To quote one of the best investors in the world today, George Soros, says: “Investing is boring, if you have fun doing it, you are probably losing money.” What does it mean? It refers to the many hours of research, analysis, and searching for good information required to invest successfully. Anyone can read a 5-minute article on Bloomberg or CNN Money, but these kinds of resources rarely provide the kind of information you’ll need to be successful as an investor. I won’t go into why, but suffice it to say that research is difficult and good research is more difficult, no one gives it away for free, and if it’s that good, they don’t give it away at all, they use it to Get Rich.
Think of quality research as inside information; you have it, and if you let it out, you will lose your edge. This is why it is imperative that you do your own research, or at least find a top-notch service, which in all likelihood will cost you money. You don’t work for free and neither do they. Knowledge is power, we live in the information age. Understand this and you will understand why you won’t get the gold nuggets if you spend 5 minutes on Bloomberg or CNN.
Also, virtually no one is willing to do the hard work of researching for good, solid information. Most investors reflect our society, they want it now, effortlessly and preferably at no cost. It is this attitude that makes them easy prey for the market professionals, who publish these articles and, all too often, trade to profit from the lazy investors who will invest thanks to these articles.
This attitude also explains why so many traders lost so much money in the oil crash. They did not understand the forces behind the decline, and they were also not informed about how the energy market had developed extreme excesses of production and supply in recent years. In fact, most of history. If they had done their homework, they would have known that the EIA was warning of oversupply since 2013, and that all US refineries were at or close to supply capacity. Instead, investors mistakenly believed that because oil had been at $ 100 for so long, it had to get back there soon, market forces would get it there. But market forces had changed dramatically and many powerful changes were taking place to reduce oil at the fastest rate in history.
We now know all the facts and it is very clear why oil fell now. In fact, now that the facts are out, many leading sources suggest that we might even see $ 20 oil. However, none of this matters, the damage is done and the move has taken place. Whether we go to $ 20 or not is not as important as going from $ 110 to $ 45. No one is making money from oil right now except the Saudis and some Middle Eastern nations. They have the lowest cost per barrel of any producer in the world so they don’t mind letting these prices stay, they know they will be the last man standing and then they can raise the prices as much as they want. But they can’t do that until the competition is eliminated.
Do you see the game that is being played? Do you think traders would have bet on oil falling if they had known? By no means would they have made money short on oil instead, as some did. So the name of the game is information, the better yours is, the more money you will make. Don’t skimp on that, but don’t assume that anyone who charges you a lot of money will provide you with excellent information. Choosing a source of information is the most important decision you will make for your investments. At Wealth Management Vancouver, our edge is information. Our clients know the value of it and, since they benefit from it, the cost is fully justified.