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Hi Jody. While I am extremely bullish on oil, I am at a place in my life with two young children and a wife who is not currently working that has led me to play the sector a little more conservatively than I ordinarily might.

I am staying away from anything that needs super high oil prices, like oil sands and deepwater for now, though I am still fairly optimistic that companies in the latter category like RIG and PBR will do extremely well over the next several years.

Oil services and drillers should do very well over the next several years as well, assuming that one has the stomach to hold on and ride out the inevitable ups and downs in the price of oil and nat gas.

I personally am in E&P (Exploration & Production) companies that pay high dividends. Look for ones that have low payout ratios, a manageable debt level, and that are growing their reserves consistently.

I would love to trade the physical commodities themselves, but I have friends who do so and it is a VERY dangerous game if you do not have the time to watch your positions like a hawk. I work too much to invest that sort of time in it.

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