The relationship between low gas prices and the stock market

You love low fuel prices. At least that’s what social media tells me since everyone loves to comment about gas at $1.23. Sure, it is nice to save a few bucks on fuel, but it’s also directly related to why the market had such a bad week.

Oil prices are down, that’s why you are paying less at the pump. While this is good for you, it isn’t good for the economy at large. Let me explain. Oil producing countries have flooded the market driving down the cost of a barrel. A year, year and a half ago, the cost of barrel of oil was 100 bucks. Now there is talk a barrel could go as low as $10. Yikes. With prices that low, the economies of countries which produce oil (Russia, Saudi Arabia, Brazil, for example) are struggling. Struggling economies generally mean people are spending less money. Which is how oil prices impact the price of Apple stock. Fascinating.

There are tons of other factors at play here, including China’s struggling economy, but I don’t want you to get too caught up in all of this. Let it be interesting, but don’t let it impact your investing behavior. Stay the course. Don’t cash out. Ignore your losses. You will recover, if you don’t sell.

You can hear me expound on this topic, in this segment with Angela on Fox59:
 

Leave a Reply

Your email address will not be published.