Big Oil Stocks to Buy Now

The best option is large integrated energy companies, which have both market clout and solid balance sheets.

Does the huge drop in the price of oil provide an opportunity for contrarian investors to cash in? Or are we in for a long period of cheaper oil, which would be great for consumers but poisonous for shareholders of many energy companies? Unfortunately, history doesn’t offer a simple answer. Starting last summer, the price of a barrel of oil fell from more than $100 to less than $50 in the space of about six months. Oil fell roughly the same amount during the 2007–09 recession, as well as during the downturn of the early 1980s. The previous declines were triggered by significant global slowdowns. In other words, the price dropped because demand—the desire of people and businesses to buy—dropped.

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James K. Glassman
Contributing Columnist, Kiplinger's Personal Finance
James K. Glassman is a visiting fellow at the American Enterprise Institute. His most recent book is Safety Net: The Strategy for De-Risking Your Investments in a Time of Turbulence.