Many commodities experts are predicting a flock of “black swans,” or unexpected events, to hit the market throughout 2017. This is naturally creating unease among experienced and new traders alike as people naturally dislike uncertainty. With inflation looming on the horizon and OPEC controlling the supply of oil, a few large, impending black swans are going to have a profound impact on the status of the markets.
The Night is Darkest Before the Dawn
A healthy market has its natural ups and downs, and these changes are where the opportunity lies for investors. An experienced investor will recognize the signs of an impending black swan, allowing them to be prepared for when it comes to fruition. This will help reduce the amount of surprises and panic. Success is just a matter of how prepared and experienced you are at foreseeing and reacting to events and the changes in the markets.
OPEC Pulls its Strings
In late 2016, OPEC struck an agreement to limit supply and there were rumors spread throughout the markets that the agreement may not be followed by all of its participants. At the start of 2017, Iran began trading with Asia, springing a leak in the agreement. However, the agreement has been followed relatively close by the rest of the OPEC nations. They may continue to pull the strings in attempts to control the market demand and supply, so investors should keep an eye on the moves that OPEC makes.
The Big One
The federal government has been trying to spark inflation by pulling interest rates lower. However, once inflation sets in, it will become very difficult to control. This may release a flock of black swans into the markets. One way to protect one’s assets against the impending inflation is through diversifying a portfolio and investing for the long run. Once it hits, prices across the board should increase. Inflation will create a massive opportunity for investors, and a lot of good could come out of it for the health of the economy. When it arrives – the timeline is still unknown – it should cause gold, grains and wheat to rise, which will be great news for farmers, oil companies and the state of the U.S. economy.
The term ‘black swan’ may sound alarming, but it’s a bit of a misnomer. Black swans in the market create opportunity for players to readjust their holdings and react in ways that can potentially yield higher returns in the long run. An investor who is prepared for unexpected events should look forward to the black swans coming this year.