Throughout the decline from about $100 a barrel, yours truly spoke about a $30 target for oil with a real possibility it could even trade down to the $20s.
This morning we have breached the $30 level.
While I’m out of the soothsayer and stock picking game, I do continue to follow markets and address them in general. When it comes to oil, I believe the final stage to this vicious bear market has begun. It shall be the ugliest stage of the entire down move but shall allow a classic quote to come into play:
“Adversity creates opportunity”
Neither I nor anyone truly knows precisely when that exact moment shall arrive. For those who still believe they can regularly and correctly time markets, I not only wish them well, but recall a famous line uttered by one of the most colorful market commentators I spoke alongside on the speaking circuit for years, Mr. James Dines. Jim’s comment about thinking one could regularly time markets was:
“Think about what happen to the man who invented Preparation G”
So forgive me for no longer laying claim to being a Market Timer (which thankfully allowed me to throw out all medications that relieved the pain when wrong), but I do think it would be wise for investors to develop some strategy to begin identifying the baby that’s going to be thrown out with the bath water in this oil market carnage.
Whether one does their equity selecting on their own or with a qualified financial advisor, it seems reasonable that there shall be numerous bankruptcies, mergers and consolidation for a considerable period even after the dust finally settles. I think what’s important now is to prepare a plan that fits your investment criteria and have it all set to go and not try to simply pick a bottom (like the market claimed they did yesterday in oil and oil stocks, only to get hammered yet again today). I personally would prefer a method that accumulates over a period of time, whether it’s by price, dollar amount or different sectors.
The news is all but certain to get worse before it gets better. But you don’t buy bargains during happy times.
I do believe we’ve reached the final stage not only because my downside targets have been reached, but also the fact that in the last few weeks, investment firms (and so-called Strategists) have not only thrown in the towel on their cries all the way down to buy oil; but now are making such bearish forecasts to the point of claiming oil shall be cheaper than water! This needed to occur to set the stage for the final washout.