Veteran investor Bob Moriarty discusses one company that is poised to benefit from the volatililty in the oil markets.
As investors we tend to over-think our investments. Regardless of why oil went down, at some point someone had to figure out that it was too cheap and should be bought. It didn’t make any difference why oil was so cheap, at some point it was a screaming buy.
That took place on Feb. 11 of this year as the near futures contract just about touched $26 a barrel. The ratio of oil to gold was a blistering 48:1, higher by 20% than during the Great Depression. Low prices cure low prices. In the next six weeks after the low, the price of oil went up over 70%. I’m perfectly comfortable saying we have seen the bottom.
The fastest money to be made in commodities and resource shares are in the initial bounce higher after a blowout low. We have seen that. But the safest money to be made is after a correction of that first move up. We have a correction in oil coming. I can’t say if it will be today, tomorrow or a month from now but the rocket higher brought in a lot of bulls and the market will want to punish the latecomers.
I wrote about an oil company with a giant unconventional oil field in West Texas last August. Oil was over $50 a barrel and the company’s shares were almost $1 apiece. Oil plummeted and took the price of Torchlight Energy Resources Inc. (TRCH:NASDAQ) shares with it. Torchlight dropped to a low of $0.42 in early March. It has since recovered to $0.72.
Commodities hit a 5,000-year low when measured in constant dollar terms in January. All commodities, not just gold …read more