In the short span of a few months we have seen oil (West Texas Intermediate) decline from over $100 per barrel to just above $55. While the decline was anticipated to a point, very few (if any) expected the extent of this decline. Just over two months ago bullish analysts made the following comments: “Goldman Sachs said the slowdown will take time with Brent hitting a bottom of $80 a barrel in the second quarter of 2015” & the Barclays research team noted that “It seems extremely unlikely that oil prices will remain below $100 for very long”. This is why we at Friesen Capital Management strongly believe in taking such forecasts with a grain of salt, as the only thing that truly matters is the current trend at hand.
Many of our clients know the difficulties of starting a business whether they come about from managing operations, hiring the right people, or maintaining a culture. Mark Cuban, arguably one of the most successful entrepreneurs of our time, created a list of his 12 rules for start-ups. These have come about after countless struggles and obstacles that Mark has encountered through multiple successful and failed ventures during his career.
Too often analysts write reports that call out market tops saying that stocks are “overvalued” and that markets are “frothy”. Unfortunately, they are rarely correct and cause anxiety for investors with any sort of market exposure. In reality, it is very difficult (basically impossible) to consistently predict market tops or market bottoms as both are driven by the bulk of institutions either simultaneously entering or exiting the market. This is why we stress the importance of having a discipline where one can exit to protect his/her capital and more importantly gains when markets falter. This has to be based on what is actually happening in the market and not in the economy or China or Europe or… etc. A wise John Keynes once said, “Markets can remain irrational for longer than you can remain solvent”.