Crude Oil Prices Per Barrel

hello investors in traders out there I had to put out an emergency alert oil is getting absolutely crushed as Saudi Arabia has officially declared a price war you can see crude oil trading lower by twenty point four six percent it's currently trading around thirty three dollars per barrel this is the lowest price level that we have seen in quite some time if we zoom out any longer term time horizon we can see we are now currently trading at the prices that we were back in January 2015 in January 2016 when we saw oil companies going bankrupt declaring bankruptcy left and right this is very very bad news for the markets as it will once again send a shockwave through the credit markets as many of those companies do trade with junk debt levels if we shift over and take a look here at Exxon Mobil we can see quite a collapse in the underlying share price all of the large oil names have been demonstrating considerable weakness selling off even more rapidly than the broader market now what impact has this collapse in oils prices had on sp500 futures well you can see a massive gap down here with sp500 futures trading lower by four point three eight percent and the sell-off does not look like it's over yet you have to remember not only are we now dealing with the coronavirus but we also have Saudi Arabia willing to drop oil prices to the absolute minimum in order to bankrupt other companies who are involved with producing.

Crude Oil Prices

a manufacturing oil we can see here that sp500 futures are not happy about the news that the virus is spreading as well as this all-out war on oil prices now oil markets fell the most since 1991 after the disintegration of the OPEC alliance looks set to trigger an all-out price war crude futures dropped almost 30% seconds after the open falling last week's massive losses the causes are a collapse in demand due to the coronavirus as we are familiar with exasperated by an all-out price war after the Saudi / official prices Saturday by the most in at least 20 years and signal they would maximize output so not only are the slashing official prices but they're also going to increase their output Saudi Arabia's out for blood they are going to produce as much oil as possible to bankrupt other companies now what makes this price war especially dangerous and historic is it breaks out simultaneously with a massive demand shock from the coronavirus we've not seen that toxic combination since the early 1930s when texas monster guild started up on the teeth of the depression sending crude oil prices down to pennies on the barrel Robert McNally president of rapid Ian Energy Group a Washington dc-based energy market consulting firm it's certainly a high risk high-stakes approach economist Tim Fox said the oil price weakness is looking likely to extend and steep in probably in coming weeks and months unless there's some policy coordination to bring that to an end but the endgame here is not low oil prices but rather forcing Russia back to the negotiating table the question is how long if at all that will take we would stress that is not in any OPEC nations interest to have sustained oil prices below $50 per barrel and hence we see this solely as a strategic move from the Saudis now if we remind ourselves for a moment that share prices are based on not only today's earnings but tomorrow's earnings investors are clearly fearful of the coronaviruses spread as was the impact on all of these companies underlying fundamentals we've seen left and right companies declare cancellations and drops in earnings they've been giving us warnings about guidance as well as stressing and emphasizing shocks to their supply chains.

Crude Oil Prices

so there is no doubt about it there is going to be a drop in both demand as well as supply and so investors and Wall Street here are cashing in with futures dropping four point seven percent we also now have to juggle this $30 per barrel oil this is a huge shock to markets and this will definitely be a bloody day as markets open you can see clearly Wall Street is not happy about this at all and this will send a ripple through the credit markets as well now I always like to keep in mind when we see blood on the streets to keep some of the most successful investors of all time in mind so we're gonna shift over and take a closer look at Warren Buffett's approach to all of this turbulence in the stock market that we are seeing I'd like to break down analyze and explore Warren Buffett's greatest tips the knowledge that he has shared on how to get rich in the stock market all of these tips are timeless advice that will ring true for thousands and thousands of years as businesses continue to exist rise and fall we have to keep in mind here with Warren Buffett is that he is a value investor he's not a traitor he does not worry about the day-to-day fluctuations in share prices as a trader would he is an investor now he does not look at stocks as ticker symbols he focuses on the under lying business while stock prices may gyrate and fluctuate huge degrees the majority of companies with good business models.

crude Oil Prices

strong competitive advantages will likely see a far smaller negative impact to their underlying business during times of financial stress in the markets so be sure to detach stock price performance from business performance Buffet elaborated on this concept in Berkshire most recent shareholder letter by stating Charlie and I view the marketable common stocks that Berkshire owns as interest in businesses not as ticker symbols to be bought or sold based on their chart patterns the target prices of analysts or the opinions of media pundits instead we simply believe that if the businesses of the investees are successful as we believed most will be our investments will be successful as well and so the large takeaway here is that Warren Buffet does not focus on the day-to-day fluctuation of the markets or all the news that's out there he is focused on the underlying business another very important I deal put forth by Warren Buffet Warren Buffet does not invest in stocks at very high in elevated valuations as you guys know we have had a zero interest rate policy put forth by the Fed the Warren Buffet has built up a cash position of over 120 billion u.s. dollars in the underlying reason for this is because Warren Buffet has not seen any opportunities in the US markets because they've been so overvalued Warren Buffet steps into the stock market whenever prices are very cheap whenever he sees opportunities he lets all those dividends compound he collects all that income and he deploys it whenever the prices are right at the optimal moment in time and so as share prices are decreasing I'm sure you'll see Warren Buffet stepping into the markets and so cash is definitely a position we should let that cash build-up.

Crude Oil Prices

we should deploy it only whenever there is a huge opportunity to buy the dip as significantly lower prices Warren Buffett is a value investor and this is something that we can all learn from golden tip number three put forth by Warren Buffett is to not try to time the market the economy ABB's and flows there are periods of economic booms and busts there are periods of time where the stock market won't ascend and reach fresh new all-time highs each and every day there are times when we face a bear market and the stock market in general will sell-off and collapse but Warren Buffett puts forth the idea that we should stay the course in the short term we may have a loss in our investment but over the long term that will smooth out and translate into gains and so Warren Buffet's idea here is that we should stay invested we should not bother trying to time the market time in the market matters more than timing the market this is something that we should keep in mind as stock prices are collapsing tip number for put forth by Warren Buffett is to stay invested while stock market crashes and major downturns have proven to resurface time in time again throughout history an even stronger trend has been powerful wealth building returns of stocks over time the Dow Jones Industrial Average for instance has risen an average of 10 point 3 percent annually over the last 100 years when including reinvested dividends and so I have a picture here for you guys put out by Morning star we can see with 1 year return time frame being invested you can actually have negative returns over three years the annualized returns smooth out in over a 10-year time frame that money just compounds in compounds and there's a 100% likelihood that you will actually have a positive return.

Crude Oil Prices

so the idea is that you should stay the course the returns will smooth out over time even in this period of financial turmoil and stock market volatility idea number 5 is our last idea and that is to go shopping when stocks are on sell even better than not selling stocks during a recession is to actually go on the offense in bull markets investors can occasionally find reasonably priced wonderful businesses but they can rarely find wonderful businesses trading at a significant discount to their fair value stock market crashes are the rare times when high-quality businesses can be found in the clearance aisle go shopping as Buffett as famously said be fearful when others are greedy and greedy when others are fearful or consider a more recent quote from Warren Buffett when major declines occur they offer extraordinary opportunities to those who are not handicapped by debt and so whenever the stock market crashes this creates a buy the dip opportunity there are all sorts of buy the dip candidates out there you just have to go hunting for some of these wonderful businesses so these are the five idea put forth by Warren Buffett Warren Buffett claims he learned these investing principles from the intelligent investor rent by Benjamin Graham who was Benjamin Graham Benjamin Graham is known as the father of value investing his investment philosophy stress investor psychology minimal debt buy and hold investing fundamental analysis concentrated diversification buying within the margin of safety activist investing.

Crude Oil Prices

contrarian mindsets Warren Buffett claims today that he would have never been as successful as he has become without the model and the frameworks established and put in place by Benjamin Graham now idea number one Benjamin Graham puts forth is that a stock is not just a stock ticker symbol or an electronic blip it is an ownership interest in an actual business with an underlying value that does not depend on its share price we see this play out time and time again very very strong companies with incredible fundamentals go on sale and sometimes there is a disconnect between the share price and the underlying business idea number two put forth by Graham is that the market is a pendulum that forever swings between unsustainable optimism which makes talks too expensive and unjustified pessimism which makes them too cheap the intelligent investor is a realist who sells to optimists and buys from pessimists when we think about the most recent stock market correction and rally we are now seeing this play out before our very eyes there is a shift from complete pessimism to complete optimism and euphoria the market is a pendulum this is an incredible talking point an assessment by Benjamin graham idea number three that he puts forth that we'd like to think about further is that the future value of every investment is a function of its present price the higher price you pay the lower your return will be and we think about this and we look to the markets we see many stocks and companies out there trading with incredibly high price to earnings ratios way above far above historical norms and so we are looking for we are seeking value in the markets if we overpay then it could take years for our stock to rally.

Crude Oil Prices

to appreciate in value now the next idea put forth by Benjamin Graham is that no matter how careful you are the one risk no investor can ever eliminate is the risk of being wrong only by insisting on what ground called the margin of safety never overpaying no matter how exciting and investment seems to be can you minimize your odds of error the margin of safety is always dependent on the price paid it will be large at one price small at some higher price non-existent at some still higher price what Benjamin Graham is getting at here is the idea that we must not overpay for our investments the final and arguably most important argument put forth by Benjamin Graham the secret to your financial success is inside yourself if you become a critical thinker who takes no Wall Street fact on faith and you invest with patient confidence you can take steady advantage of even the worst bear markets by developing your discipline and courage you refuse to let other people's mood swings govern your financial destiny in the end how your investments behave is much less important than how you behave what Benjamin Graham is asserting is the idea that market participants will shift money and around we will see stocks correct to the tune of 15% 20% 30% we must not let other people's perceptions other people's mood swings dictate what we do with our money our financial destiny this really speaks to you in hits home with the most recent stock market correction when the S&P 500 correcting 20% in rebounding 15% in a month this is incredible advice that we must keep in mind moving forward into the future as investors Wall Street's perceptions of companies and businesses is shifting all the time which translates into the share price shifting but sometimes Wall Street gets the story wrong and this is something we must pay very close attention to this is the market through the eyes of Warren Buffett as well as Benjamin Graham if you enjoyed this article be sure to smash that like button let me know all your thoughts and comments surrounding and regarding this particular article.