Fabian: A VIP Selection
01/30/2004 12:00 am EST
"The government insists that inflation is well under control, but prices in oil, gold, copper, etc., tell me otherwise," says Doug Fabian in his VIP Investor. "There could be a lot of inflation down the pipeline." To play this trend, he suggests an energy fund.
"The falling US dollar has artificially held down interest rates giving a tremendous amount of demand for oil, commodities and basic materials because products manufactured in the US are cheaper abroad, have boosted exports and stimulated the economy. This inflationary move has also been instrumental in fighting off one of the Fed's biggest foes: deflation. With interest rates not likely to rise anytime soon, it appears as though prices may continue to rise, until a specific move is made to curtail further inflation and pump up the US dollar.
"We are buying Rydex Energy (RYEIX) in our VIP Investor portfolio. The fund primarily invests in domestic energy companies, as well as in futures and options contracts. Energy companies are involved in all aspects of the industry, including oil, gas, electricity, coal, as well as nuclear, geothermal, oil shale, and solar power. It may invest in companies that produce, transmit, market, distribute, or measure energy. The fund is non-diversified. The top five include energy producers Conoco Phillips, Texaco, Exxon Mobil, Devon Energy, and Apache. This fund hit a new 52-week high and is trading above its 50-day moving average."