6/1/16
Updated Monthly

Oil Prices: 
06/01/15.....$65.07

06/01/16.....$47.81   

DOWN 26.63%
(oil prices approximately one year earlier due to weekends & holidays)
ANS West Coast prices   

 OIL INDICATOR  POSITIVE

Oil prices are well known for their volatility in the short term, longer term due to dwindling reserves energy prices are in a secular bull market.  Technologies such as fracking will extend the life of oil fields but major new discoveries arrive at a snails pace far slower than the world's growth.  

As long as prices rise in a slow and orderly pace our economy can adjust to those changes, however if prices spike (international tensions, war etc.) high energy costs behave as a massive deflationary tax. This will send our economy tumbling down and very possibly the U.S. stock market.

If oil prices rise greater than 75% from one year-earlier level, investors at that time should shift their portfolio geared towards deflationary times.  This would be oil indicator as negative.

If oil prices rise from one year-earlier less than 10% or drop then the inflationary play is in effect; a positive for economic growth along with possible higher stock prices.

Where to find one year-earlier oil prices?  Alaska Department of Revenue    

Oil indicator positive              
20%  REIT's
20%  Energy
20%  P.M.'s
40%  Small Caps
  0%  Lt. Gov't Bonds

Oil indicator negative
  5%  REIT's
10%  Energy
10%  P.M's
10%  Small Caps
65%  Lt. Gov't Bonds

Vanguard Funds

REIT's
REIT Index Admiral  VGSLX

Energy
Energy Fund  VGENX

Precious Metals (P.M.'s)
Precious Metals and Mining Fund  VGPMX

Small Caps
Small Cap Value Index Admiral  VSIAX

Long Term Government Bonds
Long-Term Government Bond Index Admiral  VLGSX

DYI Comments:  Oil prices are down in price from a year ago as stock price have continued levitation despite the fact that on a secular basis equity prices are grossly overvalued.  Oil prices and massive Fed intervention is why stock prices have been elevated over the past two plus years.  Fed's stimulus is drying up and oil prices have risen in the past year the supports for these equity prices have become a bit tenuous.  The S&P 500 has formed a year and halve long arch.  Stock prices as a whole have gone nowhere since then.

The Great Wait Continues....

DYI