Oil
Price Smash!
Oil is the poster child of the forces driving massive deflation: overcapacity / oversupply and a collapse in demand. Overcapacity / oversupply and a collapse in demand are not limited to the crude oil market; rather, they are the dominant realities in the global economy.
DYI: Oil as measured by West Texas
Intermediate as I’m writing this post 9:22 A.M. 4/17/20 is trading at
$17.51! As compared to 5 years ago at
$55.74 prices from that time till now has dropped by a staggering 69%! If oil
prices go single digits [I have no idea if they will or won’t] then oil and gas
shares will be at “the give-away-table.” Prices when corrected for inflation will be far cheaper than the 1998
price smash.
As of 4/17/20
$17.51
For those of you with
401k’s that have an oil/gas energy sector funds this is a great time to dollar
cost average at very low prices. Recovery for oil prices may take months especially if the U.S. experiences a deflationary smash. That is great as that will allow you time to build a position with some size. My favorite of course
is Vanguard’s Energy Fund symbol VGENX current 6.42% yield.
You will know that you
are close to the bottom when see headlines almost daily discussing the demise
of the oil and gas industry. Below is
such an example.
Why oil prices will never recover
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DYI
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