Savvy investors should always be looking for opportunities in any economic environment good or bad and while the bad news keeps piling up, there are opportunities to be found.
First, the US is contemplating banning Russian oil and gas from US markets and if this were to happen it would send US energy costs higher. Companies positions to produce oil and gas would do very well in this environment and perhaps that’s why Warren Buffet took up $5 billion position in Occidental Petroleum.
In general, US oil and gas producing companies stand to profit nicely from oil while oil refiners may not do so well with limited stock feed coming into the United States.
Secondly, utilities will need to pay more for raw feed stock so electricity rates could easily rise over the next few months and the summer months could become costly and brutal.
Thirdly, alternative energy should receive a boost from the oil & gas chaos. Solar, Wind and other energy producers may see huge investment inflows as a result of these global challenges. Electric car adaption may speed up especially if and when gas prices head into the double digit range of $10/gallon or more. It is perfectly conceivable that gasoline prices hit $10+/gallon by end of year if this Russian conflict continues to escalate.
Lastly, with the cost of energy going up, utilities and fuel, it is easy to expect massive inflation for 2022 and beyond. A savvy investor will understand that more income will be needed to help pay for daily living costs and those that don’t have enough money will stick to buying basic goods and services.
The net result is to shore up our defensive portfolio and buy on dips but we’ll wait till the end of March or a massive correction.
Stay tuned and stay solvent…