Move Away From Southern Crude Oil LOF

Today, let’s talk about the Southern Crude Oil LOF. For those familiar with LOF funds, arbitrage is a routine operation. But this time, due to rising crude oil prices and the fund’s own lock-up period, some positions weren’t exited in time. However, I have fully liquidated all my holdings today.

The current situation of this fund makes me feel like history is repeating itself, as if we’re back in the crazy phase of Guotou Silver LOF. Those who have been paying attention know that Guotou Silver LOF’s premium once exceeded 70%, maintaining a high level of 30%-40% for a long time. Today, the Southern Crude Oil LOF’s premium has also broken through 40%, reaching about 45%, which is clearly unreasonable.

Its outcome is very likely to mirror that of Guotou Silver LOF—that’s inevitable. The only suspense is whether it will collapse at 2.5 yuan or 3 yuan. Currently, its net asset value is only about 1.7 yuan, while the on-market trading price has already risen to 2.5 yuan, which is a very dangerous signal.

This reminds me of a friend who invested in Guotou Silver LOF. He comes from a remote area and, unable to buy physical silver, blindly bought Guotou Silver LOF with his entire position. Initially, he made some money, but when the price corrected, he didn’t sell. Instead, like a gambler, he poured all his savings of a few hundred thousand to a million yuan into the fund, going all-in. As a result, he lost 300,000 yuan in just a few days and then made a series of irrational moves. My advice at the time was to exit immediately, but I don’t know whether he eventually liquidated his position.

Guotou Silver LOF has already caused many people to suffer big losses. Now, the daily on-market trading volume of the Southern Crude Oil LOF has reached 1.7 billion yuan, which definitely includes a large amount of retail investor funds. I believe that at this point, exiting the fund is the right choice at any time.

Especially now, when the premium is already ridiculously high. Will crude oil prices continue to rise in the future? Possibly. Will they reach $110 or $120? Also possible. But to say it can hit $150? Sorry, the current premium has already driven the price to the level of $150! Are you betting on whether crude oil can rise to $200? In reality, its upward potential is already locked, but the downside space is at least 30%-40%.

So, from any perspective, the Southern Crude Oil LOF is no longer worth investing in.

That’s all for today. If you find this information helpful, I hope you will share it widely, especially with friends who are only vaguely aware of LOF funds. Maybe it can help them avoid a huge “pit.”