We are not even a month into 2010 and already looking at what has and has not been working so far in 2010. We have been asked about oil stocks and ETF’s and at the start of the year we did a brief intro into the best alternatives. Then, earlier this week we looked into the best performing oil stocks so far in 2010.  I received a few emails from readers who wanted the same information for oil ETF’s. Here it is! First off, to kick things off, here are the main oil related ETF’s as well as their YTD (year to date) returns, price, if they are leveraged or not and finally their expense ratio.

As with most such graphs, it is not a surprise to have leveraged ETF’s with the top returns. Now if I had done this table just a few days ago, I think the results would have been very different but the truth is that Crude Oil has taken quite a hit in the past week (as have many other commodities and assets) which has meant that the top picks so far have been those that return the inverse of crude oil.

Take a look at SCO from Pro-Shares which returns -200% of the return of crude oil.

Personally, I would be very surprised to see this trend continue but I guess everything is possible given the uncertainty in the world. What are your top picks among this list???

Oil is back in the news as it went back up to 75$ in yesterday’s trading. Not too long ago, I had gone into the top oil stock picks for 2010 and it is now already a good time to see what is working and what isn’t. It might be early but this provides with opportunities to look at what has been working and what hasn’t in this first month of 2010. The good plays have not been around the major players as both Exxon (XOM) and Chevron (CVX) have negative returns so far in 2010.

One of the interesting trends in my opinion is that the best performers have generally been local US companies instead of those major international ones. Exxon has been awarded a contract in Iraq but there continues to be so much uncertainty involved when dealing in such regions that investors have preferred buying companies that are exploring in or close to the continental United States.



With oil at 75$ or so, there have been some good opportunities and that is especially true for McMoran Exploration Company (MMR) which explores and produces oil and natural gas offshore in the Gulf of Mexico and onshore in theGulf Coast area. The stock is up over 90% so far this year after new oil discoveries in the Gulf of Mexico.

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As much of a fan as I am of Baidu, I think that these two stocks moved two far given the recent news. The major movements by Baidu(BIDU) came off of news that Google might be pulling out of the Chinese markets as it announced it would no longer tolerate the Chinese internet policies even if that ends up meaning the company has to pull out of the largest internet market (measured in terms of users not dollars). And yes, that could help Baidu, especially in the short term, but the impact on Google’s profitability is not as obvious.

Baidu’s rise justified???

Baidu had been stable in recent weeks until the news of Google’s possible pulling out of China was announced. When that happened, Baidu(BIDU) quickly jumped from 386.49$ to 464.23$ in 2 days, a 20% rise based only on possible action against Google(GOOG). The stock has since backed off a bit but it continues to look a bit overvalued. Baidu(BIDU) continues to trade at a P/E ratio over 70 and I simply do not see enough growth to justify such a ratio.

No need to say that shorting such a fast growing company does have risk involved but I do believe that there is more upside in this trade.

Google is the real play here

All of that having been said about Baidu(BIDU), this trade is mostly about Google(GOOG) and its recent fall. There have been a few tougher moments for Google including the episode with the Chinese government but also earnings that although they were higher than expected, still came as a disappointment to many investors. Google’s launch of its phone, the Nexus One, has also not impressed investors. And finally, the announcement by former founders Sergey Brin and Larry Page that they will be selling a portion of their shares and giving up more voting power to investors has depressed the stock.

But in my opinion, Google still has a lot of growth in its future and is as well positionned as anyone (with Apple) in the mobile internet. That is one of the reasons why I picked Google among my 4 picks in the 2010 stock picks competition.

So, do you have any thoughts on this trade? I would imagine many investors being very reluctant to go short on Baidu(BIDU), we’ll see how it turns out!

Disclaimer: No return is guaranteed and each recommendation should be considered within the investor’s individual situation. As with any financial investment, there are risks involved.