The recent drop in oil prices is an early Christmas gift for retired investors and, on a smaller scale, reminds me of the market in early 2009.
Here’s what I was saying then.
This is the kind of market that makes millionaires. And if you don’t buy into the collapse, go to Walmart and buy a good pair of boots – you will need them. Because if you don’t buy this market, in five years, you will be kicking yourself in the butt.
In my 30 years of investing I was never more certain about anything.
In 2009, I was telling my readers to buy any of the big homebuilders before the good news started to come out. It almost didn’t matter which one, every big name would make money.
And they did!
So, how could the bond guy, me, Mr. Low Risk, the “never lose money” guy, be so cavalier about the worst slump in housing in our lifetimes?
Because everyone needs somewhere to live!
It couldn’t have been more obvious. Unless our ever-increasing population started living in vans down by the river, homebuilders had to recover. Yes, we had a glut of homes, just as we now have a glut in oil, and it took a while to work through it, but we did and it worked. And we will in oil this time around, too.
Sometimes the market really is that simple.
That’s why oil’s recent plunge, which, by the way, I predicted $87 a barrel in my Sunday Investment U Weekly Update last spring, is another virtually risk-free play, and it’s perfect for retirees.
Big oil companies pay dividends and have solid balance sheets. They aren’t going anywhere and energy – not just oil but gas, oil and the services companies – is a slam dunk at current prices.
Yes, I am telling you to buy something other than corporate bonds. I am that convinced this is a moneymaker for the most risk-averse investors there are: retired investors.
But, as in 2009, don’t get comfortable. It wasn’t a perfectly smooth or a short ride. And it won’t be for oil’s comeback. But energy, unlike housing, will pay dividends while you wait.
Unless you think we can go forward with no cars, lights, heat and just about everything else in our lives that make it warm and easy, you have to believe oil and gas aren’t going anywhere and the big boys will the lead the way back.
Believe me, they’ll find a way to get the price back up. They always do.
An absolutely essential industry at 20% to 30% discounts. It’s the best early Christmas present any of us have been handed since March 2009.
Think energy!