Dividend Investing Ideas Center
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At Dividend.com – for more than 7 years – we’ve been skeptical of the all-too-easy-to-digest headlines that the media often likes to use to oversimplify really complex market situations. The intricacies of macro economics can’t be overstated. Individual countries have exceptionally complex economies and then the inter relationships between countries’ economies add layers of complexity to an already complex system.
Einstein noted we need to “make things as simple as possible, but no simpler”. It’s the last part of that statement that can be exceptionally tricky when you browse market headlines. Let’s dive into a timely example.
A popular narrative gaining steam is related to a question high on investor’s minds these days — where’s the price of oil going? The question is pertinent given how big an impact the commodity has on macro economics. The decline in oil’s price acts like a tax cut to consumers and benefits net importers, while simultaneously hurting net exporters and those within the industry.
It has been one of the most popular topics in the investing community for the past 5 months (the data we have from our suite of digital finance properties definitely underscores this point), but as oil has consolidated in a range bound state for the better part of six weeks, the guessing game is as intense as ever as to which way it might break-out, if any. The bears seem to be trumpeting stats related to US oil storage filling up, but let’s shake this assumption, and by doing so hopefully add some much needed context to the discussion.
I came across a piece that nicely balanced this narrative from an off-the-beaten-path source that dissects the narrative that is currently popular amongst many a widely distributed source. The narrative goes like this:
In the ‘Balanced View’ piece, the site’s editor makes some great counter points. Here’s a synopsis:
Let me add something to counter point #2, as there can be quibbling about storage figures. So, let’s talk in the context of margin of safety. Even if for whatever reasons, the 4-year figure was twice as long as reality, that’s still 2 years worth of capacity at the current rate of net national storage increase.
The bottom line is and will remain to be this: you need to dig beyond the headline any time you’re making any investment-related decision. It is our job at Dividend.com to help you do that and to add requisite context and fidelity to narratives and stories that, on the surface, can appear easily digestable, but upon further analysis, likely require more research to paint a better picture. Together, we’ll make things “as simple as possible, BUT no simpler.”
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