What Do Low Gas Prices and Your Investments Have in Common?
Thanks to very low oil prices, the cost of gas has dropped dramatically, and that’s saving New Jersey drivers hundreds of dollars a year, but there’s also a negative side to the story.
As oil stocks have dropped, the stock market has also dipped roughly 7 percent since the beginning of the year.
According to Dr. Maury Randall, the chairman of the Rider University Finance Department, cheaper gas is a benefit for consumers, and it could wind up saving the typical driver hundreds of dollars a year, but “if somebody had $100,000 invested over let’s say the past month, with the market dropping roughly 7 percent, they would have lost somewhere in the neighborhood of $7,000.”
He said during the 2015 calendar year, the market was fairly flat, and it ended roughly at the end of the year where it had began, perhaps dropping slightly.
“So investors had pretty close to a zero return, but the month of January has been a bad month, so that’s resulted in a decline. It is a significant hit, but of course it is for a very narrow period of time,” Randall said.
He adds the stock market can be volatile and while stocks have dropped lately, a rally on Wall Street could begin next week or next month, and current losses could turn into tomorrow’s gains.