While meteorologists were plotting Hurricane Gustav’s course, uncertainty about exactly where it would go and how strong it would be drove the price of oil up $7. When the storm ripped through the Gulf of Mexico with minimal damage to vulnerable oil platforms, oil dropped over $9 a barrel the next trading day. The old saying “Buy on the rumor, sell on the news” certainly held true in this instance.
With dramatic swings like these, the average investor should not be playing in this game. It takes experience and discipline to make money consistently in this kind of market.
My advice to the average investor is to steer clear of the oil market, especially for the rest of hurricane season. But if you feel that you have to play it, I encourage you to do so on a small scale and with only a small portion of your portfolio.
[Ed. Note: One major key to making money? Steer clear of investments you don't understand. Investment expert Rick Pendergraft can show you a simple system that will help you determine which ones are right for you... and which are best avoided. Get the details here.]
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