Oil Price – where are we heading?

August contract expired as of yesterday, New York crude future trade started for September contract from today onwards. Officially summer travel season ends on September and we are moving towards low demand months of oil consumption. Oil price slides to $127 (and today $124), that is, almost 20% drop from peak, that means, a prolong bull run have been ended. The main factor of oil drop is President Bush’s executive order of lifting ban on offshore drilling, which was approved by most of the US people.

I personally liked Al Gore’s 10 year, 3 trillion dollar investment to transform all energy need from oil to electricity. His views from Sunday’s “Meet the press” really good, but caveat is, he want to do it aggressively and on one go, no baby steps. He is not willing to join any future government position and doesn’t want to advice future president also. I think he want to convenience US business people to make his plan become reality.

There are several talks and brainstorms about future energy needs. This all take years to achieve. But my opinion is, we can’t see a substantial oil price drop and inflation would shoot up year by year for infinite time line.

My dad usually say, “Make more money, spend less, save more, accumulate money in saving account or under mattress”, I was always against to it. New school thought is “Make more money, spend high, invest more in stocks, bonds, mutual funds”. The old school thought is now obsolete. The money in saving account yields 0.5% growth rate per year, which is well below current inflation rate. In order to beat inflation, at least we have to make 5%-15% growth depends on where you live, 5% for developed nation and 15% for developing nation.

When ever I start discussing with my friends about stocks and investments, they always replied with negative tone. Most of them are thinking that stock investment is same as Las Vegas casino, which is not true always, but sometimes yes, when you are not prepared to face the market. One thing I learned from stock investment is, we have to work hard to find out which company to invest, market trends and follow-up with our portfolio at least 8 hours per week.

Greedy: Greediness is first enemy of investments, we can’t expect, invest $100 to grow $1000 within 1 month. On average S & P index yields return on investment of 10-15% per year.

Emotions and sentimental: There is no emotions and sentimental when we try to invest and make some money. Logic and reasoning are the best for investments. Unless there is a nuclear war between US and Russia/or China, we are all safe and sound. A good investor never presses panic button rather he/she buys when others sells out of panic and sells when others are buys.

Collaboration: Regularly communicate with other investors, and learn from others. But i think based on our interest we have to select stocks by ourselves. Make mistakes and learn from mistake.

Learn about new investment options such as ETF, FOREX, Commodity future trading.

Categorize investment style as “aggressive”, “moderator” or “conservative” and based on that we can start invest. In my opinion, normally a good investor starts young age 21-30 would consider themselves as aggressive and 31-45 moderate and above 45 conservative. Based on that we can allocate our funds to various investment options. Aggressive is 100% on stocks. Conservative is 30% on stocks, and 40% on mutual funds and remaining would be in govt. funds.

Resource: There are millions of sites, guide, TV shows and resource for investment, learn them. Before getting into market, you have to be master of investment strategies.

http://www.mymoney.gov/ - The best and unbiased information about stock investments and mutual funds.
http://www.sec.gov/investor.shtml - Security and Exchange commission for accurate and detailed information.
http://www.marketwatch.com/ - Wall Street Journal network, all news and commentary and latest market information.
CNBC TV Show – Mad Money by Jim Cramer and http://www.thestreet.com/investing-a-z/index.html