Just a Commodities Correction - Not the End of the Bull (Part 1)
Source: Seeking Alpha, Eric Roseman (8/19/08)
Every single day, the world's population uses more oil than the planet can possibly produce. This means the peak oil theory is still alive and well. That's why this ongoing correction in crude oil prices is creating the best entry point for new investors in more than three years.
That's why this ongoing correction in crude oil prices is creating the best entry point for new investors in more than three years. Right now, most companies trade at or near their 52-week lows and pay some fat dividends higher than both the broader market and Treasury bonds...
Oil stocks, as measured by the Spiders XLE Index (XLE) are down 22.5% from their highs while the Dow Jones Oil Equipment and Services Index is off 21% from its best level.
Commodities, including oil, are in a correction. But don't be mistaken: We're definitely not at the cusp of a bear market for oil or commodities.
The market is right to discount a slowing global economy this year as credit problems and stagflation spread to overseas economies. It's wrong to assume that the bull market in oil and most other commodities is over. Short-term cash rates still below the rate of inflation and global money-supply is still growing in excess of almost 20% year over year, according to Grant's Interest Rate Observer.