Quote:
Originally Posted by Ozy_Flame
That's why it's important to use a trusted, reputable advisor with a good portfolio of work if you are not an SME yourself, and being familiar with your wheelhouse so you can see the highs and lows coming and know about industry events. It's also why I said get familiar with 2-3 industries. I agree, all eggs in one basket is not good.
I think the issue with lack of diversification was the boom rode too long and people got complacent, and were thinking too much within a singular vein of commodity investments. The 2008/09 should have been a bit of a warning shot that markets can take an impact - even if it wasn't directly related to O/G. 2014 was the real shock to that singular investment strategy.
There is still much potential in commodities and energy - but it requires learning about things like renewables, mining, and other upcoming integrated companies that may also include things like big data, tech, GIS, etc.
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Complacent and just comfortable with what they know. I can look at any set of financial statements of any oil and gas company and tell you 10x more about the company than I could of a financial services or manufacturing company and my background is finance and accounting. Add to the fact that my peer group are mostly senior management level in other oil and has companies and its easy to buy into the hype of each other. So while I can make better investment decisions about energy companies, it still doesn't take away the pervasive risk of commodity prices collapsing. People like investing in what they know and that can be a problem.
Luckily ETFs can really provide a good means to diversify without needing to know too much about specific companies.