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What to Invest When Oil Price is Rising?
By Pauline Yong
Indonesian Rupia falling, rising interest rates. It is rather challenging to avoid losses and stay
profitable in our investments at this scenario. How can you reposition assets without increasing
market risks? The trick is to find ways to take advantage of the coming changes in smart ways.
The way you choose to change strategies should depend on your investing experience,
knowledge, risk tolerance, and personal preferences.
drilling ventures, will continue to be solid investment opportunities in the future. With growing
demand for oil from China, its oil imports were up 40% in 2004, this trend will continue as long
as China’s economy is growing. Of course, the blame is not on China alone as China is only
consuming a third of what the US is consuming.
For the more advanced investor who is comfortable with options, consider buying long-term
call options in oil related sectors – coal, oil and gas operations, oil well services and equipment.
By Pauline Yong
Indonesian Rupia falling, rising interest rates. It is rather challenging to avoid losses and stay
profitable in our investments at this scenario. How can you reposition assets without increasing
market risks? The trick is to find ways to take advantage of the coming changes in smart ways.
The way you choose to change strategies should depend on your investing experience,
knowledge, risk tolerance, and personal preferences.
drilling ventures, will continue to be solid investment opportunities in the future. With growing
demand for oil from China, its oil imports were up 40% in 2004, this trend will continue as long
as China’s economy is growing. Of course, the blame is not on China alone as China is only
consuming a third of what the US is consuming.
For the more advanced investor who is comfortable with options, consider buying long-term
call options in oil related sectors – coal, oil and gas operations, oil well services and equipment.
Second, with the US dollar shrinking, perhaps we can turn to gold. As the gold has a negative relationship with the dollar. We can
invest in unit trust that invest in gold, or invest in US stocks that are related to gold mining. However, we might face the forex risk if
we invest in US stocks.
Third, we may always turn to fixed income assets such as FD (3%) and Merdeka bonds (5%) when we are not comfortable investing
in the equities market at this moment.
Many people asked me: “What about bond funds?” Well, during the times of recession, bond funds usually face the risk of early
redemption as unit trust holders are desperate to cash out their unit trust investment. Hence, fund managers would pay penalty fees
for early redemption. When too much supply chasing too few demand, it would affect the fund’s performance. Bond funds are good
when the interest rate is falling, and the economy is doing well.
Lastly, our futures market provides a venue to hedge against our portfolio in the stock market. We can short the KLCI futures when
KLCI is falling ad vice versa.
Happy investing,
Pauline Yong
invest in unit trust that invest in gold, or invest in US stocks that are related to gold mining. However, we might face the forex risk if
we invest in US stocks.
Third, we may always turn to fixed income assets such as FD (3%) and Merdeka bonds (5%) when we are not comfortable investing
in the equities market at this moment.
Many people asked me: “What about bond funds?” Well, during the times of recession, bond funds usually face the risk of early
redemption as unit trust holders are desperate to cash out their unit trust investment. Hence, fund managers would pay penalty fees
for early redemption. When too much supply chasing too few demand, it would affect the fund’s performance. Bond funds are good
when the interest rate is falling, and the economy is doing well.
Lastly, our futures market provides a venue to hedge against our portfolio in the stock market. We can short the KLCI futures when
KLCI is falling ad vice versa.
Happy investing,
Pauline Yong
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