Keep Your Eye on the Horizon

19Nov08

Ronald J. Sloy
11/19/2008

Newspaper titled Investing

Obviously it’s been a tough year for nearly everyone and there really hasn’t been a place to hide. This week the market is experiencing added volatility because of news surrounding the big three U.S. automakers. On a positive side, last week we tested 8,000 on the DOW for the third time and this seems to be a good indication of the bottom.

We do expect to begin trading in a more positive direction through the final six weeks of the year and still hold hope for the standard end-of-year Christmas bump, even in this very tough and rare economic state.

One thing to note and keep in mind is the significant drop we’ve seen in oil. This extremely rapid decline has been largely overshadowed by the tremendous volatility in the equity markets, both domestic and global. The price of oil has now dropped from $147 to this week’s low of $54 a barrel, in less than six months. The key note here and now is that every $20 decline is equivalent to a $250 billion consumer savings across our country. We booked our gains a couple months early at $128 a barrel, but made fantastic earnings on the way up and are now beginning to bring our clients exposure to the natural resources sector once again.

As we said above we still anticipate an end-of-year bump in the right direction, and hope to see signs of that by the end of the Thanksgiving week. We hope you all have much to be thankful for, and have the foresight to keep in mind through these tough times that it is truly a small window in the grand scheme of things. The U.S. economy is the most resilient in the world and we will bounce back.

Please feel free to contact us with any questions or comments regarding your 401(k), or personal situation, and we’ll be happy to help out where we can. We can be reached at 503.248.9800.

Best Regards,

Ron Sloy

Learn more about Ron Sloy.

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3 Responses to “Keep Your Eye on the Horizon”

  1. 1 forexsystemprofi

    Who knows will we see this significant drop in oil next time? Much things depend upon OPEC…

  2. 2 ronsloy

    Thank you for your response, questions and concerns.

    I wish I could tell you our firm will know when such a significant drop would occur again, in any sector across the board, but I can’t do that. The fact that no one holds the crystal ball remains just that, a fact. No one could’ve predicted what we’ve gone through this year, especially over the last few months. However, we do know the markets go up and down, and we’ve seen such tough times before. The average one-year rally following a bear market bottom is in excess of 40%. Now history is a guide and not a gospel, so we need to keep a close eye on the world today, but we can’t forget what’s happened in the past.

    As for your specific question to the price of oil, I’ll say this. There are many factors that will drive the price of oil up and down, but the world’s demand on oil for energy is at the core. Will oil become less and less of a necessity as we further develop alternative sources of energy? Quite possibly. However, will there continue to be a worldwide demand on oil for the foreseeable future? I say absolutely. We turned up our exposure to natural resources last year, as all of us were getting beat up at the gas pump , to take advantage of the upswing we saw coming. We backed our exposure out once we felt we had capitalized on a good investment, and booked our gains. I can’t tell you if oil will hold above $40 a barrel or if it will shoot back up to $150 a barrel. All I can say is that the worldwide demand on oil is still here and today’s price of $48 a barrel is cheap, so we’re buying.

    Thank you again for your response and we’ll look forward to hearing from you soon. See you on the upswing!

    Best regards,

    Ron

  3. Ha, OPEC decides too much IMHO.


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