The Dow Chemical Company (DOW): Gambling on the Future Price of Oil

In the case of 2008 and oil speculators, the same was true. A heightened fear of demand outpacing our ability to produce led to an overreaction in the market, which in turn led to a quick collapse. It’s not to say that those who poured money into oil futures were completely wrong, but the fear associated with higher prices led many into grossly overestimating the degree to which oil prices would change.

What a Fool believes
It’s not wrong or immoral or corrupt in any way to invest in futures contracts in any commodity. Long-term investments in commodities can be lucrative investments. To be a successful investor in commodities, though, you need to display the same temperament that has made great investors like Warren Buffett and Peter Lynch the legends they are today. Avoid fearful overreactions to fluctuations, and resist tempting opportunities where you have not yet done your due diligence. A disciplined approach in any investment vehicle can pay off.

The article Gambling on the Future Price of Oil originally appeared on Fool.com.

Fool contributor Tyler Crowe owns shares of LINN Energy, LLC. You can follow him at Fool.com under the handle TMFDirtyBird, on Google +, or on Twitter, @TylerCroweFool. The Motley Fool has no position in any of the stocks mentioned.

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