Events Calendar
In This Section
Matsos bottling a dressing that’s selling in 25 states
Economic survey: Job losses to bottom out in first quarter
Ohio gas prices up 12 cents from last week
SCORE offers wide variety of workshops
After 30 years at the helm of Akron Children's, Considine still looks to future
New version of Mozilla Thunderbird landing soon
Most Read Stories
Police accuse bank robbery suspect of gobbling up note (with dashcam video)
Victim of beating in Kent last week is declared dead at Akron hospital
Akron man killed in crash on his street
Browns find another way to lose
Can DNA tests free ex-Akron captain?
Dad accused of forcing son into field, killing him
Man found dead in North Akron home is identified
After 30 years at the helm of Akron Children's, Considine still looks to future
Blogs:
Pets:
Cat-loving chihuahua suckles seven abandoned kittens
The Heldenfiles:
Sunday Notebook
Patrick McManamon:
Browns sick after sick loss in Detroit
Akron Zips:
Zips advance to Sweet Sixteen
Tribe Matters:
Seven players added to Tribe’s 40-man roster
Cleveland Browns:
Post-game defensive quotes
Kent State Sports:
Kent State defeats Rochester College, 63-44
Cleveland Cavaliers:
Gameblog: Cavs vs. Philadelphia 76ers
Buckeye Blogging:
OSU – Michigan college football rivals meet in Baghdad
Varsity Letters:
Four area football teams play tonight
All Da King's Men:
The Onion, By Any Other Name…
Blog of Mass Destruction:
Will Health Care Reform Pass?
Akron Law Café:
Health Care Financing Reform: (70) Savings in Medicare Advantage
See Jane Style:
Vintage Chic
Car Chase:
TIME TO GET YOUR COLLECTOR CARS WINTERIZED
Let's Talk Real Estate:
Faye Dunaway to be Evicted?
Ohio Travels with Betty:
Monique asks how to get tickets for the Polar Express.
Sound Check:
Steely Dan Plays "The Royal Scam" at E.J. Thomas Hall
HRLite House:
Personal Rant – You are All Wrong About Jobs, or the Lack of Jobs, Being the Reason People Do Not Live in NEO
Akron Gamer:
Nintendo's Mario endures even as games come and go
Some say it's not wise to purchase shares now
By Jim Mackinnon
Beacon Journal business writer
Published on Friday, Jun 27, 2008
Upset about all those so-called oil company windfall profits with each $4 gallon of gasoline you pump into your vehicle?
And what about your natural gas and electricity bills?
Instead of complaining about rising energy costs, people can buy stock in energy companies, energy-sector mutual funds or exchange-traded funds and take the risk that they will likely profit if energy prices keep rising, says economist and forecaster Ken Mayland, the Pepper Pike-based owner of ClearView Economics.
''You don't have to be a victim. You don't have to play the victim,'' Mayland said. ''This is stuff I've told audiences the past two years. . . . I said, create a natural hedge.''
Anyone who bought 100 shares of ExxonMobil stock a year ago, for instance, would have offset up to a $1.50 a gallon rise in gasoline as the oil company stock appreciated at one point by $9 a share for a gain of $900, Mayland said. He said he owns energy company stocks, though not ExxonMobil.
At $86.41 a share as of Thursday's close, 100 shares of ExxonMobil stock would be valued at $8,641.
Shares are up 7.4 percent from a year ago — but down 7 percent since Jan. 1, even as crude oil prices increased.
Share prices hit a 52-week high of $95 in December and a 52-week low of $81.44 in early February.
While $8,000 to $10,000 is not a trivial sum, the size of that investment is within the reach of a great many families, Mayland said.
(Some mutual fund companies have policies that allow investors to buy their funds for as little as $50 to $100 a month. Investors can also buy smaller amounts of individual shares of a company stock, but they will also incur costs by paying transaction fees to buy and sell shares.)
''This is not theoretical, pie-in-the-sky stuff,'' Mayland said. ''What you lose at the pump, you'll gain in value of your stock portfolio.''
The downside risk is that if energy prices fall, then the value of any energy company shares or related mutual fund would also fall, Mayland said.
''If oil prices fall a lot, you'll be shelling out a lot less at the pump but the value of your investment will go down a lot. That's the nature of a hedge,'' Mayland said.
A financial planner cautioned against making a move to buy high-flying energy stocks and funds now.
Keep in mind the bursting of the tech stock bubble and what is currently happening to once high-flying housing prices.
Plus, people who own investments such as broadly diversified mutual funds may already have exposure to the energy sector and don't need to increase their exposure.
Buying energy stocks or energy-related mutual funds now, particularly with many oil and energy company stock prices at or near record highs, would be highly speculative, said Tom Presper, financial planner at The Millennial Group in Akron.
Anyone who invests in energy company stocks needs to use money that he or she can afford to lose without changing their lifestyle, he said.
''Our approach is not speculation. We look at broad diversification of assets,'' Presper said. ''It's not something we would recommend.''
Jim Mackinnon can be reached at 330-996-3544 or jmackinnon@thebeaconjournal.com.
Upset about all those so-called oil company windfall profits with each $4 gallon of gasoline you pump into your vehicle?
And what about your natural gas and electricity bills?
Instead of complaining about rising energy costs, people can buy stock in energy companies, energy-sector mutual funds or exchange-traded funds and take the risk that they will likely profit if energy prices keep rising, says economist and forecaster Ken Mayland, the Pepper Pike-based owner of ClearView Economics.
''You don't have to be a victim. You don't have to play the victim,'' Mayland said. ''This is stuff I've told audiences the past two years. . . . I said, create a natural hedge.''
Anyone who bought 100 shares of ExxonMobil stock a year ago, for instance, would have offset up to a $1.50 a gallon rise in gasoline as the oil company stock appreciated at one point by $9 a share for a gain of $900, Mayland said. He said he owns energy company stocks, though not ExxonMobil.
At $86.41 a share as of Thursday's close, 100 shares of ExxonMobil stock would be valued at $8,641.
Shares are up 7.4 percent from a year ago — but down 7 percent since Jan. 1, even as crude oil prices increased.
Share prices hit a 52-week high of $95 in December and a 52-week low of $81.44 in early February.
While $8,000 to $10,000 is not a trivial sum, the size of that investment is within the reach of a great many families, Mayland said.
(Some mutual fund companies have policies that allow investors to buy their funds for as little as $50 to $100 a month. Investors can also buy smaller amounts of individual shares of a company stock, but they will also incur costs by paying transaction fees to buy and sell shares.)
''This is not theoretical, pie-in-the-sky stuff,'' Mayland said. ''What you lose at the pump, you'll gain in value of your stock portfolio.''
The downside risk is that if energy prices fall, then the value of any energy company shares or related mutual fund would also fall, Mayland said.
''If oil prices fall a lot, you'll be shelling out a lot less at the pump but the value of your investment will go down a lot. That's the nature of a hedge,'' Mayland said.
A financial planner cautioned against making a move to buy high-flying energy stocks and funds now.
Keep in mind the bursting of the tech stock bubble and what is currently happening to once high-flying housing prices.
Plus, people who own investments such as broadly diversified mutual funds may already have exposure to the energy sector and don't need to increase their exposure.
Buying energy stocks or energy-related mutual funds now, particularly with many oil and energy company stock prices at or near record highs, would be highly speculative, said Tom Presper, financial planner at The Millennial Group in Akron.
Anyone who invests in energy company stocks needs to use money that he or she can afford to lose without changing their lifestyle, he said.
''Our approach is not speculation. We look at broad diversification of assets,'' Presper said. ''It's not something we would recommend.''
Jim Mackinnon can be reached at 330-996-3544 or jmackinnon@thebeaconjournal.com.
Comments
Click here to post your comments
