Live After Quit

Live Rich: Invest in Oil When Fear Grips the Market

As the old saying goes: “buy when there is blood in the streets.” In the stock market, this has historically been a phrase used to encourage investors to buy stocks when prices have been well below their value, as a result of market panic and pessimism. As the market goes through surges and dips, investors have long followed this mantra. Now, this phrase has a new meaning in terms of commodities investing. Oil prices, traditionally seen as a gauge of economic stability and vitality, have been at multi-year lows since early 2015. During this time, the price of oil has repeatedly dropped below its underlying market valuation. Many investors and industry analysts view this as a prime opportunity to “buy the dip” and invest in the commodity. When it comes to investing in oil, there are various strategies that can be taken. Some investors may look to buy oil futures and option contracts, while others may look at investing in oil stocks or even in exploration and production companies. Whichever approach is taken, it’s important to have an eye on the macroeconomic events that affect the oil industry, such as global supply, geopolitical affairs, and economic growth forecasts. Analyzing and understanding the supply and demand dynamics of oil can be tricky, and having a financial advisor or an experienced commodities investor can make things a lot easier. For those who are more comfortable with technology, a range of trading programs can be used to scan the markets and execute trades automatically. While there is no guarantee of success when investing in oil, those who choose to buy when there is “blood in the streets” may be able to take advantage of several market opportunities that could result in significant gains over the long-term. As the old saying goes, “diamonds are made under pressure” and it’s no different when it comes to oil. The current market presents a prime opportunity for investors to acquire oil on the cheap—and potentially pave the way for greater future profits.