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How to Invest in 2016:  SPY & OIL, a Timely Divorce

Posted by kdadmin on January 22nd, 2016.

How to Invest in 2016:  SPY & OIL, a Timely Divorce

As with many troubled marriages, there often comes a breaking point where the more stable partner dumps the dysfunctional, hysterical partner. The recent bond between SPY & OIL is no exception.

SPY Kicked OIL to the Curb.

As if to prove my point in Wednesday’s, How to Invest in 2016: Panic or Profit, SPY ticked up by 0.5% on Thursday while kicking OIL and its 16% daily loss to the curb.

All I can say is that it’s about damn time.

The Road Ahead.

While both SPY & OIL are up today, hope for stimulus from monetary policymakers abroad (Europe/Japan), and a positive surprise in USA manufacturing data have started to refocus SPY on more clear, and economically relevant, bits of information.

Sure, OIL is relevant, but it’s not as relevant as the recent panic selling has made it. Sure, lower profits for giant USA corporations aren’t great. But, lower fuel costs are hugely beneficial to a much broader segment of the economy, namely everybody who uses oil. Which … is everybody. This is how the market works.

So, where do we go from here? I’m sticking to the plan I laid out in How to Invest in 2016: Cash is King.

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