Thursday, August 07, 2008

Price of Oil and Stock Market

Do you think the price of oil and the stock market are correlated? If not, here is an interesting chart that I put together to prove you wrong.

The blue line going up is the "iPath S&P GSCI Crude Oil Total Return" fund. It basically invests in oil related investments.

The bottom line is the Down Jones Industrials Index. Yes, the same index that I've tossed a modest sum into lately.

As you can see, since the beginning of 2008 there is a strong negative correlation of the two. This graph, while short-term, shows evidence that the price of oil has major influence on U.S. markets.


Scooter said...

It's too expensive to drive to ye olde' stock store to pick up some more stocks.

Mac Noland said...

That's why I use the internet. Heard of it?

Scooter said...

My first contracting role, during my exit interview from the company, the VP told me the internet was a passing fad. Who am I to disagree?

You haven't talked aboout the pros and cons of the corporate stock plan and the change to paying taxes on the 15% discount up front. I'd be interested to hear your take.

Mac Noland said...

I actually have an opinion on the tax change and will share it with you in the near future. Thanks for reminding me ;)