A 40% haircut to oil prices has the market up in arms, ignoring everything that actually matters. While everyone focuses on how far or how quick oil will move, we've set our focus on profiting from the fall in oil. Here's how.
The move in oil prices has been quick and quite violent. You likely don't need a recap of what's happened, but in case you do, he's a chart of crude oil prices.
By the media's proclamation, things are dire. Desperate even. One thing remains true, the media loves to fear monger, because fear sells.
Some headlines have said oil could fall below $50 a barrel. Recall when oil was barreling past $140 in 2008, Goldman Sachs called for $200. Shortly after that, oil plummeted to $40.
Some headlines have even suggested that OPEC is waging war on the American shale revolution. Where by forcing prices even lower, many of America's smaller oil producers will be forced out of business, re-crowning the Middle East as the oil overloads.
There will always be extremist. But all this has still sent oil-related names into a vicious selloff. There is some “blood in the streets” opportunities, but that's a post for another time.
One of the things I find most interesting is that most of the news around the current price of oil is pitched in a negative light. However, there are a couple things that studious investors should be paying attention to.
As you likely known — with every penny fall in gas prices, Americans saves a billion dollars. Considering the fact that gas prices are the lowest in over five years, it looks to be an easy bet that Americans will have a lot more money in their pockets in the coming months.
And when consumers are winning, investors should be winning too. Here's a few ways they've been winning this month: the S&P airline industry is up 12% over the last month. Many other companies that use a lot of gas are also winning. Shares of Domino's Pizza (NYSE: DPZ) and FedEx Corporation (NYSE: FDX) are up 6% and 7% for the last thirty days, respectively.
