Morning Report Friday 6 February 2015
Oil has bounced over recent weeks, is it time to buy Oil stocks?
A lot of people are often “too itchy” to trade / tinker with investments and I’m currently hearing a similar thought from a number of investors:
• “Should I sell some banks and buy oil stocks? They have all moved so far it cannot continue!”
My first comment is, remember the GFC? Things can continue much further than we anticipate. The fall we are witnessing in both interest rates and oil prices is because the world economy is struggling to grow since the GFC 6 years ago. Equity markets are being driven higher by the “free money” trade as Central Banks pump money into the system, there is no talk of earnings growth for companies. Professional investors are still happy to pump money into bonds at current all-time low interest rates, implying this trend is not over.
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