There are lots of areas right now that look promising for investors, which include:
BUT… and there is a huge but here… we need to understand what is going on in our economy and financial world right now.
Even though we are seeing unbelievable advances in technology and the general quality of life, there are enormous risks in the financial world. Now, I’m not being negative, I’m just being realistic.
So here is the reality.
Energy prices will continue to rise!
Oil. Most of us are very well aware of the oil price because we see it every day at the gas station. High gasoline prices? Well, oil must be pricey. Low gasoline prices? Then oil must be inexpensive.
Of course, that’s an overgeneralization, but most of us remember how costly gasoline was a few years ago. Especially around 2008. That’s why you should always look at the commodity markets.
Oil is the commodity that rules everything.
If you think European natural gas prices are insane, just think of them as a dress rehearsal for what will happen when oil prices skyrocket. Energy equals inflation, and we’re only at the beginning because the energy transition still dominates the narrative. Various policies are restricting supply to the point of an energy crisis.
Meanwhile, the consequences can be seen in rising prices, which is why consumption is now being subsidized. Just imagine a world where the demand for energy like oil remains stable or even increases with higher prices.
But hasn’t the price of oil already risen very sharply? Yes, but the cycle lives on.
So, what is a smart financial decision to make for 2022?
Buy Oil. But with a discount.
I know it’s counterintuitive, but if you want to hedge against inflation, you can do that with options. More precisely: with long-dated OTM oil calls. They are strikingly cheap.
One last idea…
Major oil producing companies are doing great. And they pay lavish dividends.
Just look at: ExxonMobil, Chevron, Petrobras, …
Fast forward to today, many oil producers have suffered in recent years as they were no longer seen as having a bright future.