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Energy Investing is Worth Your Time and Effort

by | published February 15th, 2012

Lots going on in the energy sector this week. Kent and I always do our best to cover everything that's going on – both the big stories and the little ones.

Yet our true focus isn't on the headlines.

The point of these articles is to give our readers useful and actionable guidance as they plan their oil and energy related investments. We want to dig up and deliver opportunities you can profit from – at a time when profits are especially hard to pin down.

So today I want to take time out.

Instead of analyzing the latest from Iran or the potential of LNG or some other macro concern, today I'm just going to address one very common question I get from enthusiastic energy investors like you.

Remember, if you have a question or a comment of your own, be sure to register below and type your thoughts into the box. We'd love to hear from you.

Okay, who's up?

Q: I am starting out with such small amounts of money to invest. Is investing in the energy markets even worth my time and effort? ~ John B.

A: Yes.

And here's why.

If you have money sitting in a checking account right now, it's earning nothing.

If your cash is in a savings account, you're making a little more than 1% annually on that money (if you're lucky).

So sure, your money is stagnant. You probably knew that. But it gets even worse…

See, the buying power of your cash is falling, even as I type this letter, due to consumer inflation.

So you can sit back and watch your hard-earned cash whittled away to nothing…

Or you can fight that assault on your wallet by investing in the most profitable sector of all time.

Last week, I talked about the Alerian MLP Index (NYSE: AMJ), which tracks the performance of the energy Master Limited Partner (MLP) sector. This electronic trading note (ETN) pays a current yield of 5% annually, and has appreciated by 100% in the last three years.

I showed you how a $10,000 investment back in March 2009 would be worth roughly $23,500 today.

But $10,000 is a lot of money for many investors.

So, I did the math again, but this time starting with a more modest amount. And the results are still impressive.

If you had purchased 25 shares for $494 back in early 2009 and reinvested the dividends, your “small amount” would be worth $1,158.51 today.

That's a 134% gain.

On the other hand, if you'd have kept it parked “safely” in a bank account at 1.5% over three years, your $500 would be worth roughly $522.83 after three years.

And here's where it gets interesting.

That $522.83 today has the same buying power as $497 in 2009.

So, your money has gained nothing due to consumer inflation. And we're being a little generous with that interest rate.

So, is investing even a modest amount worth your time and effort?

Absolutely.

But here's the thing.

You don't have to put a ton of time and effort into investing if you know where to look.

Kent has done a superb job in identifying equities and funds that offer the opportunity to turn any amount of money into big gains.

All you need is patience.

The energy sector is experiencing one of the greatest shifts in the history of investing. We've discussed in the previous question our timeline for natural gas. Just a few hundred bucks in the right companies today could be huge gains down the line.

Kent will be back on Friday. We're taking the day off for President's Day on Monday.

But next week, I'll be back to answer another question about energy investing, and explain when we can expect global demand to spike for natural gas… and the best way to profit.

Sincerely,

James

P.S. Today you can get access to Kent's favorite money-making energy plays at a steep discount. Less than $50 a year won't break anyone's bank.

So I invite you to take a glance at his latest research. You can see it here now.

Please Note: Kent cannot respond to your comments and questions directly. But he can address them in future alerts... so keep an eye on your inbox. If you have a question about your subscription, please email us directly at customerservice@oilandenergyinvestor.com

  1. Phillip Kirkland
    February 15th, 2012 at 13:58 | #1

    James: I just want to make a comment to today’s question. I too have very little to invest but I buy 10 share lots. I bought 10 shares of LNG and WPRT 4 months ago and have received 69% and 37% gain with a positive $60 and $112 return. So a little at a time does work.

  2. Mike
    February 15th, 2012 at 14:29 | #2

    I perceive long term investing strategies in the energy sector as those recommended by the Energy Inner Circle subscription. I also subscribed to the Energy Sigma service thinking that I could build a portfolio bit-by-bit with smaller short-term option investments. Is that a good way to think about these two services? I can’t afford every play that’s recommended, but I’m finding that the Sigma Trader service requires a different way to think about investing. So far I’m not to good at it, my first two choices were FTK and ATPG, though it looks like I might gain a bit on the VLO trade. I see other Sigma trades have gained, though right now I don’t know what to think of the short term investing climate, and am finding the option recommendations are just pure risk. How can I improve the odds do you think?

  3. Robert
    February 15th, 2012 at 16:00 | #3

    Is there anyway to hedge against a disaster in the Middle East,i.e Israel attacking Iran or an Iranian confrontation at sea with the U.S. Navy?

  4. Keith
    February 15th, 2012 at 16:23 | #4

    Just wondering if any of your research team has looked at a Singapore Energy conglomerate called Kepel Corporation. OTC: KPELY. Regards.

  5. Chuck from Virginia
    February 15th, 2012 at 21:41 | #5

    As a current Energy Advantage subscriber, will I automatically receive the report about the 2250% possible gain arising from the coming oil constriction, or not? Is this only for new subscribers?

  6. Too A. k.
    February 15th, 2012 at 23:26 | #6

    Hi Dr Kent,

    You mentioned alot of energy stock but you never recommend any stock or how to go about in buying it.

  7. Bobby
    February 18th, 2012 at 08:28 | #7

    To Buy/// Open a choice trade account $5.00 commission.
    IRA has a $30.00 anual fee.

    Ed Jones charges over $50.00 per in and out.
    hard to mack a buck there small dollar trades.
    Take a profit on any thing over $10.00;
    for fast Cash.Dont buy at a high.

    $100.00 will buy 95.00 in stocks. ten dollars up is 10 percnt.
    5 trades a year is a start.10 trades a year is a double.

    Do not buy Penny Stocks they reverse split and go to nill
    my penny stock was 1700 dollars to 1 cent 4000 to 1 reverse split .
    then down to .00001.per share.CMGR Camelot

  8. enthusceptic
    February 25th, 2012 at 11:52 | #8

    I’m amazed how many ask for free advice when it’s clear below each article that it won,t be given.

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