Ever since oil cratered to $26/barrel on February 11th, prices have steadily inched higher. West Texas Intermediate has now climbed into the $40/barrel range. Not surprisingly, energy stocks have kept pace, with many service companies and independent producers hitting year-to-date highs. Unfortunately for some energy firms, however, this recovery will probably be too little, too late.
Before I get into blogging, I’d like to thank all the people who have written to me about Dead Companies Walking. I’m sorry I haven’t been able to respond to most of the messages, but I do try to read every email that comes in and it’s a thrill to hear that people are enjoying the book. Thank you for buying it and thank you for reading it!
Okay, on to this week’s blog:
Possibly the greatest surprise in 2014 was the decline in government bond yields. Ten-year treasuries fell from 3 percent to 2.2 percent by year’s end. Last month, I said that yields were unlikely to fall much further. Guess what? They did just that, dropping to 1.8 percent last week after hitting 1.65 percent two weeks ago. This surprisingly rapid drop in rates didn’t just prove (yet again) how silly it is to make financial predictions, it also has two important implications for investors: