Short Oil as a Long Investment

There is an increasing number of discussions and recommendations about being short or long oil.  A number of innovative ETF vehicles have been springing up to provide ways of playing oil long or short, even leveraged in either direction.  At the same time the usual suspects are out there encouraging individuals to try their hand in the futures market.

To be up-front, we are long (DUG) which is a leveraged short on a number of oil and gas related stocks. A fair number of people have come out and questioned this as an "investment." In the short-term, of course it is not. Nobody can be right in the short-term without inside information or luck. (We’re up 20% in DUG but that’s just luck, see below for the true long-term story.)  But if one is looking out a few years and running a diversified portfolio, vehicles like DUG and others can come in very handy.