High gas prices got you down? Today Josh and Austin are talking all things gas and oil! Starting with a quick recap of the Russia and Ukraine conflict, they describe how it has impacted gas and oil prices globally. The guys then talk about what’s next for gas and oil, and how that could impact your investments. Tune in now!
Main Talking Points
[0:51] – Recap of Russia and Ukraine Conflict
[2:30] – How Does this Conflict Impact Gas and Oil?
[5:32] – Dad Joke of the Week
[6:38] – Russia’s Exports
[8:09] – Oil Demand Globally
[10:17] – Hesitant to Cut Off Russian Oil Imports?
[11:27] – Oil Prices
[12:08] – Gas Prices
[13:13] – Why are Gas and Oil Increases Not the Same?
[14:39] – What’s Next?
[18:16] – Future Impacts
[21:15] – Vendetta Quotes
[22:20] – How Should You Handle Your Investments Right Now?
Links & Resources
117: What is Going On With Russia and Ukraine? – The Invested Dads
Invest With Us – The Invested Dads
Free Guide: 8 Timeless Principles of Investing
Social Media
Full Transcript
Intro:
Welcome to The Invested Dads Podcast, simplifying financial topics so that you can take action and make your financial situation better. Helping you to understand the current world of financial planning and investments, here are your hosts, Josh Robb and Austin Wilson.
Austin Wilson:
All right. Hey, hey, hey. Welcome back to The Invested Dads Podcast, a podcast where we take you on a journey to better your financial future, today. Josh?
Josh Robb:
Yes?
Austin Wilson:
We’re going to be talking about gas.
Josh Robb:
Well, I did have some beans for lunch, so…
Austin Wilson:
Well, let’s avoid talking about that kind of gas, but if we have to stop this episode periodically, I’ll know why.
Josh Robb:
You’ll know why.
Austin Wilson:
But the situation that really stinks right now-
Josh Robb:
Yes, there’s your gas pun.
Austin Wilson:
It’s really stinky over there in Eastern Europe, and that’s not to make light of the situation.
Josh Robb:
No, but we’re talking oil and gas, the fuel.
[0:51] – Recap of Russia and Ukraine Conflict
Austin Wilson:
Yeah, that’s what we’re talking about. So, let’s kind of briefly talk about Russia and Ukraine, because that’s what’s driving the conversation right now. First off we did a dedicated episode, so we will link that, very recently. We’ll link that in the show notes as well, so if you haven’t listened to that one, I would listen to that one before you listen to this one, just to make sure you’re up to speed on that. But essentially, Vladimir Putin has always believed that Ukraine should be a part of Russia, ever since the fall of the Berlin Wall and the fall of the Soviet Union in 1991, which as I remind Josh every time I say that, it was a great year.
Josh Robb:
Good year for you.
Austin Wilson:
Freedom was found for many people, and I was born.
Josh Robb:
Just the whole world celebrated.
Austin Wilson:
It was a great year. So, Putin also sees Ukraine as a valuable buffer state between Russia and the rest of Eastern Europe for defense. Ukraine kind of is in a pseudo-NATO world now that they’re getting a lot of support from NATO countries. The rest of Europe essentially is a NATO country, society, and they get a lot of support because of that. Well, that’s a very big threat to Russia, and that is not so good. So, Putin sees Ukraine as that buffer between NATO and Russia, essentially. Also, he has a bit of a personal vendetta, because his brother was actually killed in conflict in Ukraine when he was young, and that’s kind of been a thorn in his side on his view of Ukraine since he was young, essentially. It made me think, Putin has a vendetta, his name’s of Vladimir. Yeah, V. V for Vendetta, so I’m going to throw in some quotes from the 2006 blockbuster hit V for Vendetta, at the end.
Josh Robb:
At the end.
[2:30] – How Does this Conflict Impact Gas and Oil
Austin Wilson:
That’s going to kind of tie all this together, but the real question you’re going to ask me, Josh, is what?
Josh Robb:
Yes, is how does the Ukraine conflict impact what we’re talking about today, which is gas and oil?
Austin Wilson:
Talking about gas and oil. So, millions of barrel of oil per year, specifically destined for Europe, travel through Ukraine. There’s a bunch of pipelines.
Josh Robb:
And they’re coming from?
Austin Wilson:
From Russia.
Josh Robb:
From Russia, to-
Austin Wilson:
Yeah, so that is obviously stage one, a lot of Europe’s oil comes through Ukraine through pipelines and that is significant. So that supply is under threat of being controlled by Russia, where they could theoretically then cut it off or do whatever they wanted, even though they wouldn’t, because they can’t make money if they do that.
Josh Robb:
Now, just to clarify, when millions of barrels of oil go through the pipelines through Ukraine, they’re not in the barrels when they go through.
Austin Wilson:
Correct.
Josh Robb:
Just so everybody’s clear on that.
Austin Wilson:
It’s a measurement. It’s a measurement. It’s a liquid measurement.
Josh Robb:
It’s not a bunch of barrels that are being shot through the tunnels. Yep. It’s all liquid.
Austin Wilson:
You think of it like a bank, like the bank tubes?
Josh Robb:
Yes. That’s all those… Bye bye.
Austin Wilson:
Millions of barrels just going through there.
Josh Robb:
They’re flying by there.
Austin Wilson:
So, that’s one impact that we’re talking about. Another one is that much of the world is discussing cutting off nearly the only economic power Russia has and that’s the sale and exporting of Russian oil. This limits oil supply, which if you didn’t know, oil supply is already under pre-pandemic levels and demands above pre-pandemic levels. So, there was already pressure on oil prices before spring.
Josh Robb:
Right. Slow that down. You said that real fast. So, just to clear, so now we are above pre-pandemic demand.
Austin Wilson:
Correct.
Josh Robb:
In other words, we want more oil than we had in the past.
Austin Wilson:
Or we need more oil.
Josh Robb:
Need. Use more oil, which is normal, because as your economy grows and everybody goes, you see that demand go up. But supply is below because we haven’t caught back up through logistics on what we need, as well as the-
Austin Wilson:
Through logistics and oil rig counts are down, and we’ve just been under-investing largely due to there has been a lack of incentive from a governmental perspective.
Josh Robb:
From cheap-
Austin Wilson:
And for from cheap oil and from a governmental perspective to support oil drilling really has not been a lot of incentive for oil companies to increase the rig count. So supply is down. Demand is up.
Josh Robb:
Demand is up.
Austin Wilson:
So what has that done for prices?
Josh Robb:
Puts pressure on it.
Austin Wilson:
Prices have already been rising prior to Ukraine and Russia already happening. Then another aspect of this is through COVID and an administrative change in the White House, we’ve seen America go from an oil net exporter where we were energy independent to back to actually importing oil from Russia. We’re importing Russian oil right now. Now we’re going to get to it in a little bit, but we’re currently, as Congress is looking at their sanctions for Russia, discussing ways to pull back our demand for Russian oil. But as a point of a reference, the US imported 76.3 million barrels of oil from Russia in 2021. That’s a lot of millions of barrels.
Josh Robb:
Yes.
Austin Wilson:
That was nearly triple 2020 levels. Now 2020 was COVID impacted heavily, but still, that’s a lot of stinking oil.
Josh Robb:
It is.
Austin Wilson:
Stinking oil.
Josh Robb:
Stinking oil.
Austin Wilson:
Gas joke.
Josh Robb:
Yes.
Austin Wilson:
So that’s where we are. That’s kind of the state of where we are today.
[5:32] – Dad Joke of the Week
Josh Robb:
Okay. So let’s do a dad joke.
Austin Wilson:
Oh, I’m ready.
Josh Robb:
All right. So I thought, you know what’d be great? Is if I found a oil or gas dad joke to go with it.
Austin Wilson:
There’s got to be a million.
Josh Robb:
The problem is of these jokes about oil and gas are crude jokes. He took a big drink and he about spit it out across the microphone towards me.
Austin Wilson:
That was crude.
Josh Robb:
Crude jokes. Yes. But I do have one more, because that was a joke. But so one large oil company has announced that they’re going to produce fuel from insect urine. Do you know which company’s doing that?
Austin Wilson:
Oh man.
Josh Robb:
BP.
Austin Wilson:
B…
Josh Robb:
So those are my two. Those are my two dad jokes.
Austin Wilson:
That was so funny. So BP is British Petroleum, right?
Josh Robb:
No, it’s bee pee. That’s what they’re using. Insect urine.
Austin Wilson:
The other European oil company is Shell, right? Royal Dutch Shell, I believe is the official name. They are still continuing to buy oil, Russian oil.
Josh Robb:
Because they need to.
Austin Wilson:
And it is so cheap.
Josh Robb:
Oh, I’m sure for them.
[6:38] – Russia’s Exports
Austin Wilson:
It is so cheap for them. They’re like, “Oh I can’t afford not to at this point.” All right. So back to Russia and Ukraine, Russia currently exports about 4 million barrels per day of crude. That’s a lot. They export that. So multiply that times 365 and you get, Josh, on your phone, doing this on the spot, get out your calculator.
Josh Robb:
Hang on one second. Whoop. Here we go. 4 million-
Austin Wilson:
Four times 365.
Josh Robb:
4 million times 365, not a leap year, is one billion, 460 million barrels.
Austin Wilson:
Yeah. That’s a lot.
Josh Robb:
Yes. Rounded. Rounded-ish, if you don’t kind of leap year.
Austin Wilson:
That’s a lot of oil that Russia exports.
Josh Robb:
Billion barrels. Billion and a half of them.
Austin Wilson:
Now that is really hard to replace in the global market. So Bloomberg, I was watching Bloomberg today, and as point of reference, because these numbers may move quite a bit before this comes out, we’re recording this on the 7th of March. But as of today, Bloomberg was saying that a buyer strike from a bunch of agreeing countries on Russian oil could limit two to 3 million barrels per day of that 4 million that Russia is exporting.
Josh Robb:
Oh wow.
Austin Wilson:
That’s like a bunch.
Josh Robb:
Yeah. That’s half.
[8:09] – Oil Demand Globally
Austin Wilson:
This would represent 50 to 75% reduction in exported oil. Now Asia and specifically China would largely continue as they were buying Russian crude, because they don’t really care. They need each other, economically speaking, because it’s kind of them against the world, right? So that’s going to continue, but Europe currently imports about 30% of Europe’s demanded oil from Russia. So keep that in mind. So I did some math, because, well, I’m a math guy. So oil demand globally is about 99 million barrels per day. Right? So Russia, with that 4 million barrels, represents about 4% of global daily oil supply. 25% of Russian GDP comes from oil. So if you cut that portion by 50 to 75% due to reduction in exported oil, that’s a 12 to 19% reduction in GDP, if such a strike, an oil purchase strike occurs. So this isn’t just a recession we’re talking about, not a shallow one, anyway. This is a very deep recession, one that will take many, many, many, many years to come out of. It actually could cause the extreme levels of unemployment and drag out long enough in years that this could be considered a depression for Russia.
Josh Robb:
Especially considering that’s not the only sanctions being applied to them.
Austin Wilson:
Yeah. There’s financial sanctions that are also happening. So it is not a good situation for Russian people specifically. So that’s kind of what’s happening there. Another thing that I wanted to point out is that until today, today on, like I said, March 7th is the first indication that we have gotten that Congress was even considering putting a ban on Russian oil imports. It seemed that America was kind of slow to react in that way. That is because we’re buying oil, we need oil for our demand. If that supply goes away, what happens to this supply we have and the price of it?
Josh Robb:
Yeah, and that- it goes up. It does. You can’t quickly create more oil.
Austin Wilson:
No, very slow.
Josh Robb:
It’s not like it takes a process to get those refineries and the oil from wherever you’re digging them, if you even have a spot there all ready to go, it’s not a quick process. It’s not like you switch, you turn the switch.
[10:17] – Hesitant to Cut Off Russian Oil Imports
Austin Wilson:
And pipeline infrastructure has really been hampered with administrative changes, like we talked about. We’re in a different situation, not necessarily as oil and gas pipeline friendly. So moving oil even around would cause issues. So a little bit of a challenge there, but one component of our inflation story we’ve been talking about for a long time now is energy, and energy represents a substantial portion of our Consumer Price Index is what we talk about a lot of times in this instance. Well, one reason the current administration may have been somewhat hesitant to cut off purchases of Russian oil is that that would cause oil prices to go up, which then could correspond to gas prices going up. Well there’s midterms coming up later this year. As of right now, betting odds are very much not looking great for reelection of democratic Senate and House members.
Josh Robb:
Right, the control is looking to switch based on their status.
Austin Wilson:
For majorities. For majorities. So it looks like both of them could flip red based on the betting odds right now. Now betting odds have historically been more accurate than polls, but they’re not perfect. So take that with a grain of salt, but the current administration is looking at these all different metrics and saying, “Wow, we really don’t want to jack up inflation, because that’s going to make our voting constituents even more unhappy that inflation is high,” because we are going to see, now you’ll probably see this number before this episode comes out, but February’s inflation report is probably going to say eight something percent.
Josh Robb:
You think so?
[11:27] – Oil Prices
Austin Wilson:
Eight something percent, because as we’ve had no reprieve in gas and energy prices, and everything else was still pretty elevated. So probably going to see an 8% number, and that is a challenge. So let’s talk about prices. So oil prices started 2021 at 48.52 per barrel.
Josh Robb:
Yeah. Those millions of barrels shooting through the tunnel.
Austin Wilson:
That’s right. They ended the year at 75.21 per barrel. Big increase. That was 60% increase, okay? In a year, 12 months.
Josh Robb:
Yes. Beginning and ended last year.
Austin Wilson:
Today on March 7th, oil is now about $120 a barrel. That’s another 60% increase from where it ended 2021.
Josh Robb:
Yeah. So you went from beginning of last year, 48.52 to now over $120.
[12:08] – Gas Prices
Austin Wilson:
Almost tripled in 14 months. Right? So that’s a big move. So let’s talk about gas prices then, because this is what you and I are buying, right?
Josh Robb:
Unleaded.
Austin Wilson:
I like leaded. No, I can’t find it.
Josh Robb:
Diesel.
Austin Wilson:
Yeah, that’s diesel. No. Yeah. I don’t drive a Tesla yet. I’d love to, I’m buying gasoline for my motorcycles. I’m buying gasoline for my van. I’m buying gasoline for my Pilot. I’m buying gasoline. So gasoline what’s hitting my budget. Let’s talk about gas prices. Gasoline started 2021 at $2.57 per barrel. Per barrel.
Josh Robb:
Per barrel. Yep.
Austin Wilson:
Per gallon.
Josh Robb:
Gallon. We have gallons here, yeah.
Austin Wilson:
We’re back to gallons. Per gallon at the beginning of 2021, it ended at 3.61 a gallon. So that’s a 40% increase. Gasoline is currently averaging, wait for it-
Josh Robb:
Oof, I don’t want to know.
Austin Wilson:
… $4.15 as of today.
Josh Robb:
Ouch.
Austin Wilson:
Per gallon on average nationally.
Josh Robb:
That is steep.
Austin Wilson:
Now we haven’t got, fortunately in Findlay, Ohio, we haven’t got to the $4 per gallon mark.
Josh Robb:
It’s close. It’s very close.
[13:13] – Why are Gas and Oil Increases Not the Same?
Austin Wilson:
It’s coming. I guarantee you’re going to see $4 per gallon soon, but that is already an increase of 15% we’re seeing there. So the question is why are those not the same? Why is crude and gas prices moving at very different paces? Now they’re both going up, but they’re going up very differently. One of those reasons is that oil generally trades in the Spot market. So when oil companies or big buyers, refineries, whatever, they’re buying and selling oil-
Josh Robb:
Right now.
Austin Wilson:
… they’re literally buying and selling oil at the price that’s trading at in the market at given time. Gasoline, the reason that increase has been a lot slower is that gasoline largely trades in the futures market. So right now, gas companies or gas stations or whatever who are selling gasoline, they locked in their prices based on futures contracts months and months ago.
Josh Robb:
Yep. They already have this obligation to get delivered at a set price from prior.
Austin Wilson:
So that’s the disconnect. So let’s just get that off the table right now. That is kind of why those are happening, but what that also kind of means is that gas is going up-
Josh Robb:
And it’s going to continue.
Austin Wilson:
… more.
Josh Robb:
So what it means is when oil-
Austin Wilson:
There’s a lag.
Josh Robb:
… flatlines, wherever that’s going to be-
Austin Wilson:
Gas is going to continue to go up.
Josh Robb:
Some time in the future, they’re trailing, so you’re going to see, let’s just say oil stops at $120 a barrel. That’s where it’s at right now. It just stays there. We find a way to find more oil or whatever. Who cares? Gas will continue to go up, because the futures market’s playing catch-up to this.
Austin Wilson:
Now it’s going to go the other way too though.
Josh Robb:
Yes.
Austin Wilson:
So when oil prices come down, the gas prices-
Josh Robb:
Are delayed.
Austin Wilson:
… are going to be delayed when they’re coming down as well.
Josh Robb:
Yeah. That’s how it works.
[14:39] – What’s Next?
Austin Wilson:
That’s the way it works. So that is really leading us to the question, what’s next? We kind of alluded to it before. Inflation is going to be higher for another month or two probably, especially in… I think the peak of this inflation curve, because we’re near it. We’re really darn close to it, has been pushed down a month or two because of this energy shock we’re seeing right now with fuel prices and gas prices, energy prices going up right now. So that is what we’re going to see as another big inflation number or two, three, or whatever. What that’s prompting the fed to do, which they were planning on doing anyways, is raising interest rates. 25 basis points though, that’s pretty much what we’re having.
Josh Robb:
That’s what they’re saying. Now the question is with these higher gas prices, because the oil market, that is impacted through, but gas prices is with the consumer. 70% of our GDP is based on the consumer.
Austin Wilson:
Correct.
Josh Robb:
So will higher gas prices actually put pressure on inflation, because with paying more for gas, I’m buying less discretionary things, or not? What is your opinion on that?
Austin Wilson:
Yeah. So gasoline is a sizable chunk in fuel and energy. It’s a sizable chunk of CPI, but it doesn’t drive the ship. It’s not the entire thing. So if gas prices and when, we’re pretty much assuming when gas prices get crazy, maybe you’ll see 4.50 a gallon, who knows? That seems crazy.
Josh Robb:
Ouch.
Austin Wilson:
But it’s coming, something like that. When you see something like that, yes, your discretionary buckets are going to pull back, and that might sort of offset a decrease in the other way, because increase in gas price is going to be up still. So that bucket or basket part of the goods is going to be high. But yeah, you might not want to spend as much as you are on, I don’t know, moving or whatever.
Josh Robb:
So an example would be too, let’s say I was going to do a vacation, but now I don’t want to drive, so I’m going to go maybe closer to home, not a farther trip. So then that affects my spending on other things. So maybe I’m not going… We’re here in Ohio. I like to go to the beach. Maybe I don’t go to the beach, now I just do something more local. So I’m spending less fuel and I’m not paying for the hotel. I’m just wondering if higher gas prices just deter other spending, because-
Austin Wilson:
They are going to, for sure.
Josh Robb:
… I’m not going to go there, I don’t want to do that.
Austin Wilson:
Don’t even get me started on airlines.
Josh Robb:
Oh my goodness.
Austin Wilson:
Because airlines, yeah, we use a lot of fuel for gasoline, but airlines use a lot of fuel for jet fuel. Jet fuel is up even more than gasoline is, and it’s going up further. So that is why your plane tickets, if you’re looking at traveling anywhere-
Josh Robb:
Are going up.
Austin Wilson:
… are going up and are going to continue to go up, you’ll know why.
Josh Robb:
Now I remember back in the day, fuel surcharges. Do you remember this?
Austin Wilson:
No.
Josh Robb:
You’re too young. The charged fuel surcharges in certain travel stuff when gas prices or oil was high.
Austin Wilson:
Really?
Josh Robb:
So you’d pay, and then they’d tack on an additional extra cost for fuel.
Austin Wilson:
I hate those, yeah.
Josh Robb:
Because in a sense, it was moving so quickly, you may have bought your ticket six months ago, and they had a hard time paying catch-up on that to cover the fuel costs.
Austin Wilson:
Call me an old cranky man.
Josh Robb:
You’re an old cranky man.
Austin Wilson:
But I think surcharges, when it comes to fuel surcharge or whatever surcharge or the credit card fee, when you line item it, it makes me feel like you’ve been very cheap.
Josh Robb:
You get mad. You get mad.
Austin Wilson:
Just put it in the price, and I’ll never care. Put it in the price, I will never say a wink.
Josh Robb:
Don’t tack it on.
Austin Wilson:
I will never do anything. Don’t give me a special line item.
Josh Robb:
I just think in 2022, we should have no more surcharges. We could call them ma’am charges or something, because-
Austin Wilson:
It’s about equality.
Josh Robb:
… equality.
Austin Wilson:
It’s about equality.
Josh Robb:
No more surcharges.
[18:16] – Future Impacts
Austin Wilson:
That’s right. That is right. So let’s talk about more impacts of what’s next. So there’s obviously going to be continued sanctions on Russia. The wealthy, the ultra wealthy, Putin’s friends, they’re getting their yachts confiscated.
Josh Robb:
That’s so sad.
Austin Wilson:
Their bank accounts stolen. It must be rough.
Josh Robb:
Just, yeah, their seven or eight different airplanes that they can no longer fly around in.
Austin Wilson:
Yeah, it must be rough. So that is definitely happening, but banks, obviously money movements in and out of the country, even within the country being challenged. In fact, I just saw today that Russia is considering using China’s money movement technology instead of Swift, which is what they were using.
Josh Robb:
China isn’t on Swift?
Austin Wilson:
Nope.
Josh Robb:
Don’t trust it?
Austin Wilson:
Well, they might be, but-
Josh Robb:
Maybe they have their own side?
Austin Wilson:
They have their own. Yeah, it wasn’t Western Union, but it was something Union, I think. So they’re-
Josh Robb:
Okay, yeah. Western Union. They’re just wire transferring between the two.
Austin Wilson:
Then oil sanctions are the biggest thing here. Another couple bits of fallout here is that Europe or the European Union specifically is planning to accelerate their green energy push to limit their dependence on Russian oil and how it’s a little too late.
Josh Robb:
That’s great for 20 years from now.
Austin Wilson:
Yeah, yeah. That doesn’t really work. It’s not going to fix your oil shortage right now or your energy shortage right now, but maybe in the future. You should have thought ahead on this. Hindsight is 20/20. So an oil purchase strike from Russia from Europe is specific, like coming. That’s almost guaranteed at this point. I would say that there is a potential bill as of today from the US on an oil purchase strike, but it’s not finalized yet, but that could be down the road as well.Here’s the ticket. This brings me back to V for Vendetta. I think that what we are about to see is revolution in Russia, because think about it, Putin is killing his people slowly. Their economy, they are becoming more and more isolated. Their wealth is being stripped away, their economy is ruined, their currency and markets have been slashed in value, and all for what, right?
Josh Robb:
Mm-hmm (affirmative).
Austin Wilson:
For nothing good for them. So they’re going to get very desperate. They’re going to become isolated beyond any belief as a country. So all for a personal vendetta, illogical and unwise, but happening anyway without the consent of the Russian people, because as we know, there’s never been a fair election that put Vladimir Putin in office.
Josh Robb:
Oh, I think he won the last election.
Austin Wilson:
Sweeping. It was really, it wasn’t even close. Lives are being lost as well, and Russian lives as well as Ukrainian lives. Russian people have close ties with people in Ukraine, and Ukrainian people have close ties with people in Russia. So this is a war no one wants. So that’s going to really anger Russian people.
Josh Robb:
Yeah, there wasn’t any kind of building hostility to this. It was-
Austin Wilson:
It’s a light switch.
Josh Robb:
… troops amassing at the boarder, and then-
Austin Wilson:
Boom, we’re invading.
Josh Robb:
So you’re right. It’s a sad event that’s-
[21:15] – Vendetta Quotes
Austin Wilson:
It’s a sad event, but it’s sure to light a fire under some Russian activists, and it’s not a matter of if. It’s probably a matter of when this sort of thing happens, but these Russian activists know that this action must not continue. It’s continued for too long already. We saw it with Crimea. We’re seeing it again with Ukraine, and they’re not going to stand for it. They’re going to demand change. A couple quotes from V for Vendetta, because I think they’re fitting here. One quote is, “People should not be afraid of their government. Governments should be afraid of their people.” I think that’s fitting, because Putin is going to feel the wrath of the Russian people. Another one is, “And when that day…” I say this is going to be a joyous thing for the world when Russia becomes more democratic. So there will be some dancing. V said, “A revolution without dancing is a revolution not worth having.” So that is where I leave you on oil and gasoline and Russia and Ukraine. It’s a messy situation.
Josh Robb:
It is.
Austin Wilson:
I can make all the gas jokes I want, but it still is sad.
Josh Robb:
We’re talking about the impact of oil, but again, that’s tiny compared to the impact on the lives.
Austin Wilson:
Yeah.
Josh Robb:
Millions of people have fled. They are now trying to figure out what’s next. The loss of life, but the sweeping impact across the globe is being felt even now with this impact.
[22:20] – How Should You Handle Your Investments Right Now?
Austin Wilson:
I guess a bigger question for you, Josh, is how should someone handle their investments in this situation?
Josh Robb:
Yeah, so there’s a lot going on, a lot of uncertainty, a lot of changing. That comes back to our concept always of having a purpose for what you’re doing and sticking to that plan. Maybe some adjustments are needed. You talked about the energy market and what’s going on, making sure that you’re comfortable with the risk that you’re taking, but also don’t lose sight of that far-sighted goal, because these all are temporary. We’ve had issues like this in the past. They’re not great. There’s tragedy around, but from a long-term investment standpoint, you can look at headline news around the world, and there’s always conflicts. So don’t change your long-term goals and strategies for the short-sighted on the impact of oil, what it’s doing.
Austin Wilson:
Right. Stick to the plan, talk to your advisor.
Josh Robb:
Yep. Now-
Austin Wilson:
That’s really-
Josh Robb:
Yeah, do commodities fit? I know we’ve talked about those different things. That’s really a strategy decision for your situation, and it’s hard to say, but in general, a diversified portfolio is where you are really ideally positioned to weather through these unknowns and uncertainty.
Austin Wilson:
And a diversified portfolio is going to have some sort of energy exposure. If you look at what’s worked in 2022, it is energy. That’s the only thing that’s worked. Bonds have lost money. Other stocks have lost money. Energy is up huge, because oil prices are up huge, and that causes great profit margins for energy businesses. Now the question, and it’s a multi-billion-dollar question is how much of the good news of high oil prices and high demand and all this stuff has been baked into the prices of these stocks, of energy stocks? That is the question we don’t know the answer to. A lot of good news, certainly, because they’ve gone up pretty sharply. Is it all of it? Is it not near all of it? We don’t really know, but if you hold a diversified portfolio, you probably hold some energy stocks. That is a very good thing, because they’re doing very well for you right now when everything else is down.
Josh Robb:
Yep.
Austin Wilson:
So as always, check out our free gift to you, it’s a brief list of eight principles of timeless investing. These are overarching investment themes meant to keep you on track to meet your long-term goals. We don’t talk about oil prices, because they’re pretty irrelevant in the grand scheme of things when it comes to your financial plan. So check it out. It’s free on our website. Josh, how can people help us grow this podcast?
Josh Robb:
Yep, make sure you subscribe to us, that way every Thursday, you get our most recent episode. Leave a review on Apple Podcasts and/or Spotify, wherever you listen to us. If you have any questions, thoughts, or concerns, email us at hello@investeddads.com. Then also share this episode with everybody who loves gas.
Austin Wilson:
Classy. Classy. All right. Well, until next Thursday, have a great week.
Josh Robb:
Yep, bye.
Outro:
Thank you for listening to The Invested Dads Podcast. This episode has ended, but your journey towards a better financial future doesn’t have to. Head over to theinvesteddads.com to access all the links and resources mentioned in today’s show. If you enjoyed this episode and we had a positive impact on your life, leave us a review, click subscribe, and don’t miss the next episode. Josh Robb and Austin Wilson work for Hixon Zuercher Capital Management. All opinions expressed by Josh, Austin or any podcast guest are solely their own opinions and do not reflect the opinions of Hixon Zuercher Capital Management. This podcast is for informational purposes only and should not be relied upon for investment decisions. Clients of Hixon Zuercher Capital Management may maintain positions in the securities discussed in this podcast. There is no guarantee that the statements, opinions, or forecasts provided herein will prove to be correct. Past performance may not be indicative of future results. Indices are not available for direct investment. Any investor who attempts to mimic the performance of an index would incur fees and expenses, which would reduce returns. Securities investing involves risk, including the potential for loss of principle. There is no assurance that any investment plan or strategy will be successful.
