An unknown philosopher was reported to say, “I never got run over by a truck I saw coming.” Is there anyone who is bold enough to say that they saw oil prices dropping by over half in just 3 months as it did in 2015? For that matter, did anyone really predict the market meltdown of 2007 & 2008? There are some who would take credit, but few could honestly say yes.
We’ve all been run over by “the truck” from time to time. Attempting to predict the market is wishful thinking at best. What we do about the debacle is the important part. Baron Rothchild advised that the time to buy is “when there’s blood in the streets.” There’s an oversupply of oil worldwide and its apparently getting worse. OPEC is driving prices down by flooding the market with oil. This in turn is pushing the price of oil company stocks down. So, is now the time to add these stocks to our portfolios? Is blood flowing in the oil field? Several years ago I wrote an article titled, “How about Dividends for Some Change” encouraging investigation into large, solid companies whose stock prices were down and dividends were high. One company I mentioned was AT&T. According to Yahoo finance, AT&T closed January 1, 2014 at $33.32 per share and was paying a dividend of $1.84 per year, per share. On January 1, 2017, 3 years later, AT&T closed at $42.16 per share and paid an annual dividend of $1.96 last year.
Being “the smartest investor you know” is ignoring the hype of the media and doing personal research, Yahoo Finance says: Conoco Phillips (COP) is down 30% from its high last year of $87.09 a share and pays a dividend of 4.5% as of 1/16/2015. British Petroleum (BP) is off its 2013 high of $53.48 a share, and pays a dividend of 6.6%. Total (TOT) the French exploration and production company share price has dropped 35% and its dividend is 6.2% as of 1/16/2015. These companies pay us dividends while we wait to see if and when their prices change.
Do you think that the world is going to use less of the energy commodity moving forward? Do you think that even though there’s an oversupply now, it may drop? Do you think that in time prices may go up? Do your research. There are many places on the internet where you can go for current information. A place to begin is Yahoo Finance. Look for trends and get involved whole others are getting out. Be practical about your decisions. Take the phone company AT&T for instance. Do you really think its going away? Everyone you know seems to be clinging to a cell phone of tablet. Have you ever noticed fewer vehicles on the road?
If you’re using an advisor to help you with your investments, now might be a good time to discuss you investment portfolio. If you’re not employing an advisor then see out one who has a CFP® (Certified Financial Planner) designation. I believe you’ll feel comfortable knowing that we have to maintain both a strict code of ethics and rigorous continuing education requirements to maintain our professional designation.
When you pull up to the gas pump next week, ask yourself, “should I be getting an additional benefit from this purchase?” Become the smartest investor you know and reap the potential rewards of ownership.
If you have ever read one of our newsletters, then you have certainly heard the phrase, “be the smartest investor you know.” Research is a key part of making good financial decisions. If would like to begin receiving our monthly newsletter, sign up here.
This article is for informational purposes only. All expressions of opinion reflect the opinions of Joe Psalmonds CFP® of JPJ Investments.
The views expressed are not necessarily the opinion of Royal Alliance Associates Inc, and should not be construed directly or indirectly, as an offer to buy or sell any securities mentioned herein. Individual circumstances vary. Investing is subject to risks including loss of principal invested. No strategy can assure a profit against loss. Due to volatility within the markets mentioned, opinions are subject to change without notice. Information is based on sources believed to be reliable; however, their accuracy or completeness cannot be guaranteed.