“Strike Oil: Invest When Prices Hit Bottom!

With global tensions on the rise, ‘blood in the streets’ can now also be a reference to oil. For decades, oil has been viewed as the new gold and a smart investment in times of uncertainty. The argument is that when oil prices fall, it’s a sign of a worsening economy, making it a smart time to buy oil for a cheap price. It’s called the ‘buy when there’s blood in the streets’ approach, and it’s an investment strategy that has stood the test of time. However, given how volatile oil prices are, it’s important for investors to understand the specific factors that influence oil prices. These can range from supply and demand to geopolitics. As the saying goes, “the only certain thing about oil is uncertainty”, so investors must be mindful of the macro trends that can cause oil prices to unexpectedly dip. As to why oil can be a great buy when its prices fall, it’s due largely to the fact that it’s a finite resource. That means that, while prices may drop, they’re not likely to stay low for long. When the global economy starts to improve, the demand for oil goes up and so do its prices. So, those that buy when the prices are low can reap the rewards when the prices rise again. However, while it’s good to buy when there’s blood in the streets, investors must also be aware of the potential risks. Namely, it’s not a guarantee that prices will rise when the economy recovers and, worse, investors could get stuck with oil that’s no longer viable to use in the future. All things considered, investing in oil can be a smart move if done strategically. Those that understand the risks and the dynamics of the market can get in while prices are low with the expectation that they’ll eventually rise again. After all, they can’t print more oil, so buy when there’s blood in the streets can be a wise approach for those willing to tolerate the risk.