As always, we believe in taking a long-term approach and diversifying.
We recently received the following questions from some of our readers. If you have questions you'd like to ask our team, please email us at [email protected].
Question: Gentlemen, I would appreciate your thoughts on the price of oil for the next three to six months, one year out, and for the next two to three years.
Answer: With my tongue planted firmly in my cheek, I suggest getting back to us in three, six, and 12 months, and we’ll let you know where oil prices have been. Just as we don’t pretend to have any ability to forecast where stocks will move in the short term, we also have zero ability to forecast oil prices – there are just too many variables.
Oil remains a vital part of the global economy, so I can’t say I see the price dropping to zero anytime soon. However, it does appear that U.S. shale operators are making $50 oil work for them and have resumed production at a level that probably doesn’t make Saudi Arabia very happy, so I also don’t see $100 oil on the horizon.
Over the longer term, there are a whole host of other items to consider.
First, will the lack of investment by the world’s oil giants over the past two years result in a shortfall in oil supplies – and therefore rising prices – in the next few years? According to Core Labs – which definitely has a dog in this fight – the world needs to find 2.8 million barrels per day of production, or 3.3% of annual production, every year just to replace wells that reach the end of their productive lives.
Second, how rapidly will electric vehicles be adopted now that we have Tesla 3s and Chevy Bolts, with their $35,000 price tags and 200-plus-mile ranges, and a whole host of other competing vehicles in the works? Will efforts in China and India to leapfrog the internal-combustion engine bear fruit?
The answers to these questions hold the keys to forecasting oil prices. Unfortunately, we at Motley Fool Asset Management do not possess these answers.
So there you have it: Motley Fool Asset Management’s completely useless guide to trading oil.
Question Hi! I need your expert opinion on bitcoin. Is this a good thing to own, and when will be a good time to sell?
Answer I can safely say that bitcoin would have been a good thing to own – its value has tripled in the past six months! Whether it’s a good thing to own from here – much like the price of oil in three months – is anyone’s guess.
The argument for holding bitcoin is similar to that of owning gold. Because of their decentralized nature and limited volume — there can only ever be 21 million bitcoins in existence, unless the community in charge of verifying bitcoin transactions agrees change the rules — their value can’t be eroded by having a central bank print more. Of course, if bitcoin fails to become widely accepted as a form of payment, they’re only a series of 1s and 0s, so you can’t melt yours down to make pretty baubles.
Bitcoin has been around for nearly a decade, but in terms of currencies, that isn’t very long, so it’s hard to make the claim that it has gained acceptance as an asset. I therefore find it hard to think of bitcoin in the same terms as gold, which I believe has a place in a portfolio for diversification purposes. Instead, I consider buying bitcoing as spectulation at this point -- something you're more than welcome to do, but not something to build your portfolio around.