Where will the oil money go next?
When one bubble ends, another one begins and there is no doubt that yet another will begin. The trouble is finding it, and getting on it before the rest of the market does. Here are a few ideas of where that oil money just might go:
The alternative energy industry
Rising oil prices definitely shined light onto an industry that is favored by green investors and socially responsible investing types. Though the alternate energy industry does have some roadblocks, that being the cost to produce green energy is still higher than the cost of fossil fuels. Granted, most of the development in the alternative energy field comes from government grants and subsidies, alternative energy business is starting to cut costs and compete. Though oil prices have dropped, there is plenty of interest in alt energy and going green. These might be the next stocks to take off.
Financials
The finance sector is carrying two black eyes at the moment but that isn’t stopping investors from snapping up shares of banks on the cheap. Though the balance sheets at most banks are surprisingly terrible, the largest banks are posting losses that come in less than expected. The finance sector as a whole, through the exchange traded fund XLF has bounced back from its lows of $16.77 per share to $22.54. Though the industry is facing some troubles, its looking undersold to many investors. The oil money could land here if banks improve their balance sheets.
Defensive stocks
As the economy prepares for recession, investors are piling into companies like Big Lots and Dollar Tree as a hedge against a slowdown. Defensive stocks are loved by the investing community because they do well both in time of economic growth and slowdown, some stocks like the deep discounting dollar stores actually do better during a slowdown.
