Political unrest and soaring Oil price are all over newspaper headlines nowadays. Oil, which is hanging at 29 months high, become the culprit causing the market correction lately, again.

But if you recall the reports during the financial crisis just 3 years ago, people blame oil price for increasing business cost, hurt corporate earnings and slow down the economy. but when oil price finally came down, did the market stops falling? NO!

Look at the chart below, in fact, oil and stocks are more correlated nowadays

Oil Price vs S&P 500 (Source: Bloomberg)

So instead of panicking about the current situation,  investors should ask themselves, are the global economy still on the recovery road.

Maybe many investors felt that the market was overvalued; Maybe many wanted to take some profits; Maybe some were simply looking for an excuse to reduce their equity exposure.

Huge market movements are seldom at the hand of individual investors, fund managers also needed a good excuse when their funds are down so they blame oil.

Think about it.

About the Author

Ivan Guan is the author of the popular book "FIRE Your Retirement". He is an independent financial adviser with more than a decade of knowledge and experience in providing financial advisory services to both individuals and businesses. He specializes in investment planning and portfolio management for early retirement. His blog provides practical financial tips, strategies and resources to help people achieve financial freedom. Follow his Telegram Channel to join the FIRE community.
The views and opinions expressed in this article are those of the author. This does not reflect the official position of any agency, organization, employer or company. Refer to full disclaimers here.

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