasionally oil will hit turbulence and investors nimble enough to trade those moves will find USO very handy.

I can see how a combination of USO and some oil stocks could turn out to be a good way to play this sector, but in general terms, I don't think owning a new product on day one is necessary -- the

PowerShares Water Resource Portfolio

(PHO) - Get Report

(bought on day two) was an exception for me.

A Nay Vote on the Oil ETF, by Howard Simons

This was originally published in

RealMoney's Columnist Conversation

on 4/10/2006 at 11:45 AM EDT

In my professorial days, I introduced myself to my classes as a former CIA agent. Dead silence. I went on to tell the little dears that my contribution to the art and science of intelligence was to hide things in the syllabus, because not even the KGB ever read the syllabus. They got the message.

The same is true for your typical investment prospectus. I read the one for USO. Whatever this issue does, it will do it without my participation. You are free to draw your own conclusions.

For a more detailed account of the problems Howard Simons sees with the U.S. Oil Fund, read his article on

RealMoney.

A Way to Play Volatility, by Michael Brush

This was originally published in

RealMoney's Columnist Conversation

on 4/10/2006 at 12:19 PM EDT

This is a great new trading vehicle.

I don't expect peace to break out in the Middle East anytime soon, unfortunately. And as Chris Edmonds

points out

, oil will continue to be quite volatile on even rumors of possible conflict or disruptions.

Roger Nusbaum is a portfolio manager with Your Source Financial of Phoenix, Ariz., and the author of Random Roger's Big Picture Blog. At the time of publication, Nusbaum had no positions in any of the securities mentioned in this column, although positions may change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Nusbaum appreciates your feedback;

click here

to send him an email. Howard L. Simons is president of Simons Research, a strategist for Bianco Research, a trading consultant and the author of

The Dynamic Option Selection System

. Under no circumstances does the information in this column represent a recommendation to buy or sell securities. While Simons cannot provide investment advice or recommendations, he appreciates your feedback;

click here

to send him an email.

TheStreet.com has a revenue-sharing relationship with Trader's Library under which it receives a portion of the revenue from purchases by customers directed there from TheStreet.com.

Brush is an award-winning New York-based financial writer. At the time of publication, Brush had no positions in any of the securities mentioned in this column, although positions may change at any time. In addition to writing for

RealMoney

, Brush has a weekly market column on

MSN Money

called Company Focus, and a column called Insiders Corner at InvestorIdeas.com. He has covered business and investing for

The New York Times

,

Money

magazine and the Economist Group. He studied at Columbia Business School in the Knight-Bagehot Fellowship program and the Johns Hopkins School of Advanced International Studies. He is the author of

Lessons From the Front Line

, a book that offers insights on investing and the markets based on the experiences of professional money managers.

Under no circumstances does the information in this column represent a recommendation to buy or sell stocks.

Brush appreciates your feedback;

click here

to send him an email.