Been to the gas pump lately? I paid under $2.00 for regular unleaded the other day. How nice to be able to fill up the car for under $40. I’m really happy because I’m not spending as much money on gas so I can spend it on other things, like golf. Or, a trip to a warmer climate to play golf.
You would think that there are a lot of people who feel like I do and who will be spending that extra cash. That should mean more demand for goods and services, higher employment and higher profits. Wouldn’t investors be happy?
I guess that I’m drinking the wrong Kool-Aid. Everyone else seems to be drinking the Kool-Aid that says lower oil prices are bad. Lower oil prices mean that there is less demand for oil caused by weak economies in Europe and Asia (bummer for them). That weak demand will hurt the economies of countries like Iran and Russia and Venezuela (that doesn’t necessarily make me sad). Lower prices could even cause political turmoil in some of the underdeveloped oil producing countries (the leaders of these countries deserve to be toppled because they are taking all the oil profits and pocketing them personally). All of these things could lead to a worldwide recession and eventually hurt the U.S. economy. I think that is a stretch, because if most Americans are like me and are spending 30% less on filling my car up and using that money to buy other things, or actually invest it, that should not only keep the U.S. economy strong, but will probably be enough to drag China up off the floor and Europe too.
Drink whatever Kool-Aid you want, but my brand says that low oil prices are good for me and good for the economy! Drink up!
Mike Berry is a Registered Representative offering securities through Cambridge Investment Research, Inc., a Broker/Dealer, Member FINRA/SIPC. Investment Advisor Representative, Cambridge Investment Research Advisors, Inc., a Registered Investment Advisor. Legacy Wealth Management, LLC and Cambridge are not affiliated. Cambridge does not offer tax advice.
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