Oh man. wgntv . com/2016/01/20/dow-drops-over-500-points-oil-falls-below-27-a-barrel/ Is this a buying opportunity for oil investors, or are we in some deep excrement with this one?
Well it may be a combination of both. I think it is probably a great time to invest in petroleum products as you know oil is going to rise again...but the fact that the stocks are continuing to drop does not look promising for the economy. I heard them say on the news that when the market has a bad January it does not bode well for the rest of the year.
No one knows for sure what to expect, but many believe we are in the early stages of a fairly lengthy bear market. If you are investing for longterm growth and won't need any of your investment dollars anytime soon, I'd stay the course, continue to dollar cost average every payday, and keep a little cash set aside for bargains. Not too much in any one sector or industry. If you're an experienced, more active, tactical, "enterprising investor" / trader type with a fair amout of money to play with, I'll just say that when things start to get scary in the markets, I personally tend to take at least a little profits on more volatile and speculative investments, buy a little on dips as good companies become cheaper, buy more put options (and sometimes calls) on more volatile holdings, buy a bit more gold, and to also write a few covered calls on less volatile companies I am long... and also carefully short a few overpriced low-beta companies with declining fundamentals - usually larger companies that are less likely to be takeover targets. A good tool to use as a hedge without taking a whole lot of risk: http://www.marketwatch.com/investing/Fund/SH?countrycode=US
SkyNews on its 4 pm EST (9 pm in UK) was saying "officially entered bear market today" when showing the DJ IA closing numbers. I might nbible a tiny bithe but I'd pay attention to the Chinese-based financial news for signs of slowing the drop. You can find links to the those sites in my other postings; in the car now and don't have access to them. HTH. YMMV.
There is nothing to indicate we have hit the bottom in oil, in fact the opposite is true. Iran has come online which had been predicted and priced in, but probably what was not priced in was their announcement that they planned on producing about 60% more than previously announced. The same thing with China.. Most people thought China would announced slower growth, but not the slowest in 20 years, and many believe that even that horrible number was being fudged a bit by their central bank and things are worse than expected. And finally, the Saudis continue to double-down with their fair market value talk. At least in their public statements, they seem more than happy to let the market determine the value of oil without trying to limit production to artificially boost it. I think a lot of people are waiting for them to say ´enough is enough´ and try to do something, but every interview, they just keep repeating that they are going to let the market determine the price.
It's like I keep saying, fossil fuels are not a scarce resource. Look at Britain: we are literally sat on vast coalfields, but there's no need to drill for it because there's a super-abundance of the stuff elsewhere, which we can buy and import cheaper than it'd actually cost us to extract ourselves! So yes, oil can definitely drop further. How much further and just how quickly is what we should be worried about.....
I also think that oil hasn't finished decreasing either and it still as some way to go before something is done. Look on the bright side though, at least petrol prices have been slashed aswell so every cloud as a silver lining as the saying goes!
