Oil
Here's something to watch out for -- or at least to be thinking about regarding the big OIL price decline. I have a bunch of money invested in oil and oil pipes etc and these investments have paid a higher than normal dividend. Dividends can typically build a "floor" in a share price because as the share price drops -- the dividend percentage payout increases -- investors searching for YIELD are then attracted to the shares (remember the market is about buyers and sellers - period).
BUT --- ALWAYS THE BIG BUTT -- At some point if a company is losing money they can and will CUT the dividend!! When they do that - then the price drops yet again.
The reason I say this now is because I don't want you to get caught up in trying to catch a falling knife. It's a mental game - where you've been in a great up market - everything you've touched has been good... and all of a sudden you're seeing companies share prices dropping and the yield rises - and you're like a moth to a flame. Have patience! None of us know what's going to happen with oil --- we have a new metric in place with the US production numbers rising dramatically... When there's too much of something - the price goes on sale... how much is too much? We don't really know... We don't really know what it costs certain oil producers to produce... We're not experts - we're just investors.... So WAIT until this settles out. I'm not selling what I had -- I've trimmed some to balance up and make other more diversified investments going into the end of the year. In other words I'm not panicking. We'll have plenty of time to sit back and let someone else battle it out - and then we can step in when the picture is clearer.
In the market this is called a VALUE TRAP. Where the value suddenly looks so enticing... but I'd still prefer to buy stuff that is on the upswing over dropping. Let the experts try to pick the bottom. They've got way more money than we have.
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