03/15/2006
One of the big concerns right now for both individual investors and those who make their living on Wall Street is what will happen with oil prices. How much of a "terror premium" is baked into the energy equation? Can oil drop below $60 a barrel and stay there? Will oil skyrocket past $70 a barrel? How much damage, if any, would $70-plus oil do to our economy?
Now all of these are legitimate questions to ask, but given the unpredictability and volatility in the energy sector, I don't think any rational market observer can honestly say they know for certain how things will play out.
Right now I am telling my Successful Investing subscribers to take a small portion of their total portfolio and put it into energy stocks via Exchange Traded Funds (ETFs). Why am I betting on oil? I believe the continuing geopolitical strife (Iran, Iraq, Nigeria, Venezuela, and elsewhere) will continue to drive oil prices higher. I also think that over the long term, worldwide energy demand will exceed a politically fragile supply.
These conditions could translate into big gains for the sector. But what if I'm wrong on this one? Well, no problem. You see, I am a realist when it comes to money. I always enter into every position I recommend with a preset stop-loss. That means I know exactly how much am willing to lose in any given position BEFORE I move my money in. If things turn south on us, we will only get dinged with a small loss.
If you have any designs on becoming a wise investor, I strongly suggest you employ a strict sell discipline on any position you enter. You don't know how many tales of woe I've heard over the years where people bought a stock or mutual fund and just watched it spiral downward to 20%, 30%, 50% or even a 100% loss. If you have that sell discipline in place, you will always be protected from catastrophic market losses.
So, what's the next move for oil? I think we'll see a sizable move either way in the price of crude after the whole Iran situation plays out in the weeks ahead. If the Iranians decide to play ball with the rest of the world community, then oil, and energy stocks, could witness a sharp selloff. If, however, Iran defies the U.N. and pushed ahead toward its stated goal becoming a nuclear power, oil and energy stocks could very well blast off.
The stage is set, the band will soon play, and we're all going to hear this tune loud and clear.
To find out more about my new energy allocation, as well as the strategies that will help you profit regardless of market conditions, check out my Successful Investing service.
http://www.fabianssuccessfulinvesting.com/order.php?offer=12
I just finished writing the April issue of Successful Investing, and I want to share a few of my thoughts on the experience with my Making Money Alert readers.
First, the April issue is always special to me as it marks the annual anniversary of the newsletter my father started 29 years ago. That's right, from a dining room table in Huntington Beach, CA, nearly three decades ago, a man decided that you didn't need to follow the prevailing advice on Wall Street, nor did you have to pay high commissions to brokers in order to make money in the stock market.
His simple yet elegant trend-following strategy made it possible for anyone to achieve financial freedom, provided they had the motivation and the willingness to take control of their lives.
I am proud that for the past 29 years, my family has been empowering investors with the positive message of market discipline, patience and fortitude.
Here are the promises I've made to my Successful Investing subscribers in celebration of our 29th anniversary:
I promise to continue providing you with the "how to" of investing.
I promise to continue analyzing and dissecting both the good and the bad with an objective eye.
I promise to always be on your side in the battle to achieve the financial freedom you desire.
In return I ask that you make a commitment to yourself.
I ask that you define your purpose, write down your goals and act in accordance with your objectives.
Together we can bring into reality our deepest desires. Together, we can achieve the greatness open to us all.
"The individual has always had to struggle to keep from being overwhelmed by the tribe. If you try it, you will be lonely often, and sometimes frightened. But no price is too high to pay for the privilege of owning yourself."
-- Friedrich Nietzsche
Achieving self-ownership, particularly when it comes to taking responsibility for your financial success, is what we've been teaching our readers to do for nearly three decades. Isn't it time you stopped being overwhelmed by the tribe?
Wisdom about money, investing and life can be found anywhere. If you have a good quote you'd like me to share with your fellow Making Money Alert readers, send it to me, along with any comments, questions and suggestions you have about my radio show, newsletters, seminars, or anything else.