Premium Content

Starting next quarter, current clients will have exclusive access to premium content. Not a client? Use the form below this article to get started.

 
Oil is hovering around $80 a barrel, from the high of about $105 a barrel not too long ago. Most analysts feel that oil is down temporarily, with the possibility of it bouncing back up in a couple of months.  We don’t think so.  We believe it’s a structural change, due to better technology. Not only does fracking take place here in the US, it’s taking place throughout the world. The result is increasing supply. It seems we finally broke the backs of OPEC and other Arab nations, who hung onto this monopoly for so long.  If we are able to continue to increase supply, it becomes very obvious what that can do to prices.
 
Now, the other side of any equation is demand. We talk about supply and demand quite often, but the demand for oil and gas has gone down over recent years, thanks to hybrids and other types of cars that don’t use petro fuels. We also continue to get reports that global demand is down, as Europe and Asian economies are stalling. We will watch this very closely, because we know oil is very speculative. Yet, we believe the market looking at lower prices for oil is only a temporary “blip.”
 
Think about it.  It’s as if the government is sending the American people a check each week, in the form of a stimulus for the overall economy. This will have a compounding effect. The longer oil stays down, the more confidence consumers will have. As it currently stands, the market views lower oil prices as temporary, and therefore, people may not be as confident. However, if oil stays down longer, consumers will have a lot more discretionary money.  For instance, I recently heard a friend filled up his SUV for $55 when it normally would cost him about $80. Think about that for a minute, he was filling up twice a week, with one car in the family. Then multiply that over many different families and households – you get the picture.
 
It is also very convenient, with the troubles we have around the world — the biggest losers for oil is Russia, ISIS and OPEC. None of these countries/groups are our friends, so aside from the normal supply and demand, there also may be some other orchestrations going on. However, low oil is extremely beneficial to Europe.
 
One of the biggest concerns we had in October was a slowdown in Europe and the EU (their Fed), being “behind the curve.” Said another way, the EU was not going to put any teeth into quantitative easing.
 
We think that everybody recognizes that oil is low, but we believe that oil is going to stay low for a while and this would be a big boom for companies. Think about transportation companies; now their cost of operations are lower. We’ve already seen a lot of airline stocks go up in price; perhaps a reflection of lower operating costs thanks to low oil. In almost every product you can imagine, there is some type of oil component; the shoes you wear, the vehicle you drive, when a producer sends something by truck from a factory to the retail center. Taking all of these things and more into consideration, it isn’t hard to imagine that with the lower the cost of oil, there is going to be a huge stimulus; making oil the big story of 2015.
 

Contact Ken today for access to exclusive content, insider news & a clear path to your financial destination








     
    © Mahoney Asset Management

    INVESTING RISK DISCLOSURE
    Keep in mind that investing involves risk. The value of your investment will fluctuate over time and you may gain or lose money. Before investing, consider the funds’ investment objectives, risks, charges, and expenses. Contact Mahoney Asset Management for a prospectus or, if available, a summary prospectus containing this information. Read it carefully.

    IMPORTANT CONSUMER INFORMATION
    This web site has been prepared solely for informational purposes. It is not an offer to buy or sell any security; nor is it a solicitation of an offer to buy or sell any security.This site and the opinions and information therein are based on sources which we believe to be dependable, but we can not guarantee the accuracy of such information.

    Representatives of a broker-dealer or investment adviser may only conduct business in a state if the representatives and the broker-dealer or investment adviser they represent: (a) satisfy the qualification requirements of, and are approved to do business by, the state; or (b) are excluded or exempted from the state’s licenser requirements.

    An investor may obtain information concerning a broker-dealer, an investment advisor, or a representative of a broker-dealer or an investment advisor, including their licenser status and disciplinary history, by contacting the investor’s state securities law administrator.

    SECURITIES: ARE NOT FDIC-INSURED/ARE NOT BANK-GUARANTEED/MAY LOSE VALUE
    This information is intended for use only by residents of CA, CT, DC, FL,, MA, MD, MN, NC, NJ, NY, OH, PA, and VA. Securities-related services may not be provided to individuals residing in any state not listed above.

    The financial calculator results shown represent analysis and estimates based on the assumptions you have provided, but they do not reflect all relevant elements of your personal situation. The actual effects of your financial decisions may vary significantly from these estimates–so these estimates should not be regarded as predictions, advice, or recommendations. Mahoney Asset Managment does not provide legal or tax advice. Be sure to consult with your own tax and legal advisors before taking any action that would have tax consequences.

    Securities offered through
    Newbridge Securities Corporation,
    member FINRA / SIPC

    Investment Advisory Services offered through
    Newbridge Financial Services Group Inc.,
    an SEC Registered Investment Adviser.

    Office of Supervisory Jurisdiction
    1200 North Federal Highway, Suite 400
    Boca Raton, FL 33432

    Toll-Free: 877-447-9625
    Phone: 954-334-3450
    Fax: 954-489-2390