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Falling Oil and Its Global Impact

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Michael Farr
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with Michael Farr, Founder and CEO of Farr, Miller & Washington Investment Management, Author of A Million is Not Enough: How to Retire With the Money You’ll Need

Michael Farr is a veteran of the markets and has seen several trends come and go – like the time in 1999 when investors wanted to sell oil and buy dot-coms… and we all know how that turned out. He takes a longer view to investing, and understands that market movements are tied to a combination of economic fundamentals, geopolitical events and the shenanigans of deep-pocketed hedge fund traders who often use leverage with deadly effect. Michael also knows it’s hard to predict when trends might reverse. For example, no one saw the sharp drop in oil prices coming. And now that oil is down significantly, many are predicting a slide down to $20 based mostly on an extrapolation of recent trends. But with fundamental demand for oil still sound, and global appetite for energy on the rise, could this be a good time to buy oil?

And while the slide in oil is certainly a boon for U.S. consumers who are expected to save about $120 billion at the pump, it could also cause refinery shutdowns and job losses in the energy sector, the very sector that was key to our economic recovery. The energy sector could also see a wave of consolidation as part of a natural economic “survival of the fittest” cycle. Moreover, the slide in oil has begun to significantly redraw geopolitical alliances – and pushed countries like Russia to the wall – perhaps to where they may react in unexpected ways. A lot happened in 2014 – in good ways and bad – so there’s enough out there to surprise the markets in unexpected ways in 2015.

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