Royal Bank of Scotland sez... Sell Everything now!
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Saw that some were speculating gas might be selling for $1/gallon by the end of the year. Who thought we'd ever see that again?
Or would you rather, if you can swing it, hang in, keep your shares and add more on the cheap later, just like in 2009-2011?
The last time we had oil that cheap was under Clinton.
Unemployment was under 4%, the dollar was strong, and we were headed toward balanced budgets for as far as the eye could see - or until we elected a Republican president, whichever came first.
Why is everybody so upset about cheap oil?
The only problem with it is that it makes alternative, less carbon spewing energy sources less competitive and encourages people to buy larger, less efficient vehicles and generally engage in more wasteful energy use, undermining efforts to reduce carbon footprints to combat climate change.
So, you are assuming that all shares would once again regain all its value? When? Which ones?
Well, yes, that's a big problem.
Which is why I said some time ago that as the price of oil drops, we should raise the tax - putting the tax toward greening our infrastructure. But of course Americans lack any rational sense of personal responsibility. So that didn't happen.
Pigeons have more sense.
All shares wouldn't, but if you invest in an index fund, you should be okay, right?
Best would be one of the first to sell, and then one of the first to buy back in. But marketing timing is beyond my capabilities. Are you getting out of the market bean?
No, I was just making the larger point that panic selling as things drop in a fall isn't always the best solution. Well-run, profitable companies with a good track record often hit bargain share prices when the markets are falling. A crap investment is a crap investment, so if you have a dog that isn't a good bet to survive a pullback, then let it go.....but people can unnecessarily wipe themselves out if the panic sell on a fall. Pull back on the dogs, but look for buying opportunities in the rubble.
Even in a recession, people are going to continue to need and want "stuff". People still need to eat. People still need places to live and they still need to get around. They still need services. Look for good buys.
In the Great Recession, my portfolio was a mixed bag. I sold some things at a loss for sure, but I held onto some things and added others. On the whole, I'm much better off for not panic-selling out of the market and waiting for the rebound. Dollar-cost-averaging is a proven strategy for a reason.
I have been largely out of the market since late 2007. I now only own shares in five companies...companies that make and sell things that I understand.
My wife and I own a few blue chip stocks, but not any real money in them. The money that I'd be worried about is in our 401(k)s. I wonder if it would be a good idea to move money to one of the bond options for a little while.
Well, I voted for him - but I confess I can't remember what he said on this. Can you refresh my memory?
IMHO, if you're sitting on a bunch of profits in funds from the last few years and/or you'll need the money in the short or near term, then I'd certainly advocate taking profits and minimizing risk. Re-evaluate your funds -- if you see a particular area likely to be a loser, re-allocate out into something else. If you're still in the 10-15 year or more retirement horizon in your 401k, I wouldn't worry a ton. Keep investing in vehicles you're comfortable with long-term. Great markets always sour eventually and down markets always swing back up eventually. I'm probably 20-30 years from retirement. I'll see plenty more up and down swings, so I'm not going to panic out......and if everything goes to zero and society as we know it collapses, I'll have bigger worries than my 401k.
He proposed a 50 cent per gallon gasoline tax with a corresponding reduction in the Social Security tax. I was talking mainly about the gas tax part of it though. Higher taxes on gasoline have for quite some time been a very, very good idea for any number of reasons.
Big oil is integral to the US economy, but they have a tenth of the goodwill with the US population that the auto industry has. They never cut their consumes a break, so I don't see them getting a break from the taxpayers. The politicians they own my see it differently.
With the recent wave of mergers there is more diversification and much stronger companies at the top.
I think it would go deeper than that. What we think of as "Big Oil" is more than than just the price of crude and the price at the pump. They're so diversified and the stuff they pull out of the ground is used in so many industries that they may actually be fairly collapse-proof and, if I'm horribly wrong, they might be even more "too big to fail" than the big financials.
Exxon/Mobil and Chevron are heavily diversified. Since they already have a hand in so much I think they'll weather the storm just fine. Even those that just refine and sell it will probably be fine. The price is down, but we are still buying the stuff. It's the equipment and service providers who will be hardest hit. Pipeline ownership has been consolidating at a rapid rate the last two years. They'll be okay.
The RBS view that isn't receiving enough attention is that the US could be close to going back into recession.
Will we see a rate cut? More QE?
Will we see a rate cut? More QE?
There was really no earthly reason the Fed should have raised the rates in December in the first place. They seemed to be doing it just to be doing it.
What you are suggesting is a floor price on gasoline. The problem there is would the oil/gas industry just price to the floor? Would the govt be able to control it's spending with big windfalls of cash during low oil prices and how would it handle increases in oil prices and a shutting down of that money spigot?
I don't think we have enough adults in DC to handle that sort of responsibility.
I understand that moving money into a bond fund at current rates is essentially moving your money to cash, but within a 401(k), its a way to de-risk if you think the market is about to crash and then you can move your money back into stocks after the crash. As I said earlier, I'm not going to try to market time any crash. I've got plenty of time until retirement, so I'll just ride it out. But if I was in my 60s, moving money to bonds seems like a good way to secure profits if you're worried about a market crash.
I know you are trolling, but just for fun care to speculate on where the market will be relative to where it was when Obama took office?
Along with reducing unemployment to 5%, dramatically lowering gasoline prices, slashing the deficit, insuring millions....
The only one of those that isn't true is the one you mentioned.
Perhaps that's why you keep needing to sign up with a new handle. Yeah, that's just a guess. But it's probably most people's guess.
