That should be enough to stabilize the market. Remember the real factor is how long the global economies remain shut. Here in the US, for instance, driving season begins in the second and third week of May. If the economy remains in lockdown, there is very little driving. People will not be driving, the airlines will not be using as much as fuel as they need and with the winter coming to an end, demand for products like heating oil, etc will go down. That is the key. If the economies open up within the next several weeks, then the Opec plus deal should stabilize prices and push it to $30-35 a barrel.
One cannot ignore the fact that globally coronavirus cases are on the rise. Despite US President Donald Trump tweeting that the accord will save hundreds and thousands of energy jobs in the United States, the prospects for the global economy look really slim with all kinds of forecasts coming in. What should be the strategy for an investor and what is going to be the long-term trend for the United States markets? Last week the market rose but once again, Dow is giving up all those gains!
Well we did not give up all those gains but certainly the market seems to be sold here and that is common. I think the market has made a bottom. That means the market cannot retest its lows. You asked what investors should do? Investors should take a long term approach. This is probably not going to be a recession. This is probably going to be more like a deflationary period. But I do not think it is going to be long lasting, at least in the US.
There are stocks that have been cut in half and in some cases even more than half. I suggest that investors buy on pullbacks and should also hedge. I have said this many times before. They should have certain amount of hedges in their portfolios and the best hedge that I can come up with is gold.
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Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price