There Will be Blood!

There Will be Blood, a 2007 movie starring Daniel Day-Lewis, is based on Upton Sinclair’s book Oil!, published in 1927. Mr. Sinclair’s novel dealt with the struggle of greed and fear that many faced in the early days of the oil industry in Southern California. If Mr. Sinclair were writing his book today, 93 years later, the storyline would probably be similar.

The decline in the price of oil is one of the catalysts for the recent stock sell-off. Below is a look at some of the significant plunges in the price of oil since 1980[1].

  • April 2011, through the recent low, the price of oil is down 71%.
  • May 1980 to April 1986, the price of oil dropped 77.2%.
  • October 1990 to December 1998, the price of oil dropped 74.4%.
  • July 2008 to February 2009, the price of oil dropped 69.6%.
  • November 2000 to January 2002 the price of oil dropped 43.8%

The price of oil declined by 86% from May 1980 to December 1998, while the S&P 500 climbed 1,005%. The 18-year bull market in stocks averaged 17.6% per year. During this run, there were 2,526 up days and 2,193 down days. One of the down days was October 19, 1987, when stocks fell by 25.7%.

As markets remain volatile, stay diversified, focus on the long-term, and follow your plan. And, as a reminder, the stock market has always recovered.  It might take one week, one month, or one year, but it has always bounced back. If you need proof, please look at the following years: 1907, 1915, 1929, 1930, 1931, 1932, 1934, 1937, 1939, 1940, 1941, 1946, 1953, 1957, 1962, 1966, 1969, 1973, 1974, 1977, 1981, 1990, 2000, 2001, 2002, 2008, and 2018.

There is no free market for oil. ~ T.Boone Pickens

March 8, 2020

Bill Parrott, CFP®, is the President and CEO of Parrott Wealth Management located in Austin, Texas. Parrott Wealth Management is a fee-only, fiduciary, registered investment advisor firm. Our goal is to remove complexity, confusion, and worry from the investment and financial planning process so our clients can pursue a life of purpose. Our firm does not have an asset or fee minimum, and we work with anybody who needs financial help regardless of age, income, or asset level. PWM’s custodian is TD Ameritrade, and our annual fee starts at .5% of your assets and declines depending on the level of your assets.

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[1] https://www.macrotrends.net/1369/crude-oil-price-history-chart, website accessed March 8, 2020