I think it would be safe to comment that Oil Prices are the recent ‘in’ thing. At least since their spectacular halving of their prices in the 2nd half of 2014 falling from close to US$100 to US$50 per barrel.
So Where Are Oil Prices Heading To?
‘Expert’ opinions range from US$20 per barrel all the way to US$200 per barrel. Even flipping a coin would give us better odds!
After reading this recent Bloomberg article titled “These Experts Know Exactly Where Oil Prics Are Headed”, I was very inclined to agree with them that the outlook on oil prices is as clear as day.
Outlook 1: Oil will crash!
Outlook 2: Unless prices go up!
We can say that definitely one or the other will happen. We definitely have our bases covered!
Where Are We Going With This?
What we are trying to put across is that some things are inherently out of our control. So many factors could potentially affect oil prices. We not only have to consider the forces of supply and demand but we also have to note the political powers at play. And these are only some of the major factors!
So what we are trying to say is that with so many relationships, it’s close to impossible to know where prices are going with much certainty, well at least for the most of us.
So why not focus less on things that are uncontrollable and instead focus more on things that have an easier outlook.
Focusing On Things With An Easier Outlook
When prices plunge, there are often opportunities present. This is because the same people who push prices up are also the same people that push prices down to the other extreme.
What we mean by clearer out outlook, we mean easy-to-understand businesses. There might not be as much of a kick in terms of returns but you can count on these businesses For example products with an inelastic demand, like consumer staples such as beverages, food, household appliances. Be it rain or shine people have to eat, drink, bath (Well at least most of us) and basically do normal everyday stuff.
Just taking a look in your house, you might notice things like:
- Magnolia Fresh Milk from Fraser & Neave Limited (SGX:F99)
- H-TWO-O from Yeo Hiap Seng Ltd (SGX:Y03)
- Oki Cooking Oil from Mewah International Inc (SGX:MV4)
- CP Chicken Gyoza from Charoen Pokphand Foods Public Co. Ltd(BKK:CPF) – Want to find out more about Thailand’s consumer giant, wait no more and check out Stanley’s recent article right HERE!
- Nissin Cup Noodles from Nissin Foods Holdings Co Ltd (TYO:2897)
Pretty amazing at the number of great products you can find at home!
Value In Action
The above are some great products. However companies that produce such products do not normally come cheap. At the end of the day it depends on the price that you pay for the listed company.
A good plan would be to get a feel of some of these companies and when the ‘right’ price comes for whatever reasons (Prices WILL fluctuate!), if your data and reasoning are still legit and if you are still feeling good about it, they would be there for the taking.
Join us on Facebook for more exciting updates and discussion about value investing. Submit your email address for important market updates and FREE case studies!
We will only provide you with information relevant to value investing. You can unsubscribe at any time. Your contact details will be safeguarded.The information provided is for general information purposes only and is not intended to be any investment or financial advice.
All views and opinions articulated in the article were expressed in Mun Hong’s personal capacity and do not in any way represent those of his employer and other related entities. Mun Hong does not own any shares in the companies mentioned above.