Ed Butowsky, managing partner at Chapwood Capital Investment Management LLC, joins Fox News to discuss the impact on oil prices and other aspects of the economy, in light of the recent UN sanctioned attacks on Libya.
Months of violence in the Middle East have put the oil markets in turmoil, and oil prices spiked as the UN Security Council approved the use of force against Libya. Could this be the time to buy into crude oil?
Because the military activity in Libya occurred over the weekend as opposed to a weekday during market trading, stock markets will experience less of a negative impact. When military events occur, such as the recent attacks on Libya, markets do not hesitate to sell off because of a lack of clarity into the situation. In this instance, however, investors will have time to digest what has happened, and not react so abruptly.
The UN sanctioned attacks on military outposts along the Libyan coast will have an impact on cost of oil, providing investors the optimal time to invest in oil. Although the tension in the Middle-East has contributed the rising cost of oil, it is mostly due to rising demand for these resources from countries like Brazil, Russia, India, and China (BRIC). It’s quite possible that we will see oil prices at $130-$140 a barrel by the end of summer 2011.
I suggest that if you are going to buy into the oil market, allocate 5%-10% of your portfolio to the sector, and consider Exchange Traded Funds that invest in companies that produce and service the oil industry.
The very unfortunate nuclear crisis in Japan has slightly motivated investors to move towards fossil fuels like oil, there has been a bigger turn in the US towards utility stocks. The utility stock prices declined recently, primarily due to the disasters in Japan. However, investors are starting to realize the great purchasing opportunity of utility stocks in the US. Most importantly, when owning these stocks investors generally receive a 4% – 5% income from the dividends, as well as the potential for principal growth.
Ed Butowsky is the managing partner of Chapwood Investment Management and is an internationally recognized expert in the investment wealth management industry. Ed is also a frequent guest on other networks such as CNN, NBC, ABC, Fox News, Fox Business, and Bloomberg to name a few.
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