Experience has taught us that while we cannot predict markets or prices, we do know that they frequently move in a way that causes pain for the majority. With relative calm befalling financial markets again, one should be asking what are changes or events that would cause investors the most pain and what is the probability of their occurrence? Data from Rystad Energy, predicts that legacy production will tip the supply balance into the negative in 2016 for the first time in years. If oil prices were to rise, this combined with higher minimum wages in the US could easily push inflation expectations, if not inflation itself, above the targets set by central banks. One can only imagine the tidal wave of bond selling that would occur – from zero and negative interest rates – if inflation emerged to shock those who remain entrenched in a lower-for-longer mindset. Investors would be wise to watch carefully for changes in the price of oil. (VIEW LINK)
Roger Montgomery founded Montgomery Investment Management, www.montinvest.com in 2010. Roger brings more than two decades of investment, financial market experience and knowledge. Roger also authored the best-selling investment book, Value.able.