Business
There are many ways to invest during a crisis such as 2020, and oil is no exception. The main difference with oil investing compared to regular equities is that the oil industry has been not doing well in general going back even a few years before the crisis. This video assumes that you have already made the decision to invest in oil and are reviewing the ways of doing it. Perhaps in a future video I will weigh in on if I actually would do the same thing myself. This video will cover 4 different methods or asset classes which are possible ways of investing in oil. Of course there are other instruments but I'll just cover these. Which one you choose depends on your risk tolerance, account size, account type and also how much time you are willing to spend maintaining the positions. My key point is that there have been heavy new money inflows into one retail instrument for oil which seems to be a favourite amongst many retail investors; but their favourite is actually my least favourite. I will explain to you why I believe this instrument is a bad idea and what are the alternatives. Of course, I can't give out any investment advice and you need to choose but I'm still going to give the reasons. In these unprecedented times in this crisis of 2020, this look very bad for the oil industry at this point. Oil tankers are plentiful around the world, storing oil with nowhere to go and running out of storage. While this is collapsing prices, especially the front month oil contract, behind the scenes it's also collapsing investment in exploration and drilling. This is really one of the only fundamental arguments for oil, lack of investment in exploration now will make oil more expensive once demand returns. We don't know how many years it will take for demand to return, but what we do know is that new wells and new production will be slowing. This could possibly be a drag on supply in the future. The only other possible bullish tailwind in the future for oil is weakening the USD. This currency is very expensive now and it's possible that governments may take action much like they did in the 1980s to lower the value of the USD. This would make oil priced in USD more expensive. Podcast form of video: https://anchor.fm/neil33 Patreon: https://www.patreon.com/clockworkcharts Twitter: https://twitter.com/clockworkcharts Instagram: https://www.instagram.com/clockwork_charts #nosmallcreator