“It's not easy taking my problems one at a time when they refuse to get in line.”
–– Ashleigh Brilliant, artist and writer.

Vancouver, BC (September 02, 2008): Oil headlines have risen to top billing. Everywhere we turn, there is yet another oil story. Yesterday it was hurricane Gustav’s turn to cause havoc and involve oil in the process. Oil does not line up. Today is no exception.

Our thoughts are with the families of all who lost their lives, were hurt and suffered property devastation. Those who live in Gustav’s path will need much resolve to weather the aftermath.

Pictures of the affected areas are vivid and telling. I can only imagine how the affected people feel. Rebuilding will be long and grueling. The destruction has changed lives and landscapes forever. Especially, as the affects of Katrina are still vivid in our minds.

Adrian Mastracci, “fee-only” portfolio manager at Vancouver's KCM Wealth Management, comments, “Let’s put oil in perspective. Three years ago it rose past $70 per barrel after Katrina and there were some $5 price swings. “

Not to be outdone, oil recently peaked at $147, currently plunging under $110. Large daily price moves are now routine for investors. Stabilizing around current oil prices, or lower, would be welcome news for the fragile economy.

Impact of oil

Let's step back. Oil is essential to run factories. It's an ingredient of many products that we buy. It’s required for virtually all modes of transportation. Not to mention the gas station and home heating.

The oil price rise is not something that everyone can endure without feeling some pain. Perhaps, the more interesting question is how many people do we know that have had an income raise in the last three years similar to oil prices?

These oil prices demonstrate the significant impacts inflicted on consumers in such a short time. No wonder the markets can stay rattled from one day to the next. Clearly, they don't like the uncertainty for the global economic pulse.

Oil price fluctuations dominate the market daily news. This has affected, and will continue to affect, all investment portfolios.

Some in a positive way, such as the price rise of energy related stocks and indices. On the other hand, the millions that insurance companies will be paying out will have an affect on future premiums and may alter availability of property coverage.

A little defense

Investors want results in near term. But, there is need for playing defense as markets zig and zag.

There is no simple fix for this uncertainty. I offer six comments for investors:

1. Review your investment expectations.
2. Revisit your investment policies and strategies to reach personal goals.
3. Get well acquainted with your asset mix.
4. Be comfortable with the sector components of your total portfolio, like energy.
5. Stay with quality wherever possible for both equity and fixed income.
6. Make broad portfolio diversification and periodic rebalancing your best friends.

Oil prices can move in either direction with little, if any, fundamental support. Stay focused on your long-term issues.

Oil is one tough cookie that refuses to get in line.

I welcome your comments.

NOTE: The information provided above is intended for general informational purposes only. It does not constitute advice for anyone's specific situation. Everyone should always first consult directly with their advisors to determine the appropriateness of any information contained above before taking any action. KCM Wealth Management Inc. assumes no responsibility for any loss or damage arising from the use of, or reliance upon the above information.