Trader Robert Duffy works on the floor of the New York Stock Exchange Wednesday, Oct. 22, 2008. (AP Photo/Richard Drew)
Well folks, we might be in an economic slowdown but the greenback is doing well! The dollar is at a high against all the currencies even gold. It might be bad news for some if you bought gold at its high a couple weeks ago at $933 per ounce. Now we are looking at gold prices near $723 an ounce.
Light sweet crude dropped to about $66 per barrel today making this the lowest I have seen it in quite some time. I am curious however. If we were paying $4.00 per gallon when Light Sweet Crude was at $140 barrel then we should be paying somewhere around $1.88 per gallon now. Basically a 47% drop in price. The lowest I have seen yet is $2.47. Hey I’m not complaining but that’s quite a profit margin even if they were to keep it up for a few days.
The question is, how long with this strong dollar last? I understand that when Oil goes down most of our economic prosperity goes up. However, with the credit market nearly frozen will we see a snapback of the dollar? I would love to talk to a panel of bankers to see where their outlook is. It seems these days its anyone’s guess as to where we are headed. Most are certain that we are headed for a long term recession and others are certain that this is the bottom. I personally think that we will see another decline in the markets as consumer confidence drops and human nature kicks off. At that moment people tend to do a selloff in the market because they feel like the action in the market deserves a re-action. That re-action is like a temporary high, Much like someone who is a compulsive shopper. The end effect is the same; Buyer’s remorse. Only here its seller’s remorse and you are faced with the facts that you bought high only to sell low. (This of course being the opposite of any business strategy.)
The best advice I have heard is to keep your head up, keep working hard and try to diversify your investments as much as possible. Do not invest in things you don’t understand. Put your money in things that you know enough to get a good gut feeling.
As with your small business, I can see a strategy already come to play. Business owners are working hard to save money and stretch that dollar. It’s not to say people aren’t spending but they want to see value out of their dollar. When you buy something with business funds, ask yourself how much you are getting for each dollar going out and when the return is. If the dollar amount is negative and the return is too far in the future then you are in a fool’s game. Your odds are probably best spent at the craps table in Vegas. (Which according to Jeff Dargatz, has the best odds in Vegas)