What to Invest When Oil Price is Rising?
By Pauline Yong
property bubble in the US, Indonesian Rupia falling, rising interest
rates. It is rather challenging to avoid losses and stay profitable in our
investments at this scenario. How can you reposition assets without
increasing market risks? The trick is to find ways to take advantage of
the coming changes in smart ways. The way you choose to change
strategies should depend on your investing experience, knowledge,
risk tolerance, and personal preferences.
well as those supplying drilling ventures, will continue to be solid
investment opportunities in the future. With growing demand for oil
from China, its oil imports were up 40% in 2004, this trend will
continue as long as China’s economy is growing. Of course, the blame
is not on China alone as China is only consuming a third of what the US
is consuming.
For the more advanced investor who is comfortable with options,
consider buying long-term call options in oil related sectors – coal, oil
and gas operations, oil well services and equipment.
By Pauline Yong
property bubble in the US, Indonesian Rupia falling, rising interest
rates. It is rather challenging to avoid losses and stay profitable in our
investments at this scenario. How can you reposition assets without
increasing market risks? The trick is to find ways to take advantage of
the coming changes in smart ways. The way you choose to change
strategies should depend on your investing experience, knowledge,
risk tolerance, and personal preferences.
well as those supplying drilling ventures, will continue to be solid
investment opportunities in the future. With growing demand for oil
from China, its oil imports were up 40% in 2004, this trend will
continue as long as China’s economy is growing. Of course, the blame
is not on China alone as China is only consuming a third of what the US
is consuming.
For the more advanced investor who is comfortable with options,
consider buying long-term call options in oil related sectors – coal, oil
and gas operations, oil well services and equipment.
Second, with the US dollar shrinking, perhaps we can turn to gold. As the gold has a negative
relationship with the dollar. We can invest in unit trust that invest in gold, or invest in US stocks
that are related to gold mining. However, we might face the forex risk if we invest in US stocks.
Third, we may always turn to fixed income assets such as FD (3%) and Merdeka bonds (5%) when
we are not comfortable investing in the equities market at this moment.
Many people asked me: “What about bond funds?” Well, during the times of recession, bond
funds usually face the risk of early redemption as unit trust holders are desperate to cash out their
unit trust investment. Hence, fund managers would pay penalty fees for early redemption. When
too much supply chasing too few demand, it would affect the fund’s performance. Bond funds are
good when the interest rate is falling, and the economy is doing well.
Lastly, our futures market provides a venue to hedge against our portfolio in the stock market. We
can short the KLCI futures when KLCI is falling ad vice versa.
Happy investing,
Pauline Yong
relationship with the dollar. We can invest in unit trust that invest in gold, or invest in US stocks
that are related to gold mining. However, we might face the forex risk if we invest in US stocks.
Third, we may always turn to fixed income assets such as FD (3%) and Merdeka bonds (5%) when
we are not comfortable investing in the equities market at this moment.
Many people asked me: “What about bond funds?” Well, during the times of recession, bond
funds usually face the risk of early redemption as unit trust holders are desperate to cash out their
unit trust investment. Hence, fund managers would pay penalty fees for early redemption. When
too much supply chasing too few demand, it would affect the fund’s performance. Bond funds are
good when the interest rate is falling, and the economy is doing well.
Lastly, our futures market provides a venue to hedge against our portfolio in the stock market. We
can short the KLCI futures when KLCI is falling ad vice versa.
Happy investing,
Pauline Yong
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