The stock market has been on a financial roller coaster lately and investors around the world are speculating about the ride. It seemed like the market was taking a rocket ride to higher returns in the second quarter, but the rocket exploded recently thanks, in part, to China’s financial debacle. China is trying to deal with its financial issues, but many investors think the China debacle isn’t over and won’t be over for some time.
But some investors like to buy when stocks are declining. Businessmen and investors like Brian Bonar know that stock values change quickly. Bonar is the CEO and Chairman of Trucept Inc. Bonar is also the Chief Financial Officer of the company.
Bonar and other investors think energy stocks, especially oil company stocks are worth buying because they are undervalued at the moment. The price of a barrel of oil dropped from $100 last year to the low $40 range this year. Bonar thinks that fact along with high oil inventories, and increased U.S shale oil production are creating false oil values. Warren Buffet also agrees with Bonar. Buffet’s company, Berkshire Hathaway, has a 10.8 percent stake in Phillips 66. Buffet purchased most of that stock recently, and Buffet doesn’t make too many mistakes when it comes to finances.
Another reason for Bonar’s and Buffet’s bullish position on oil stocks is pretty obvious. OPEC continued to produce the same amount of oil even when inventory levels were at an all-time high. Experts say OPEC has to face the fact that production must drop in order for prices to rebound. That may happen sooner than the experts think. Another fact is Iran is back on the world oil market, and that will be a game-changer in the oil market.
So even though oil prices are moving in the wrong direction at the moment they will rebound due to demand, lower inventories and a drop in U.S. and OPEC oil production, according to some financial experts. Hedge funds are still betting on oil companies for those reasons, and the fact that winter is coming and that means consumption will go up.