“Buy on cannons, sell on the sound of trumpets.” Lord Rothschild
This month we looked at the fact investors expectations are more important than the facts. The primary focus in the reflection section was the direction of the price of oil if, and when, the Strait of Hormuz reopens. We listed many factors that will delay shipments from the Strait but even the thought of opening the strait caused oil prices to fall $9 in a day. Many experts warn that it will take a significant amount of time to bring global oil inventories back to the pre-war level. What analysts missed is that once people believe oil will soon be plentiful there is no need to pay a premium for short term deliveries. The current price of oil is $96 but the futures price for December is $72. The $72 price still reflects the uncertainty so the real price in December, assuming the strait opens, will be lower, maybe even close to the mid sixty-dollar level experience before the war. A second instance was a company that had a reputation as one that would never sell its holdings of Bitcoin. When they sold 3.2 bitcoin of their over 843 THOUSAND Bitcoin both Bitcoin and the stock collapse. There was a change in perception. There was the hope of a deal but no deal and yet the price of oil collapsed.
The markets continue to gyrate. We continue to focus on dividend paying stocks with the potential for capital appreciation. In addition to the traditional dividend paying stocks our client portfolios are diversified with holdings in the Energy and Gold sectors. We, and our clients, find comfort in the steady stream of income that you get when you invest in dividend paying stocks, such as the Canadian banks.
