The oil market’s in freefall, the stock market is in freefall. You’re taking losses, big losses, in stocks that you bought – not at the top of the market where valuations were high – but at areas you thought were terrific long-term propositions. What do you do now?
I am precisely where you are right now, because I am an oil trader, first and foremost. And I can’t tell you what is going to be right for you, I can only tell you what is right for me. And for right now, I’m standing pat and even committing a little more capital into these markets here. And I’m going to tell you why.
Panic. It is clearly what has inspired the last several big drops in both the oil market and with stocks. I saw Professor Schiller of Yale University on CNBC comparing this selloff with 2008 and 2000. Really? Are P/E ratios in the 40’s? Is there a structural credit market problem about to explode? If there is, I’ve missed it. Nothing fundamental has changed, instead, there are only rumors and speculation about what is the new reality on oil. Let’s look at some of them.
One is the perception that OPEC is coming apart and the Saudis are engaged in a war for market share with the rest of the Cartel and the shale producers here in the US. A letter from Saudi prince Al Waleed has warned of the dangers of $80 oil and squelched the idea…