Did I Royally [mess up] spending $450 on USO today? Bought at $3.84 a piece

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Anderson75
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Did I Royally [mess up] spending $450 on USO today? Bought at $3.84 a piece

Post by Anderson75 » Mon Apr 20, 2020 4:49 pm

Dumb move eh? thank you ahead of time

Silk McCue
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Re: Did I Royally [mess up] spending $450 on USO today? Bought at $3.84 a piece

Post by Silk McCue » Mon Apr 20, 2020 7:23 pm

Welcome to Bogleheads.

We are not a stock picking site. We believe in sane and sensible investing mostly in low cost broad market index funds and don’t time the market.

The good news is that $4$0 won’t change your life. Taking time to learn about our investing philosophy may change your financial future.

You can learn more about our philosophy here.

https://www.bogleheads.org/wiki/Getting_started

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Re: Did I Royally [mess up] spending $450 on USO today? Bought at $3.84 a piece

Post by fabdog » Mon Apr 20, 2020 7:23 pm

asked and answered.....

But really... how much of your net worth is the $450... If a pittance... consider it like playing the slots... something good might happen but not likely.

Did you look at a chart of USO over 5 years? Do you understand how it works? Are you expecting it to track the oil price you see in the paper? That's not likely to happen

here's some light reading

https://www.forbes.com/sites/jimcollins ... dd9b3824e8

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Re: Did I Royally [mess up] spending $450 on USO today? Bought at $3.84 a piece

Post by retired@50 » Mon Apr 20, 2020 7:53 pm

Anderson75 wrote:
Mon Apr 20, 2020 4:49 pm
Dumb move eh? thank you ahead of time
Maybe put in a limit order to sell it tomorrow. Pick an acceptable price and be done with it.

Regards,
This is one person's opinion. Nothing more.

veggivet
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Re: Did I Royally [mess up] spending $450 on USO today? Bought at $3.84 a piece

Post by veggivet » Mon Apr 20, 2020 8:09 pm

At least it can't go below zero, unlike oil futures... :D
If you watch your pennies, your dollars will take care of themselves.

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Re: Did I Royally [mess up] spending $450 on USO today? Bought at $3.84 a piece

Post by Iridium » Mon Apr 20, 2020 8:12 pm

At least they weren't futures, so they can't go below zero. Just dump it and chalk it up as a cheap lesson in the horrors of contango.

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Re: Did I Royally [mess up] spending $450 on USO today? Bought at $3.84 a piece

Post by TravelGeek » Mon Apr 20, 2020 8:12 pm

For those like me who don’t know what USO is (other than United Service Organization):

United States Oil Fund, LP (USO) - apparently an ETF.

https://en.wikipedia.org/wiki/United_States_Oil_Fund

The United States Oil Fund (NYSE Arca: USO) is an exchange-traded fund that attempts to track the price of West Texas Intermediate Light Sweet Crude Oil.

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Re: Did I Royally [mess up] spending $450 on USO today? Bought at $3.84 a piece

Post by drk » Mon Apr 20, 2020 8:18 pm

Did you have fun? Are you still holding it? There are worse things to blow $450 on.

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unclescrooge
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Re: Did I Royally [mess up] spending $450 on USO today? Bought at $3.84 a piece

Post by unclescrooge » Mon Apr 20, 2020 8:40 pm

You could've bought several leap contracts for that amount. I see the Jan 21 $8 call is selling for $0.58.

For $406, you could've bought 7 contracts. If oil went to $10 by then, instead of the $550 you would've made on USO, you would have made $596.

If you're going to speculate you should do it with leverage :mrgreen:

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Re: Did I Royally [mess up] spending $450 on USO today? Bought at $3.84 a piece

Post by veggivet » Tue Apr 21, 2020 9:02 am

If you liked it @ $3.84, you'll like it 15% more this morning...
If you watch your pennies, your dollars will take care of themselves.

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Rainier
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Re: Did I Royally [mess up] spending $450 on USO today? Bought at $3.84 a piece

Post by Rainier » Tue Apr 21, 2020 9:05 am

Don't forget...if you bought this in a taxable account you will get a K-1. If you had a simple tax return it just got way more complicated if you aren't a tax person...enjoy.

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Re: Did I Royally [mess up] spending $450 on USO today? Bought at $3.84 a piece

Post by pshonore » Tue Apr 21, 2020 12:35 pm

Rainier wrote:
Tue Apr 21, 2020 9:05 am
Don't forget...if you bought this in a taxable account you will get a K-1. If you had a simple tax return it just got way more complicated if you aren't a tax person...enjoy.
Fortunately the "commodity" K1 forms" are not that complex but it will be an experience.

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Re: Did I Royally [mess up] spending $450 on USO today? Bought at $3.84 a piece

Post by DonIce » Tue Apr 21, 2020 12:41 pm

Anderson75 wrote:
Mon Apr 20, 2020 4:49 pm
Dumb move eh? thank you ahead of time
Yeah, you'll be lucky if you manage to get out anything more than $0. And enjoy your K-1...

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Re: Did I Royally [mess up] spending $450 on USO today? Bought at $3.84 a piece

Post by DonIce » Tue Apr 21, 2020 12:49 pm

unclescrooge wrote:
Mon Apr 20, 2020 8:40 pm
You could've bought several leap contracts for that amount. I see the Jan 21 $8 call is selling for $0.58.

For $406, you could've bought 7 contracts. If oil went to $10 by then, instead of the $550 you would've made on USO, you would have made $596.

If you're going to speculate you should do it with leverage :mrgreen:
It doesn't work this way. Even if USO survives the current episode, and oil goes back up to $100/barrel, it's almost impossible that USO will ever touch $8 again.

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unclescrooge
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Re: Did I Royally [mess up] spending $450 on USO today? Bought at $3.84 a piece

Post by unclescrooge » Tue Apr 21, 2020 1:01 pm

DonIce wrote:
Tue Apr 21, 2020 12:49 pm
unclescrooge wrote:
Mon Apr 20, 2020 8:40 pm
You could've bought several leap contracts for that amount. I see the Jan 21 $8 call is selling for $0.58.

For $406, you could've bought 7 contracts. If oil went to $10 by then, instead of the $550 you would've made on USO, you would have made $596.

If you're going to speculate you should do it with leverage :mrgreen:
It doesn't work this way. Even if USO survives the current episode, and oil goes back up to $100/barrel, it's almost impossible that USO will ever touch $8 again.
Yeah, I just read an article explaining that USO will always lose value over time. :oops:
USO is a terrible instrument.

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Re: Did I Royally [mess up] spending $450 on USO today? Bought at $3.84 a piece

Post by minimalistmarc » Tue Apr 21, 2020 1:08 pm

USO is for day traders only. Should never be held.

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Re: Did I Royally [mess up] spending $450 on USO today? Bought at $3.84 a piece

Post by btq96r » Tue Apr 21, 2020 1:18 pm

Thanks for validating the Bogle approach.
Moderation is for Canadians.

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Re: Did I Royally [mess up] spending $450 on USO today? Bought at $3.84 a piece

Post by arcticpineapplecorp. » Tue Apr 21, 2020 1:59 pm

US Oil Fund drops 30% after changing structure again as popular ETF tries to stave off collapse
source: https://www.cnbc.com/2020/04/21/usos-be ... to-ex.html
"May you live as long as you want and never want as long as you live" -- Irish Blessing | "Invest we must" -- Jack Bogle

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Re: Did I Royally [mess up] spending $450 on USO today? Bought at $3.84 a piece

Post by pshonore » Tue Apr 21, 2020 2:03 pm

minimalistmarc wrote:
Tue Apr 21, 2020 1:08 pm
USO is for day traders only. Should never be held.
Not really - its not an inverse ETF. Short term holding is ok as long as you understand what you bought.

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David Jay
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Re: Did I Royally [mess up] spending $450 on USO today? Bought at $3.84 a piece

Post by David Jay » Tue Apr 21, 2020 2:07 pm

Don’t mean to pile on, but one should never invest in something that they do not fully understand. I like Jane Quinn Bryant’s construction: “Never invest in something that you can’t explain to a reasonably intelligent twelve year old.
Prediction is very difficult, especially about the future - Niels Bohr | To get the "risk premium", you really do have to take the risk - nisiprius

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Re: Did I Royally [mess up] spending $450 on USO today? Bought at $3.84 a piece

Post by dacalo » Tue Apr 21, 2020 3:00 pm

Ouch down 25%. Hope it's just play money OP.

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Re: Did I Royally [mess up] spending $450 on USO today? Bought at $3.84 a piece

Post by AlphaLess » Tue Apr 21, 2020 3:02 pm

FYI: many of the oil related ETFs will have the XIV fate from Feb 2018.

Proceed like you are stepping on a mine field.

E.g., this obscure ETN called 'OIL' is basically going to be terminated on Friday.
"A Republic, if you can keep it". Benjamin Franklin. 1787. | Party affiliation: Vanguard. Religion: low-cost investing.

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Re: Did I Royally [mess up] spending $450 on USO today? Bought at $3.84 a piece

Post by asif408 » Tue Apr 21, 2020 3:38 pm

Personally I'd buy 3 or 4 shares if I felt the urge, but no more than that. I figure worst case I would lose $12 and best case I quadruple my money in a few months and buy a nice dinner for the family. But I don't have much more faith in the USO ETF than that. Plus the fact that they just changed the structure of the fund today makes me even less confident.

But if $450 is less than 1% of your wealth, I say go for it, people waste a lot more money on a things in life that have even less potential for a return on investment.


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Re: Did I Royally [mess up] spending $450 on USO today? Bought at $3.84 a piece

Post by manuvns » Tue Apr 21, 2020 4:28 pm

i sold $1 puts expiring on may 15th and collected $12 . is it possible that USO can trade below $0 ?

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Re: Did I Royally [mess up] spending $450 on USO today? Bought at $3.84 a piece

Post by manuvns » Tue Apr 21, 2020 4:32 pm

TravelGeek wrote:
Mon Apr 20, 2020 8:12 pm
For those like me who don’t know what USO is (other than United Service Organization):

United States Oil Fund, LP (USO) - apparently an ETF.

https://en.wikipedia.org/wiki/United_States_Oil_Fund

The United States Oil Fund (NYSE Arca: USO) is an exchange-traded fund that attempts to track the price of West Texas Intermediate Light Sweet Crude Oil.
The Untied States Oil Fund dropped 30% on Tuesday as managers made multiple changes to the fund’s structure in an effort to stave off additional losses.
ttps://www.cnbc.com/2020/04/21/usos-benchmark- ... to-ex.html

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Re: Did I Royally [mess up] spending $450 on USO today? Bought at $3.84 a piece

Post by nps » Tue Apr 21, 2020 5:58 pm

manuvns wrote:
Tue Apr 21, 2020 4:28 pm
i sold $1 puts expiring on may 15th and collected $12 . is it possible that USO can trade below $0 ?
It cannot. Not can its investors lose more than 100 percent of their investment.

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Re: Did I Royally [mess up] spending $450 on USO today? Bought at $3.84 a piece

Post by manuvns » Wed Apr 22, 2020 12:21 pm

thanks, oil investors are going to profit a lot once things open up .

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Re: Did I Royally [mess up] spending $450 on USO today? Bought at $3.84 a piece

Post by David Jay » Wed Apr 22, 2020 12:26 pm

manuvns wrote:
Wed Apr 22, 2020 12:21 pm
thanks, oil investors are going to profit a lot once things open up .
Probably not, storage costs are being bid up to stratospheric levels. An oil tanker is currently $100,000 a day!
Prediction is very difficult, especially about the future - Niels Bohr | To get the "risk premium", you really do have to take the risk - nisiprius

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Re: Did I Royally [mess up] spending $450 on USO today? Bought at $3.84 a piece

Post by manuvns » Wed Apr 22, 2020 12:38 pm

David Jay wrote:
Wed Apr 22, 2020 12:26 pm
manuvns wrote:
Wed Apr 22, 2020 12:21 pm
thanks, oil investors are going to profit a lot once things open up .
Probably not, storage costs are being bid up to stratospheric levels. An oil tanker is currently $100,000 a day!
well when things open up the large amount of storgae will not be needed .

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Individual Stocks vs. Mutual Funds?

Post by Taylor Larimore » Wed Apr 22, 2020 12:38 pm

Anderson75 wrote:
Mon Apr 20, 2020 4:49 pm
Dumb move eh? thank you ahead of time
Anderson75:

Welcome to the Bogleheads Forum!

This is today's headline: The Biggest Oil ETF (USO) is Down More Than 30% This Week With Retail Investors The Biggest Losers.

As you have read from other Bogleheads, most of us no longer invest in individual stocks. This is one reason:

What Experts Say about Individual Stocks vs. Mutual Funds

Best wishes.
Taylor
Jack Bogle's Words of Wisdom: "Attempting to build an investment program around a handful of individual securities is, for all but the most exceptional investors, a fool's errand."
"Simplicity is the master key to financial success." -- Jack Bogle

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Re: Did I Royally [mess up] spending $450 on USO today? Bought at $3.84 a piece

Post by David Jay » Wed Apr 22, 2020 1:00 pm

manuvns wrote:
Wed Apr 22, 2020 12:38 pm
David Jay wrote:
Wed Apr 22, 2020 12:26 pm
manuvns wrote:
Wed Apr 22, 2020 12:21 pm
thanks, oil investors are going to profit a lot once things open up .
Probably not, storage costs are being bid up to stratospheric levels. An oil tanker is currently $100,000 a day!
well when things open up the large amount of storgae will not be needed .
But oil investors have to pay exorbitant rates store their oil until demand comes back.
Prediction is very difficult, especially about the future - Niels Bohr | To get the "risk premium", you really do have to take the risk - nisiprius

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Re: Did I Royally [mess up] spending $450 on USO today? Bought at $3.84 a piece

Post by abuss368 » Wed Apr 22, 2020 4:25 pm

Anderson75 wrote:
Mon Apr 20, 2020 4:49 pm
Dumb move eh? thank you ahead of time
Welcome to the forum!

Jack Bogle has said that most investors could go their investing lifetime without any need for a sector fund.

Consider owning the entire haystack with total market index funds.
John C. Bogle: Two Fund Portfolio - Total Stock & Total Bond - “Simplicity is the master key to financial success."

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Re: Did I Royally [mess up] spending $450 on USO today? Bought at $3.84 a piece

Post by Rob5TCP » Wed Apr 29, 2020 2:24 pm

If you bought at $3.84 each and kept it - it's up to $17.00 per share.
So, you did great !!!

https://finance.yahoo.com/quote/USO

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Re: Did I Royally [mess up] spending $450 on USO today? Bought at $3.84 a piece

Post by mystupidglasses » Wed Apr 29, 2020 2:30 pm

Rob5TCP wrote:
Wed Apr 29, 2020 2:24 pm
If you bought at $3.84 each and kept it - it's up to $17.00 per share.
So, you did great !!!

https://finance.yahoo.com/quote/USO
It had an 8:1 reverse split.
Link: https://www.prnewswire.com/news-release ... 45001.html

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Re: Did I Royally [mess up] spending $450 on USO today? Bought at $3.84 a piece

Post by lgs88 » Wed Apr 29, 2020 2:32 pm

mystupidglasses wrote:
Wed Apr 29, 2020 2:30 pm
Rob5TCP wrote:
Wed Apr 29, 2020 2:24 pm
If you bought at $3.84 each and kept it - it's up to $17.00 per share.
So, you did great !!!

https://finance.yahoo.com/quote/USO
It had an 8:1 reverse split.
Link: https://www.prnewswire.com/news-release ... 45001.html
This ETF is popular with retail speculators. I wonder if it’ll see inflows as people see it “pop,” as they try to catch the “upswing” that’s actually just the reverse split.
merely an interested amateur

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Re: Did I Royally [mess up] spending $450 on USO today? Bought at $3.84 a piece

Post by Rob5TCP » Wed Apr 29, 2020 2:39 pm

mystupidglasses wrote:
Wed Apr 29, 2020 2:30 pm
Rob5TCP wrote:
Wed Apr 29, 2020 2:24 pm
If you bought at $3.84 each and kept it - it's up to $17.00 per share.
So, you did great !!!

https://finance.yahoo.com/quote/USO
It had an 8:1 reverse split.
Link: https://www.prnewswire.com/news-release ... 45001.html
Thank you -- Yahoo showed it going up 600%.

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Re: Did I Royally [mess up] spending $450 on USO today? Bought at $3.84 a piece

Post by inbox788 » Thu Apr 30, 2020 11:44 am

Look at the old discussions on this fund and the problems it had with tracking oil prices and costs. The negative May WTI prices really forced them to change a lot. It never was that good at its original aim, but neither are the alternatives. And when WTI went to zero and below, those invested should have been wiped out or worse. In another thread, I joked about USO going negative, but the joke is on Bank of China customers who may be liable for those loses beyond their investment amounts.

Explainer: How China's retail investor army got burned by the shock oil collapse
https://www.reuters.com/article/us-glob ... SKCN2261MH
Some investors that Reuters spoke to said BoC had not issued any prior warnings, or flagged that prices could turn negative.

Zhang Qi, an analyst with Haitong Securities, said BoC’s information and risk disclosure was inadequate, and that it failed to conduct the eligibility management of investors.

“I think both BoC and CME have a responsibility in this,” said Zhang, referring to CME Group which owns the New York Mercantile Exchange where WTI futures trade.

“CME changed the trading rules and allowed crude oil futures to trade in negative territory at first, and then the bank failed to alarm the investors of related risks.”
As Chinese banks halt open positions for oil products, investors cry foul
https://www.reuters.com/article/us-chin ... SKCN2251SA

Consider yourself lucky that your "investment" is still worth something and you won't be writing a check to someone for more losses. And realize that what you bought last week and what you own now are vastly different, and tomorrow, when you wake up, it could change again. In part, because of it's large size and confluence of recent events, it's necessarily changed from a passive strategy to a heavily actively manged one.

Even the Top U.S. Oil Fund Is Becoming Bearish About Oil
United States Oil is selling its current contracts. That's a huge warning sign.

https://www.fool.com/investing/2020/04/ ... about.aspx

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Re: Did I Royally [mess up] spending $450 on USO today? Bought at $3.84 a piece

Post by 123 » Thu Apr 30, 2020 12:53 pm

Rainier wrote:
Tue Apr 21, 2020 9:05 am
Don't forget...if you bought this in a taxable account you will get a K-1. If you had a simple tax return it just got way more complicated if you aren't a tax person...enjoy.
+1 Yes, congratulations to the OP on joining the elite K-1 crowd with his/her USO ownership. Now you've got another excuse not to file your tax return early (and likely join the extension crowd) since K-1's are typically the latest of the late in terms of tax forms received. Oh and K-1's are not exempt from errors/adjustments/revisions which means a somewhat higher likelihood to amended returns for you.

Myself, I would take a pass on USO just on the potential tax reporting issues themselves.
The closest helping hand is at the end of your own arm.

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