Posted by Tim Stobbs on July 7, 2008
Ok I have to admit. Investing today is getting a bit more difficult. Why? It looks like the gloom is setting in over everything. News stories seem to be focusing on “X number of jobs cut”, “stock markets down”, “home sales cooling off” and my personal favorite “oil choking global economy”. It’s just a depressing kind of place where money goes into something and I actually expect it to go down further.
So what to do? Simple. Keep investing and put on your blinders to some of the noise. The media often seems to overstate the trouble of everything. For example I don’t recall a news release with an oil companies profits lately. That should cheer up some investors for a little while. At the same time if oil does keep going the way it is we would have entered the peak oil world which brings up an interesting question of if we should continue to invest they way we have.
Assuming for the minute peak oil is true as a theory (for those of you not familiar with it read this) and that it is here now or will be shortly. This would result in a rather fundamental shift of how people do business. Up until now transport was always taken for granted as being cheap. So getting something made in China where labour is cheap is possible do to cheap transportation costs. It is cheaper to do that than let someone in North America do it due to the difference in labour costs. If transportation is now more expensive that China may lose that advantage and now it makes sense to do things more locally. Why? Cheaper transport costs due to less distance traveled.
So if the shift for companies becomes local based will they get squeezed out of the local market due to more nimble small businesses which can react faster to the changing economy or will the big business world adjust to new reality of expensive transportation costs and continue to produce profits?
Overall I don’t know, but in any case a shift of some kind is likely soon. 6.5 billion people and growing population and cheap oil can’t go on forever. So what do you think? Is peak oil valid or bullshit?
This post is now part of the 161st Carnival of Personal Finance.