Vanguard Energy ETF (VDE) - Good Time to Jump In?

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Cornflakey
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Vanguard Energy ETF (VDE) - Good Time to Jump In?

Post by Cornflakey »

VDE is down to $73, approx 26% from 52-week high and almost half its $140 all time high a few years back in 2014. VDE has not been this cheap since 2009.

Realize oil is in a bear market but given this would be a buy and hold investment for the next 20+ years....

Also pays relatively juicy dividends. Seems like a no-brainer to me.

Any great reasons not to jump in? Thanks for your insights!

https://investor.vanguard.com/etf/profile/VDE
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bluquark
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Re: Vanguard Energy ETF (VDE) - Good Time to Jump In?

Post by bluquark »

For a counternarrative, you may be interested in this thread where an investor dislikes energy stocks so much they're considering replacing their total market fund with a fund that includes everything but energy: viewtopic.php?t=285495 . There are also generic arguments against non-total-market investment strategies in there.
70/30 portfolio | Equity: global market weight | Bonds: 20% long-term munis - 10% LEMB
wootwoot
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Re: Vanguard Energy ETF (VDE) - Good Time to Jump In?

Post by wootwoot »

bluquark wrote: Thu Aug 15, 2019 8:15 pm For a counternarrative, you may be interested in this thread where an investor dislikes energy stocks so much they're considering replacing their total market fund with a fund that includes everything but energy: viewtopic.php?t=285495 . There are also generic arguments against non-total-market investment strategies in there.
Sounds like a great time to buy, blood is in the streets.
Silk McCue
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Re: Vanguard Energy ETF (VDE) - Good Time to Jump In?

Post by Silk McCue »

It has been a historical pitiful performer based upon the link you shared.

Vanguard Total Stock Market is a buy and hold for 20 years. This fund is not.

Cheers
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tooluser
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Re: Vanguard Energy ETF (VDE) - Good Time to Jump In?

Post by tooluser »

VDE is 10% of my 10-speed portfolio and is by far the biggest (and only) loser, by share price. I have to add more shares to keep it at 10%.

However, that was not the case when it was $140 a share. Back then it was a big winner, near if not at the top. I had to buy more shares of everything else to keep it at 10%.

It was recommended by Scott Burns as a proxy for commodities in general. He recommended it near the "peak oil" craze before hydraulic fracturing took off and "ruined" the market. The oil market is certainly different now.

VDE is certainly volatile.

I have no prediction for the future. Not planning on selling mine, it pays a good yield/dividend.
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Tyler Aspect
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Re: Vanguard Energy ETF (VDE) - Good Time to Jump In?

Post by Tyler Aspect »

Sector funds are very volatile. Stay with broadly diversified stock and bond index funds. It is never a good time to jump into a sector fund.
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Re: Vanguard Energy ETF (VDE) - Good Time to Jump In?

Post by lawman3966 »

Cornflakey wrote: Thu Aug 15, 2019 7:47 pm
Any great reasons not to jump in? Thanks for your insights!

https://investor.vanguard.com/etf/profile/VDE
How about this for starters: market timing fails for most people most of the time.

Second possible reason: there is no reason to believe that I, you, or anyone else on this board would know better than the sum total of market forces that placed VDE's price at its current level what the price should be instead.
92irish
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Re: Vanguard Energy ETF (VDE) - Good Time to Jump In?

Post by 92irish »

Yes - it would be market timing, but I would have to agree with you that energy seems to be in a deep bear market. I am of the opinion that energy will be needed for a very long time. I must confess that I have purchased some VDE recently as a small portion of my portfolio. One thing to remember is that VDE only has domestic energy stocks and there are some really good global companies which are not included (e.g. BP, Shell, Total, as an example) that have really nice dividend yields. Those international energy majors are in the Vanguard active fund (VGENX), although it has a higher expense ratio than VDE. You always could hold some shares of the international stock ADRs which is what I have done.
asif408
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Re: Vanguard Energy ETF (VDE) - Good Time to Jump In?

Post by asif408 »

92irish wrote: Fri Aug 16, 2019 12:25 pm Yes - it would be market timing, but I would have to agree with you that energy seems to be in a deep bear market. I am of the opinion that energy will be needed for a very long time. I must confess that I have purchased some VDE recently as a small portion of my portfolio. One thing to remember is that VDE only has domestic energy stocks and there are some really good global companies which are not included (e.g. BP, Shell, Total, as an example) that have really nice dividend yields. Those international energy majors are in the Vanguard active fund (VGENX), although it has a higher expense ratio than VDE.
+1. If you want to tilt to energy globally and don't want an active fund, you could try ETFs FILL or IXC, which are global energy funds. Energy stocks outside the US have done even worse in the last 10-15 than US energy stocks, plus you would ensure broader diversification in the energy sector. FWIW, I own FILL.
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Re: Vanguard Energy ETF (VDE) - Good Time to Jump In?

Post by assetalloc »

Silk McCue wrote: Thu Aug 15, 2019 8:20 pm It has been a historical pitiful performer based upon the link you shared.

Vanguard Total Stock Market is a buy and hold for 20 years. This fund is not.

Cheers
The energy sector has definitely been acting an uncorrelated asset with the larger stock market for the last several years. There has been lots of capital loss in the oil and gas sector in the last 10+ years. Last time I got this interested in the sector was in 2007-8 before it peaked. Those were some golden years for the sector.

Fast forward 11 years, I agree that I have started to hear on CNBC "traders on their fingers to sell OIL" on any Geo-political news. If one is buying because of "blood on the street" - I am not sure if its the beginning of blood-shed or in the middle or the end.

Wearing my market timing hat, I expect the bloodshed to continue for 2019. Afterall bears on VDE need to have an awesome year too :-)

I am eyeing on FSNGX (Natural gas) which is even more targeted sector than larger energy. FSNGX hasn't seen sunlight since 2008. And everyone has stopped talking about it (except me - starting on it)

Here is an interesting video on the subject:

https://youtu.be/8mLx0cpk-fo
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Cornflakey
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Re: Vanguard Energy ETF (VDE) - Good Time to Jump In?

Post by Cornflakey »

OP here - thanks all for the thoughtful replies. I went ahead and jumped in on Weds (the -800pt day for the DJIA).

Limit order executed at $74.80 - week low was Thurs at $73.15, but I'm nor crying about jumping the gun! 😊

I take the points about market timing but I respectfully disagree - making a sector investment at a very low price to hold for the long haul does not qualify as market timing in my opinion.

Just to give a sense of my portfolio:
36, live in NJ work in NYC, income $175k last year
$186k in 401k (large cap and small mid cap indexes with Voya, maxing out with 7% employer match)
$12k in ROTH IRA ( VTSAXmax ing out, backdoor since income exceeds limits)
$116k in taxable (vanguard sector funds as a means to overweight in bearish sectors- I have never sold an investment - ever!)
$4k in employers ESPP program (5% Discount)
Owe $299k on $360k mortgage, 15yr with 2.8% rate and 12 years to completion.
Student loan paid off and no other debt.

I know BHs hate sector investing, but I am following the BH philosophy in my tax deferred accounts. Trying to take a little more active role in my very long term investing in my taxable account, but only using low cost vanguard ETFs. I like to feel like I have a little discretion in my investment decisions since most of it is just on autopilot in my retirement accounts.

I expect to be hauled over the coals, but that's where I'm at. Thanks again for all your insights - I love reading this forum.
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tooluser
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Re: Vanguard Energy ETF (VDE) - Good Time to Jump In?

Post by tooluser »

Oil prices right now are ~$58 a barrel. I remember both tales of "oil will exceed $100 forever", and "oil will never be above $40 again". Nobody knows nuthin'. Best of luck to us all.

I do like cheap gas. It's hard to feel too bad if you play all ends.
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nedsaid
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Re: Vanguard Energy ETF (VDE) - Good Time to Jump In?

Post by nedsaid »

Cornflakey wrote: Thu Aug 15, 2019 7:47 pm VDE is down to $73, approx 26% from 52-week high and almost half its $140 all time high a few years back in 2014. VDE has not been this cheap since 2009.

Realize oil is in a bear market but given this would be a buy and hold investment for the next 20+ years....

Also pays relatively juicy dividends. Seems like a no-brainer to me.

Any great reasons not to jump in? Thanks for your insights!

https://investor.vanguard.com/etf/profile/VDE
In the past, I would have been with you and jumped in with both feet. There was a cycle of low energy prices and abundant supply going to shortages and high prices and then back again. I have heard from my broker the saying that the cure for high gas prices is high gas prices. What he meant by that is high prices provided the incentive and the resources for future exploration.

Things have changed, mainly hydraulic fracking and horizontal drilling which have opened up vast reserves of oil which before were unrecoverable. This process also releases natural gas which also is now in abundance. There are large formations of the semi-porous rock in South Dakota and Texas. I was reading that the more they drill, the more they find. These formations are also in UK and in Israel and probably all over the world. The frackers are profitable when the oil prices are in the low forties now. So when oil prices start getting about $70 a barrel, the frackers start drilling again. This may have set a ceiling on the price of oil for many years to come. Not sure oil companies, even the majors, are sure fire investments any more.

There is also increased environmental risk as oil companies search in remote areas of the world and in deeper and deeper waters. We all know what happened with British Petroleum and the Gulf of Mexico.

I am a shareholder of Exxon-Mobil and have been for many years. Not sure it is going to be a great investment going forward.
A fool and his money are good for business.
Valuethinker
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Re: Vanguard Energy ETF (VDE) - Good Time to Jump In?

Post by Valuethinker »

nedsaid wrote: Sun Aug 18, 2019 10:14 pm
Cornflakey wrote: Thu Aug 15, 2019 7:47 pm VDE is down to $73, approx 26% from 52-week high and almost half its $140 all time high a few years back in 2014. VDE has not been this cheap since 2009.

Realize oil is in a bear market but given this would be a buy and hold investment for the next 20+ years....

Also pays relatively juicy dividends. Seems like a no-brainer to me.

Any great reasons not to jump in? Thanks for your insights!

https://investor.vanguard.com/etf/profile/VDE
In the past, I would have been with you and jumped in with both feet. There was a cycle of low energy prices and abundant supply going to shortages and high prices and then back again. I have heard from my broker the saying that the cure for high gas prices is high gas prices. What he meant by that is high prices provided the incentive and the resources for future exploration.

Things have changed, mainly hydraulic fracking and horizontal drilling which have opened up vast reserves of oil which before were unrecoverable. This process also releases natural gas which also is now in abundance. There are large formations of the semi-porous rock in South Dakota and Texas. I was reading that the more they drill, the more they find. These formations are also in UK and in Israel and probably all over the world. The frackers are profitable when the oil prices are in the low forties now. So when oil prices start getting about $70 a barrel, the frackers start drilling again. This may have set a ceiling on the price of oil for many years to come. Not sure oil companies, even the majors, are sure fire investments any more.

There is also increased environmental risk as oil companies search in remote areas of the world and in deeper and deeper waters. We all know what happened with British Petroleum and the Gulf of Mexico.

I am a shareholder of Exxon-Mobil and have been for many years. Not sure it is going to be a great investment going forward.
I think Exxon-Mobil will, in a sense, self liquidate. It will pay out good dividends, do share buybacks, and acquire other oil companies.

Whether they can manage the fracking side of the business is a more difficult question. I don't know.

EOG, the old Enron Oil & Gas, is one I focus on -- after I read Bethany Hughes admirably short book on fracking (she was the one who broke the Enron story, originally). That kind of disciplined business/ financial model in an industry full of "at the edge" (and not always on the right side of that edge) industry.

There's a big question mark whether fracking can be rolled out in other countries as much as it has in the USA. One major issue is the landowners don't own the mineral rights, so there's huge local opposition in most countries. And water is often not in supply.

Fracking here (UK) seems to be mostly about gas (although oil might appear). Poland, which has a genuine need for gas and a desire to encourage domestic production, has not been successful for explorers at this point.

Basically I agree with you though:

- fracking means that if oil goes above say $60/ bl, US production rises. Oil is now more like a classic wheat farmer in ECON 101 - higher prices bring more supply relatively quickly. Spencer Dale, Chief Economist of BP, had a speech about that. It makes high cost big risk projects like Alberta tar sands or deep offshore that much more financially risky

- fracking also means North America essentially has a permanent oversupply of natural gas over any time horizon that is visible (5 years, 10 years, 20 years?). It's only a matter of whether you have the collection mechanism and the transmission pipelines (mostly those issues are in New England). The Natural Gas is not the objective of the drilling, which is for oil, but it is the byproduct

- it's too early to call an end to oil. But it's now in sight even if the timing is very uncertain - and it won't be a supply constraint that does it, it will be a civilization switching power source. It is too dense a source of energy (storage) to disappear quickly
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Re: Vanguard Energy ETF (VDE) - Good Time to Jump In?

Post by Frank2012 »

Cornflakey wrote: Sun Aug 18, 2019 7:10 pm OP here - thanks all for the thoughtful replies. I went ahead and jumped in on Weds (the -800pt day for the DJIA).

Limit order executed at $74.80 - week low was Thurs at $73.15, but I'm nor crying about jumping the gun! 😊

I take the points about market timing but I respectfully disagree - making a sector investment at a very low price to hold for the long haul does not qualify as market timing in my opinion.

Just to give a sense of my portfolio:
36, live in NJ work in NYC, income $175k last year
$186k in 401k (large cap and small mid cap indexes with Voya, maxing out with 7% employer match)
$12k in ROTH IRA ( VTSAXmax ing out, backdoor since income exceeds limits)
$116k in taxable (vanguard sector funds as a means to overweight in bearish sectors- I have never sold an investment - ever!)
$4k in employers ESPP program (5% Discount)
Owe $299k on $360k mortgage, 15yr with 2.8% rate and 12 years to completion.
Student loan paid off and no other debt.

I know BHs hate sector investing, but I am following the BH philosophy in my tax deferred accounts. Trying to take a little more active role in my very long term investing in my taxable account, but only using low cost vanguard ETFs. I like to feel like I have a little discretion in my investment decisions since most of it is just on autopilot in my retirement accounts.

I expect to be hauled over the coals, but that's where I'm at. Thanks again for all your insights - I love reading this forum.
OP,

While I'm primarily a Boglehead indexer, I also like to make a bet here and there. I think a contrarian bet on fossil fuels when it is in a bear market is a reasonable investment. Recently, Cramer said that fossil fuels are the new tobacco and he won't touch an oil stock. That tells me maybe its time to make a contrarian investment using VDE or XLE.

OP, did you give any thought to XLE as an alternative to VDE? It's a bit more liquid with a bit more yield, though not as diversified as VDE.
lexor
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Re: Vanguard Energy ETF (VDE) - Good Time to Jump In?

Post by lexor »

Frank2012 wrote: Sat Feb 01, 2020 11:35 am
Cornflakey wrote: Sun Aug 18, 2019 7:10 pm OP here - thanks all for the thoughtful replies. I went ahead and jumped in on Weds (the -800pt day for the DJIA).

Limit order executed at $74.80 - week low was Thurs at $73.15, but I'm nor crying about jumping the gun! 😊

I take the points about market timing but I respectfully disagree - making a sector investment at a very low price to hold for the long haul does not qualify as market timing in my opinion.

Just to give a sense of my portfolio:
36, live in NJ work in NYC, income $175k last year
$186k in 401k (large cap and small mid cap indexes with Voya, maxing out with 7% employer match)
$12k in ROTH IRA ( VTSAXmax ing out, backdoor since income exceeds limits)
$116k in taxable (vanguard sector funds as a means to overweight in bearish sectors- I have never sold an investment - ever!)
$4k in employers ESPP program (5% Discount)
Owe $299k on $360k mortgage, 15yr with 2.8% rate and 12 years to completion.
Student loan paid off and no other debt.

I know BHs hate sector investing, but I am following the BH philosophy in my tax deferred accounts. Trying to take a little more active role in my very long term investing in my taxable account, but only using low cost vanguard ETFs. I like to feel like I have a little discretion in my investment decisions since most of it is just on autopilot in my retirement accounts.

I expect to be hauled over the coals, but that's where I'm at. Thanks again for all your insights - I love reading this forum.
OP,

While I'm primarily a Boglehead indexer, I also like to make a bet here and there. I think a contrarian bet on fossil fuels when it is in a bear market is a reasonable investment. Recently, Cramer said that fossil fuels are the new tobacco and he won't touch an oil stock. That tells me maybe its time to make a contrarian investment using VDE or XLE.

OP, did you give any thought to XLE as an alternative to VDE? It's a bit more liquid with a bit more yield, though not as diversified as VDE.
What about FENY? It's lower cost than the others.

I won't be doing this strategy personally, but I can't say whether it will work.
“The miracle of compounding returns is overwhelmed by the tyranny of compounding costs.” -Mr. John C. Bogle
aristotelian
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Re: Vanguard Energy ETF (VDE) - Good Time to Jump In?

Post by aristotelian »

wootwoot wrote: Thu Aug 15, 2019 8:19 pm
bluquark wrote: Thu Aug 15, 2019 8:15 pm For a counternarrative, you may be interested in this thread where an investor dislikes energy stocks so much they're considering replacing their total market fund with a fund that includes everything but energy: viewtopic.php?t=285495 . There are also generic arguments against non-total-market investment strategies in there.
Sounds like a great time to buy, blood is in the streets.
The market has been saying that for the last 5 years. Nobody knows how low it can go.
spindrift103
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Re: Vanguard Energy ETF (VDE) - Good Time to Jump In?

Post by spindrift103 »

There does seem to be one particular long term exception to below when it comes to looking at particular sectors: consumer discretionary. Look at VDC. Steady growth, good dividend, and notice the relatively small hiccup in 08/09 when the market dropped 50%. People need TP and toothpaste even when things take a dive. fund ( I suspect a minimum volatility fund like USMV is quite similar)

When looking at constructing a somewhat 'all weather' portfolio for the next 30 years, I was initially considering having maybe 10-15% of the equities portion (which itself would be around 30%), be dedicated specifically to VDC. The thinking is that it's sort of a hedge, but it is still equities so you get some growth upside at the same time. Then again, I now realize that one could argue to simply this all reflected in the overall portfolio's asset allocation. (Have the equities portion still be a Total Stock Market fund/etf, but instead of 30% equities in an all-weather, have it be 25%) Yeah, probably six of one, half dozen of the other. And this is why experts have suggested that sector funds are really just 'speculation'. If you don't want the wider upside/downside of 'total stock market', then hold less of that in your portfolio (don't bother focusing on specific equities sectors)

Tyler Aspect wrote: Fri Aug 16, 2019 1:31 am Sector funds are very volatile. Stay with broadly diversified stock and bond index funds. It is never a good time to jump into a sector fund.
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Cornflakey
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Re: Vanguard Energy ETF (VDE) - Good Time to Jump In?

Post by Cornflakey »

Frank2012 wrote: Sat Feb 01, 2020 11:35 am
Cornflakey wrote: Sun Aug 18, 2019 7:10 pm OP here - thanks all for the thoughtful replies. I went ahead and jumped in on Weds (the -800pt day for the DJIA).

Limit order executed at $74.80 - week low was Thurs at $73.15, but I'm nor crying about jumping the gun! 😊

I take the points about market timing but I respectfully disagree - making a sector investment at a very low price to hold for the long haul does not qualify as market timing in my opinion.

Just to give a sense of my portfolio:
36, live in NJ work in NYC, income $175k last year
$186k in 401k (large cap and small mid cap indexes with Voya, maxing out with 7% employer match)
$12k in ROTH IRA ( VTSAXmax ing out, backdoor since income exceeds limits)
$116k in taxable (vanguard sector funds as a means to overweight in bearish sectors- I have never sold an investment - ever!)
$4k in employers ESPP program (5% Discount)
Owe $299k on $360k mortgage, 15yr with 2.8% rate and 12 years to completion.
Student loan paid off and no other debt.

I know BHs hate sector investing, but I am following the BH philosophy in my tax deferred accounts. Trying to take a little more active role in my very long term investing in my taxable account, but only using low cost vanguard ETFs. I like to feel like I have a little discretion in my investment decisions since most of it is just on autopilot in my retirement accounts.

I expect to be hauled over the coals, but that's where I'm at. Thanks again for all your insights - I love reading this forum.
OP,

While I'm primarily a Boglehead indexer, I also like to make a bet here and there. I think a contrarian bet on fossil fuels when it is in a bear market is a reasonable investment. Recently, Cramer said that fossil fuels are the new tobacco and he won't touch an oil stock. That tells me maybe its time to make a contrarian investment using VDE or XLE.

OP, did you give any thought to XLE as an alternative to VDE? It's a bit more liquid with a bit more yield, though not as diversified as VDE.
Thanks for the post Frank - I was thinking about resurrecting this thread given the new depths VDE plumbed yesterday. XLE would be tricky since I work for a financial institution and I have certain restrictions on the investment vehicles I can trade without getting preclearance.

I watched the dow steadily falling yesterday and thought it may be a good day to take some additional exposure (given that every other sector, growth and value fund are close to all time highs - this is the only Vanguard instrument touching lows right now - and lows stretching back 11 years at that!). Then a colleague pointed out that Asian markets have been closed all week so there is certain to be a sharp sell off at the Asian open. So I'll wait to see if VDE breaches the $70 threshold before scooping up more shares.

And, to preempt the Boglehead thought police from shrieking about market timing, this is a multi-decade holding which represents about 6% of my Vanguard holdings and closer to 2% of my total investment portfolio. Purposefully selecting a cheap fund in the midst of record highs in every other sector is not market timing, it's just common sense.

What is the sentiment on VDE among other energy bulls? Are we all feeling gunshy? My position is negative about $1,600 currently. I must admit it is making me question the wisdom of ramping up my exposure further, but the holding is generating relatively large dividends - in a taxable account though, so not ideal!
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Re: Vanguard Energy ETF (VDE) - Good Time to Jump In?

Post by Chuck107 »

.....
Last edited by Chuck107 on Sun Oct 04, 2020 6:41 pm, edited 1 time in total.
Alas, I find moderation of this forum too restrictive for my tastes, farewell.
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vineviz
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Re: Vanguard Energy ETF (VDE) - Good Time to Jump In?

Post by vineviz »

Chuck107 wrote: Tue Mar 31, 2020 12:56 pm I am thinking of taking a 5% of my portfolio position in vde at these levels in my Roth to just sit there for a long time. 38 per share.
One of the third-level options in my IPS is the ability to optionally overweight certain sectors (energy, utilities, healthcare) and this week I've started to very modestly overweight energy.

So far just a couple of small purchases of Invesco S&P SmallCap Energy ETF (PSCE), but a play like this will NOT be for the faint of heart. One of the 43 holdings is Whiting Petroleum Corp (WLL), which just announced that they're filing for bankruptcy protection. The stock dropped from $0.67 to $0.37 per share today.

In fact, 15 of the 43 stocks in PSCE have share prices under $1/share. No one should look at that with any notion EXCEPT that a significant percentage of these companies will go to zero. And anyone considering a contrarian "hail Mary" in hopes of a rebound might consider either a smaller cap fund or an equal-weighted fund like Invesco S&P 500 Equal Weight Energy ETF (RYE) in order to get more benefit from possible M&A activity in the sector.
"Far more money has been lost by investors preparing for corrections than has been lost in corrections themselves." ~~ Peter Lynch
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Re: Vanguard Energy ETF (VDE) - Good Time to Jump In?

Post by ReformedSpender »

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Last edited by ReformedSpender on Mon Nov 02, 2020 8:28 am, edited 1 time in total.
Market history shows that when there's economic blue sky, future returns are low, and when the economy is on the skids, future returns are high. The best fishing is done in the most stormy waters.
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ReformedSpender
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Re: Vanguard Energy ETF (VDE) - Good Time to Jump In?

Post by ReformedSpender »

Cornflakey wrote: Thu Aug 15, 2019 7:47 pm VDE is down to $73, approx 26% from 52-week high and almost half its $140 all time high a few years back in 2014. VDE has not been this cheap since 2009.

Realize oil is in a bear market but given this would be a buy and hold investment for the next 20+ years....

Also pays relatively juicy dividends. Seems like a no-brainer to me.

Any great reasons not to jump in? Thanks for your insights!

https://investor.vanguard.com/etf/profile/VDE
OP, any update on your venture here?
Market history shows that when there's economic blue sky, future returns are low, and when the economy is on the skids, future returns are high. The best fishing is done in the most stormy waters.
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Re: Vanguard Energy ETF (VDE) - Good Time to Jump In?

Post by Broken Man 1999 »

VDE is down to $39.29 at the moment. If OP is a buy and hold, might have to hold a very long time.

Last time we bought gas, $1.99/gallon.

Broken Man 1999
“If I cannot drink Bourbon and smoke cigars in Heaven then I shall not go." - Mark Twain
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Cornflakey
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Re: Vanguard Energy ETF (VDE) - Good Time to Jump In?

Post by Cornflakey »

Broken Man 1999 wrote: Mon Nov 02, 2020 8:35 am VDE is down to $39.29 at the moment. If OP is a buy and hold, might have to hold a very long time.

Last time we bought gas, $1.99/gallon.

Broken Man 1999
OP here - true to to my word, this is indeed a buy-and-hold. Here's an update on my VDE tale of woe as it currently stands:

Total invested: $10,029
Current value: $4,841
Current unrealized loss: $5,188
Total dividend income so far: $799

Laid quite the egg with this one.

Still, as the man said: "Time is your friend. Stay the course".
Always passive
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Re: Vanguard Energy ETF (VDE) - Good Time to Jump In?

Post by Always passive »

Maybe now is the time?
tibbitts
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Re: Vanguard Energy ETF (VDE) - Good Time to Jump In?

Post by tibbitts »

As far as I know VDE is domestic equities only, so the problem would be you then have to choose the ex-US equivalent for half (or whatever) of your investment. Otherwise you have two bets, not one.
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Cornflakey
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Re: Vanguard Energy ETF (VDE) - Good Time to Jump In?

Post by Cornflakey »

ReformedSpender wrote: Mon Nov 02, 2020 8:28 am
Cornflakey wrote: Thu Aug 15, 2019 7:47 pm VDE is down to $73, approx 26% from 52-week high and almost half its $140 all time high a few years back in 2014. VDE has not been this cheap since 2009.

Realize oil is in a bear market but given this would be a buy and hold investment for the next 20+ years....

Also pays relatively juicy dividends. Seems like a no-brainer to me.

Any great reasons not to jump in? Thanks for your insights!

https://investor.vanguard.com/etf/profile/VDE
OP, any update on your venture here?
Update above. Just to provide a little more context, here is a screenshot of my holding as of this morning. You can see that I started out buying a few hundred dollars of VDE back in 2016. As recently as late 2018, I was up over $1,000 on the position. Even though that position had turned slightly negative by late 2019, seemed like a reasonable entry point by recent historic standards before the pandemic tanked oil demand.

https://drive.google.com/file/d/1gbm930 ... sp=sharing

As an aside, I'm always baffled by how Vanguard computes returns. I've lost more than half of my total investments (including reinvested dividends) but total return is only -23%. I'm sure there is logic to it, but it eludes me so far...
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Re: Vanguard Energy ETF (VDE) - Good Time to Jump In?

Post by Robert20 »

Cornflakey wrote: Thu Aug 15, 2019 7:47 pm VDE is down to $73, approx 26% from 52-week high and almost half its $140 all time high a few years back in 2014. VDE has not been this cheap since 2009.

Realize oil is in a bear market but given this would be a buy and hold investment for the next 20+ years....

Also pays relatively juicy dividends. Seems like a no-brainer to me.

Any great reasons not to jump in? Thanks for your insights!

https://investor.vanguard.com/etf/profile/VDE
If u are planing to buy and sell in few days the its fine. 4hr chart looks a BUY.. :happy
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Re: Vanguard Energy ETF (VDE) - Good Time to Jump In?

Post by ReformedSpender »

tibbitts wrote: Mon Nov 02, 2020 9:51 am As far as I know VDE is domestic equities only, so the problem would be you then have to choose the ex-US equivalent for half (or whatever) of your investment. Otherwise you have two bets, not one.
and it's massively overweight in XOM (Exxon) which may or may not be the next General Electric
Market history shows that when there's economic blue sky, future returns are low, and when the economy is on the skids, future returns are high. The best fishing is done in the most stormy waters.
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Re: Vanguard Energy ETF (VDE) - Good Time to Jump In?

Post by eshkidd »

This should serve as a lesson to market-timers thinking they have an edge. Especially if it's just based on historical prices - "anchoring".
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Re: Vanguard Energy ETF (VDE) - Good Time to Jump In?

Post by Valuethinker »

Cornflakey wrote: Mon Nov 02, 2020 10:36 am
ReformedSpender wrote: Mon Nov 02, 2020 8:28 am
Cornflakey wrote: Thu Aug 15, 2019 7:47 pm VDE is down to $73, approx 26% from 52-week high and almost half its $140 all time high a few years back in 2014. VDE has not been this cheap since 2009.

Realize oil is in a bear market but given this would be a buy and hold investment for the next 20+ years....

Also pays relatively juicy dividends. Seems like a no-brainer to me.

Any great reasons not to jump in? Thanks for your insights!

https://investor.vanguard.com/etf/profile/VDE
OP, any update on your venture here?
Update above. Just to provide a little more context, here is a screenshot of my holding as of this morning. You can see that I started out buying a few hundred dollars of VDE back in 2016. As recently as late 2018, I was up over $1,000 on the position. Even though that position had turned slightly negative by late 2019, seemed like a reasonable entry point by recent historic standards before the pandemic tanked oil demand.

https://drive.google.com/file/d/1gbm930 ... sp=sharing

As an aside, I'm always baffled by how Vanguard computes returns. I've lost more than half of my total investments (including reinvested dividends) but total return is only -23%. I'm sure there is logic to it, but it eludes me so far...
That must be an annualised return.

If I go to https://investor.vanguard.com/etf/profi ... rmance/vde and set in a date of -3 years, then you can see you have about a -60% return on $10k.

So your actual return would be the solution to the formula Final amt = beg amt (1+r)^yrs , solve for r, the geometric average return

Another way of putting it is it is the IRR of your investment, taking into account when you bought the units, and IRR is a % pa number.

=XIRR(values, dates) in Excel should give you about the same number. Where values is a row or column of the cash flows (investment is an outflow ie a negative, your closing value is an inflow ie a positive) and dates are the corresponding dates of those flows.

Vanguard's calculation will be more exact than yours.
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Re: Vanguard Energy ETF (VDE) - Good Time to Jump In?

Post by Broken Man 1999 »

ReformedSpender wrote: Mon Nov 02, 2020 11:04 am
tibbitts wrote: Mon Nov 02, 2020 9:51 am As far as I know VDE is domestic equities only, so the problem would be you then have to choose the ex-US equivalent for half (or whatever) of your investment. Otherwise you have two bets, not one.
and it's massively overweight in XOM (Exxon) which may or may not be the next General Electric
Hey, my GE was up 1.35% today! :D

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Re: Vanguard Energy ETF (VDE) - Good Time to Jump In?

Post by bluquark »

We might be nearing the point where oil prices are so low there is only room for the state-owned extremely cheap oil supplies.

Saudi Aramco stock is up 40% since mid-2019, but VDE doesn't contain this stock because it's a domestic-only fund. This is also a demonstration that sector ETFs often fail to capture the exact portion of the sector it turns out you would've preferred.
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Re: Vanguard Energy ETF (VDE) - Good Time to Jump In?

Post by aristotelian »

Broken Man 1999 wrote: Mon Nov 02, 2020 8:35 am VDE is down to $39.29 at the moment. If OP is a buy and hold, might have to hold a very long time.

Last time we bought gas, $1.99/gallon.

Broken Man 1999
I used Kroger points (accumulated due to so little driving during the pandemic) and paid under $1 per gallon last time. Probably not what OP wants to hear.
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Cornflakey
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Re: Vanguard Energy ETF (VDE) - Good Time to Jump In?

Post by Cornflakey »

eshkidd wrote: Mon Nov 02, 2020 12:44 pm This should serve as a lesson to market-timers thinking they have an edge. Especially if it's just based on historical prices - "anchoring".
Sigh.

As made clear repeatedly throughout this thread, this is a buy and hold investment for a multi-decade time horizon. This "everything but DCA or rebalancing is market timing" dogma is tiresome in the extreme. Anytime a discussion of sector investing is underway a member of the market timing Thought Police is sure to interject with an observation like this.
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Re: Vanguard Energy ETF (VDE) - Good Time to Jump In?

Post by Hyperchicken »

Cornflakey wrote: Mon Nov 02, 2020 10:21 pm ... This "everything but DCA or rebalancing is market timing" dogma is tiresome in the extreme. ...
I know I'm probably pouring gasoline into fire, but DCA is a form of market timing too. Note, investing as you're getting paid is not DCA.
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Re: Vanguard Energy ETF (VDE) - Good Time to Jump In?

Post by eshkidd »

Cornflakey wrote: Mon Nov 02, 2020 10:21 pm
eshkidd wrote: Mon Nov 02, 2020 12:44 pm This should serve as a lesson to market-timers thinking they have an edge. Especially if it's just based on historical prices - "anchoring".
Sigh.

As made clear repeatedly throughout this thread, this is a buy and hold investment for a multi-decade time horizon. This "everything but DCA or rebalancing is market timing" dogma is tiresome in the extreme. Anytime a discussion of sector investing is underway a member of the market timing Thought Police is sure to interject with an observation like this.
Your original post is:
"VDE is down to $73, approx 26% from 52-week high and almost half its $140 all time high a few years back in 2014. VDE has not been this cheap since 2009.

Realize oil is in a bear market but given this would be a buy and hold investment for the next 20+ years...."

You state that your rationale for the decision is low prices relative to history. You don't state anything about fundamentally why VDE should risk-based outperform the market. If your only reasoning is historical prices, it is indeed market-timing, and not fundamentals. The market has a reason for VDE being it's current price. That IS the price now, and it has equal chance of going above or below market. It's past price does not matter.
Unfortunately, this needs to be continually brought up on the forum because many people are not able to hold their portfolio based on fundamentals. They will drop International based on past underperformance. They will add growth due to recent overperformance. You can do the opposite and further add recent underperformance. But history has shown that most people will not have the conviction to hold their deviation. And why risk it for market performance, as higher risk, given your bet isn't on anything fundamental?
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Re: Vanguard Energy ETF (VDE) - Good Time to Jump In?

Post by gougou »

If you look at the big oil majors such as XOM, it is not able to maintain its current 10% dividend and keep production steady if oil stays under $40. So unless you believe in a fast recovery of oil price, this is probably not the bottom.

Currently I own some midstream companies with long term contracts that guarantee them a 10%+ return even if oil stays around $40. I think these investments are safer. I'm also looking for oil companies that have strong balance sheets and low production costs, but I haven't found any that's compelling enough.
The sillier the market’s behavior, the greater the opportunity for the business like investor.
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Re: Vanguard Energy ETF (VDE) - Good Time to Jump In?

Post by AAA »

Cornflakey wrote: Thu Aug 15, 2019 7:47 pm Any great reasons not to jump in? Thanks for your insights!
Return has been negative for 1, 3, 5 and 10 year periods.
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Re: Vanguard Energy ETF (VDE) - Good Time to Jump In?

Post by Valuethinker »

Cornflakey wrote: Mon Nov 02, 2020 10:21 pm
eshkidd wrote: Mon Nov 02, 2020 12:44 pm This should serve as a lesson to market-timers thinking they have an edge. Especially if it's just based on historical prices - "anchoring".
Sigh.

As made clear repeatedly throughout this thread, this is a buy and hold investment for a multi-decade time horizon. This "everything but DCA or rebalancing is market timing" dogma is tiresome in the extreme. Anytime a discussion of sector investing is underway a member of the market timing Thought Police is sure to interject with an observation like this.
Cornflakey.

I hope my discussion of IRR was helpful?

The reasons to do this are:

- price of oil is a lagged result of supply (which lags demand both up and down) and demand (which is much more instantaneous, and tends to grow at a rate related to world GDP)

- it's likely that low oil prices now will lead to underinvestment and supply lagging demand in the future

- it's likely oil demand will recover on a 2-5 year view. The world will get used to Covid-19. In the meantime not much oil discovery or new production will take place, so at some point there will be a price spike

The reasons not to do this are:

- the dividends of the existing oil majors have, or will be, cut

- there are long term threats to demand around carbon restrictions, Electric Vehicles etc. These are real, but have to be balanced off against rising Emerging Market demand. EM countries are just in that phase when demand for fuel rises quite fast, due to rising vehicle ownership, more transportation of goods, air travel etc

- developed markets have flat to down oil consumption. US perhaps the least so, Europe and Japan much more so due to EV policies, mature demographics etc

So that's a summary of pros and cons as best I can manage it without doing actual research into demand forecasts etc (demand is historically correlated with GDP*, demand = supply +/- inventory change, supply historically has always been there to meet rising demand BUT there is a 1-5 year lag (reflected in a higher spot price), and there are significant geopolitical risks (war etc.).

Long term outlook

- coal will go off the electricity grid. It's already happening-- UK is almost coal free (remembering we invented coal as a fuel for industry), other countries are following suit, even Germany. The big swing factor will be China, and it will be concerns about local air pollution that will drive that (coal to natural gas) rather than longer term considerations

- oil will be around for a long time due to its energy density & transportation uses

- natural gas will be the major transition fuel, so it has a pretty good 30 year outlook, but after that probably not. US has structurally low gas prices for the foreseeable future (which will tend to attract basic industries like chemicals).

Is this a good investment? I don't know. I hope this is a reasonably balanced summary of the arguments (with my own views of the long term outlook).

* for developed countries
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Re: Vanguard Energy ETF (VDE) - Good Time to Jump In?

Post by ReformedSpender »

VDE (Vanguard energy) up +15% today :shock:
Market history shows that when there's economic blue sky, future returns are low, and when the economy is on the skids, future returns are high. The best fishing is done in the most stormy waters.
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Re: Vanguard Energy ETF (VDE) - Good Time to Jump In?

Post by goblue100 »

Up 31% since the election. Still a dog overall for me, but this run up helps some. Luckily I bought some at close to the lows to help trim my losses in this underperformer.
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Cornflakey
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Re: Vanguard Energy ETF (VDE) - Good Time to Jump In?

Post by Cornflakey »

OP here with what the WSB crowd would call a YOLO update.

My VDE position is finally above water - barely. Here is how things stand:

Total invested: $10,103 (inc reinvested dividends)
Current value: $9,305
Dividend income: $874
Net position: $75.81

Hoping to ride the reopening trade higher here, but clearly this was a rookie mistake. I did not understand that a commoditized market is one in which energy companies have little latitude over energy prices. That is a lesson that will stay learned.

Obviously this $10,000 would have done much better deployed in VTSAX over the past year, but I still think as a piece of salutary instruction this episode was a valuable one.

Will keep you posted as my diamond hands ride this rocket ship to the moon!
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Cornflakey
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Re: Vanguard Energy ETF (VDE) - Good Time to Jump In?

Post by Cornflakey »

With oil reaching its highest level since 2014 today, seems a good day to update on this ill-fated VDE investment.

As of the close today:

Total Initial Investment: $9,229.88
Total Dividend Income (reinvested): $1,281.93
Total Market Gain: $1,350.80
Total VDE Balance as of 1/27/22: $11,862.61
Total Return as of 1/27/22: $2,632.73
Total Return as % of Initial Investment (28.5%)

Not terrible performance, but in hindsight this investment would have been better placed in VTI (Total Stock Market) or VOO (S&P 500). Nevertheless, we stay the course.

Curious how any other energy investors have been faring through the rollercoaster over the past two years.
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Re: Vanguard Energy ETF (VDE) - Good Time to Jump In?

Post by RetiredCSProf »

No energy bets yet -- but I have Global X Uranium (URA) and North Shore Uranium Mining (URNM) on my watch list
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Re: Vanguard Energy ETF (VDE) - Good Time to Jump In?

Post by tooluser »

Today VDE hit an 8-year high of 110.55. That doesn't sound like a good time to jump in, unless you have good reason to believe it will go higher.

In my earlier post to this thread, I kept needing to buy more shares to maintain an approximately 10% slice in my 10-speed portfolio (which is in taxable). These days I need to keep selling shares instead, and because it is so much an outlier in positive performance relative to the other 9 slices, I have great trouble finding offsetting capital losses that maintain the balance.

So this puts one in a position I think is typical of taxable accounts during a market run-up: Do you sell now and take the known tax hit? Or do you hopefully ride it higher and make more later even after an eventual sale and tax hit. What generates the most gain? It seems to me that there's no good way out of this speculative, market-timing situation.

Would selling covered calls be a good strategy in this situation? I've never done that.
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Re: Vanguard Energy ETF (VDE) - Good Time to Jump In?

Post by goblue100 »

Cornflakey wrote: Sat Mar 13, 2021 3:56 pm OP here with what the WSB crowd would call a YOLO update.

My VDE position is finally above water - barely. Here is how things stand:

Total invested: $10,103 (inc reinvested dividends)
Current value: $9,305
Dividend income: $874
Net position: $75.81

OP, Are you still in VDE? It has more than doubled from this update. I didn't intend for it to be an uncorrelated asset to the rest of my portfolio but it worked out that way. Didn't eliminate the pain over the last year but did help moderate it.
"Confusion has its cost" - Crosby, Stills and Nash
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Cornflakey
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Re: Vanguard Energy ETF (VDE) - Good Time to Jump In?

Post by Cornflakey »

goblue100 wrote: Tue Nov 15, 2022 5:02 pm
Cornflakey wrote: Sat Mar 13, 2021 3:56 pm OP here with what the WSB crowd would call a YOLO update.

My VDE position is finally above water - barely. Here is how things stand:

Total invested: $10,103 (inc reinvested dividends)
Current value: $9,305
Dividend income: $874
Net position: $75.81

OP, Are you still in VDE? It has more than doubled from this update. I didn't intend for it to be an uncorrelated asset to the rest of my portfolio but it worked out that way. Didn't eliminate the pain over the last year but did help moderate it.
Hi GoBlue,

Yes, still in the position. Here is an update:

Original investment: $9,229.88
Dividend Income: $1,685.38
Current value: $17,213.46
Net Position: $6,298

My original exit point was $145, which I anticipate VDE will reach by late January or early February. Although this position is currently working out well for me, Energy is too volatile. I intend to exit the position and redeploy elsewhere - but that decision will be taken when I cash out. It is tempting to think that I should have gone all in on this position in March 2020 when it was down to $33 and I would now be looking at a 4X gain, but I used that opportunity to build a big position in Vanguard Growth (VIGAX). That looked like the right move at the start of this year - less so today, but I am more comfortable with holding growth for the next 20+ years.

But as you say, VDE has been a bright spot in any otherwise dismal year. I have taken a thumping, especially since I have a very strong growth tilt in my portfolio. Still, we keep investing and stay the course.
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Cornflakey
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Re: Vanguard Energy ETF (VDE) - Good Time to Jump In?

Post by Cornflakey »

Been over a year since my last update. Though volatile, 2023 was generally flat for VDE, ending the year up just 2% while the broader market was on a tear. True to form, the position has actually gone backward since November 2022. Here is where we stand today:

Original investment: $9,229.88
Dividend Income: $2,406.76
Current value: $16,726
Net Position: $5,089

Stay away from those sector ETFs kids!
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