Weekend Reading – Where does oil go from here?
Welcome to a new Weekend Reading edition covering another topic I’ve been thinking about a bit: where does oil go from here?
This was my article from this week: highlighting our Top-5 stocks.
Weekend Reading – Where does oil go from here?
Potentially much higher.
Before that take, let’s look back…
Recall experts were saying inflation was transitory, and even our Bank of Canada played along a bit.
I wasn’t planning for that myself.
These were my thoughts on inflation from summer 2021:
Back then, I believed the key reason why inflation was going to move higher and stay higher, was because our central banks were incapable of action back then, worried what would happen if they raised rates (even slightly) during a very trying and troubling pandemic after almost a decade of rock-bottom free money and inaction.
The reason I believe rates will continue to be modest, potentially for a few years ahead, is because of the pandemic aftermath and also for the same reason we got here in the first place: climbing household debt with our housing sector moving most of our economy (and not much else).
According to an OECD snapshot I read, from June 2023:
“Housing investment as a share of GDP reached 8.9 % in 2022, with an increase by 28.7% in the last five years compared with a level of 4.8 % on average in OECD.”
So, my theory is, unless housing prices come down quite a bit or at least stabilize in the coming years, inflation is not coming down anytime soon. Housing simply needs to cool off…
Back to oil…
With a new, desired economic slowdown tied to our Bank of Canada’s interest rate tightening cycle, historically speaking, one thing that surges in price when inflation is higher is oil.
Oil prices are certainly affected by several factors that include everything from the weather to economic and political instability. But at the consumer level, oil prices directly impact inflation. Rising fuel prices increase the cost of transporting goods and services, and as a result worsen inflation by raising the end price that customers have to pay for all goods. I’m sure you’re feeling this now… We are.
Like inflation, I think higher oil prices are here to stay for the coming years so I’m planning for that too – in my portfolio – and maybe you should as well.
More Weekend Reading – upcoming webinar to attend!
I must say, I’m REALLY looking forward to participating in this live webinar on Thursday, October 12 with other investors along with my partners at TD Direct Investing.
When? Thursday, October 12, 2023 @ 6 pm ET
What? Three ways to build wealth with dividend investing
As My Own Advisor, you know I tilt part of our portfolio towards dividend growth stocks. I believe and own dividend-paying stocks because I believe dividend investing is a common way for many investors to help build an income stream over time – myself included!
However, there are many different approaches to dividend investing. Those approaches may lead to very different outcomes and those outcomes may be better suited to certain investors, depending on their financial needs and goals.
As with investing, it always “depends”.
In this webinar, I join Adrian Starinieri from Passive Income Investing, and Henry Mah from Your Ever Growing Income to discuss the potential benefits of dividend investing as a way to build wealth compared to other investing strategies. I will share what works for me/us as a hybrid investor and how it likely differs from both Adrian and Henry.
More Weekend Reading…
Oil bull Eric Nuttall mentioned the energy market is facing some of the ‘strongest fundamentals’ in two decades. My plan has always been to own some energy assets over time and I’ve been picking away at owning more energy since early 2022 along with owning more low-cost XAW for extra diversification.
Bob Lai wondered if Canadian banks are likely to cut their dividends?
Humm, well, I don’t think so this year but I would expect some dividend freezes (again) as we enter 2024 until our housing economy is on much better ground.
The Globe and Mail hinted at multiple years of financial disruption ahead (subscription).
Seems economists now believe inflation is not transitory. From Rob Carrick:
“Economists have raised the idea that persistent inflation will keep rates higher than we’re used to, and now financial professionals are doing likewise. The end of cheap money was recently highlighted as a key trend over the next five to 10 years in a report from the CFA Institute called Future State of the Investment Industry.”
Excellent take from the Loonie Doctor on corporate class funds.
Source: Nelson’s post.
“Warren Buffett: If I were retired, I had a million-dollar portfolio of stocks paying me $30,000 a year in dividends. my children were grown and the house was paid off, I wouldn’t worry too much about having a lot of cash around.”
I’m sure I’ll mention this with my friends at TD in the upcoming webinar but I like owning a mix of dividend stocks and cash for this reason – aligned to someone who is more famous than I am!
“We do it because cash is the oxygen of independence, and – more importantly – we never want to be forced to sell the stocks we own.” – Morgan Housel, The Psychology of Money.
Save, Invest, Prosper!
As always, check my Deals page – partnerships and discounts to help you make the most out of your money – some of them you can’t find anywhere else!
Check out my partnerships with:
- Dividend Stocks Rock
- 5i Research
- and more!
As always, you can also consider hiring me for some low-cost financial projections services – anytime.
Just reach out.
Have a great weekend!