28 Jul Why Every Portfolio Should Include Oil and Gas
I asked a 12-year-old what natural resource made the United States of America a great and powerful country. His correct answer amazed me. He said gasoline.
While the U.S. is not now a great gas and oil producer, it does produce and has the wells to supply a large share of the world’s energy reserves. From the first oil well in Pennsylvania to the Texas oil fields and the drilling in the Gulf of Mexico, these resources have made America a great country.
This natural resource is responsible for much of our country’s wealth and the prosperity that our country proudly evidenced during the 1950’s. We are seeing how certain oil rich countries in the Middle East have received the lion’s share of economic prosperity, but it is necessary to realize how all things change and to be prepared to take advantage of every situation.
Today the great wealth in America seems to be located on Wall Street where experienced traders and investors who have tapped into the wants and desires of a world growing smaller with every new technology. The average investor does not have those resources but he has a way to substantially increase the value of his portfolio.
Before the secrets to great wealth are revealed or at least a path to improved wealth, a cautionary tale must be set forth for the benefit of those who want to not only protect but to grow their portfolios. There is not only constant change in the marketplace but there are forces beyond our control that affect and will continue to affect our economic well-being.
Those investors who don’t change may be harshly affected by these occurrences. Consider the 911 World Trade tragedy. It came as a total surprise and emotionally impacted all of us, but it also deeply affected our economy. It required months for business normalcy to return after the shocking impact. It was not only felt on Wall Street but on Main Street where the mood of the buying public was depressed. It affected all businesses and lead to an economic downturn rivaling the Great Depression.
There are also climatic events that can upset the smooth running of any economy. Hurricanes in Florida and the Gulf Coast have altered the lives of those impacted. These devastating storms left business owners faced with these climatic occurrences to restructure their business model to allow for a great impact every decade and forced them to reanalyze their bottom line and the bottom line number necessary for true business success.
Today we live in a fairly benign economic and political climate but this new reassessment of what a business bottom line must be, also pertains to the average investor and to the sophisticated investor in particular.
A portfolio is like a business it must be managed, guided, changed when necessary, and constantly analyzed. Rethinking what is necessary for portfolio success is not just having a diversified portfolio and keeping ahead of the cost of living but having a certain percentage of the portfolio in high risk and high reward positions.
The successes on Wall Street are not just due to making commissions. Brokers, analysts, and managers are investing their monies often in high-risk high-reward scenarios where profits far outnumber the average gains on less risky investments. The proper management of a portfolio is arguably the most important aspect of investing whether the individual is a trader or an investor.
Getting back to what made America great again, oil and gas found below the surface of our large and beautiful country is an opportunity that has made investors rich beyond their wildest dreams. Exploration for oil and gas should be a part of every sophisticated investor’s plan and with success comes unbounded profits. This is not just great business/success planning but it is the only way to profit in this ever changing and sometimes menacing world.
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