While recent trading has been brutal for stock investors all around, it has been particularly painful for energy investors with crude oil down more than 25% since the start of October. Oil and gas producers have been the biggest drag on the S&P 500, with shares off more than 20% this quarter, versus just over 6% for the S&P 500 overall.
The below article discusses the ramifications of lower crude prices on the greater investing universe, with junk bonds likely to see greater scrutiny (energy companies make up ~15% of the high yield bond universe) and a likely mixed bag for emerging markets (net importers of oil will benefit from lower prices, while net exporters will be hurt). Overall, the drop in oil is seen as both driven by supply and demand issues, and therefore not wholly a reflection of future global growth prospects.
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Jeffrey Viksjo, CFA