Someone Likes Every Shot
This is an old adage, generally applicable to golf, in that if you have a good shot, you like it, if you have a bad shot, your opponent likes it.
This concept tends to be just as true away from the game of golf. For example, lower oil prices are good for motorists and other users of oil and oil based products, but not good for oil producers and those who are dependent on robust petroleum exploration and production.
The same would be true for interest rates. Low rates tend to be good for borrowers and bad for lenders.
The foregoing is obvious and the impact on stock prices has often been immediate and has proven to be difficult to anticipate. The real issue for investors is, what to do after the news is out. Who will be affected, to what extent and what is the long term outlook?
Using the oil industry example again, lower oil prices are going to affect different companies differently. Historically, good managements have responded to adverse changes with surprising effectiveness. Over the next several quarters it will be interesting to observe reported results as the various participants in the oil industry respond to what many believe may be “the new normal”.
Picking winners and losers remains difficult and fraught with risk. Investors would probably be well served by maintaining long term strategies and remaining appropriately diversified.
All comments and suggestions are welcome.
Walter J. Kirchberger, CFA®
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