Companies like ExxonMobil (NYSE:XOM), Chevron (NYSE:CVX), and ConocoPhillips (NYSE:COP) will be better oil plays over the long-term than energy ETFs.
Are you ready for $4 gasoline? With the conflict in Libya and across the Middle East, you need to get ready -- and while the right investments could help you make money from rising energy costs, the wrong ones could leave you wondering what went wrong.
Oil prices are back at $100 per barrel, bringing back memories of the commodities boom that pushed oil almost to the $150 mark back in 2008. Many analysts believe the move up for oil may just be getting started. Yet if you want to profit from these big price moves -- and the potentially bigger ones that the future may bring -- you need to pick the best investments for the job. Unfortunately, some investment vehicles that seem like they should be ideal for the task have disappointed investors who didn't understand their peculiar quirks.
Energy ETFs and you
When exchange-traded funds first came out, they focused entirely on stocks. Even once sector ETFs became available, they still concentrated on the stocks within a particular industry.
That works perfectly fine for stock investors, and even as interest in commodities like oil grew, you could always buy ETFs that owned energy stocks. As long as the stocks traded roughly in line with oil prices, you could expect your energy stock ETF to go up when oil prices went up. However, as the BP (NYSE:BP) crisis reminded investors recently, sometimes company-specific news trumps the impact of commodity prices on a stock.
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