How To Be An Astute Investor

As investors, we make individual stock selection by focusing on the business economics of the companies, by learning about the products, customers, process, cost etc.

In addition to the business economics, we might also want to know something about the macro economy and something about the external business environments.

We can do it by taking a look at some of the key events that have happened around the world. Here are a couple that won’t have escaped your attention:

US Federal Reserve raised interest rate

The Federal Reserve raised interest rate last week by 0.25%, after nearly a decade of low interest rate. Moreover, it is expected that the Fed will raise interest rate again. Readers who are interested in understanding the impact of the recent hike in interest rate should take a look here and here.

Oil in the doldrums

The price of oil remains below $40 per barrel, a level not reached since 2009. It has stayed there for about 2 weeks, which has caused problems for the oil and gas industry. Although there is much speculation about oil-price movements, nobody knows will happen next.

Predicting the direction of macroeconomic events is not easy. In fact it can be quite difficult. So instead, we should try to understand how those events could help us make better investment decisions.

For example, with oil prices at already below $40 a barrel we have to ask if it is possible they could fall much further. If our answer is “no”, then now could be a good time to revisit some of the companies that have fared well and those that have fared badly through low energy costs.

These could include SembCorp Industries Limited (SGX: U96), which has been adversely affected through its exposure to oil service through its subsidiary Sembcorp Marine Ltd (SGX: S51). It might also be a good time to reassess Singapore Airlines (SGX: C6L), which has done well from low aviation fuel costs.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Lawrence Nga doesn’t own shares in any companies mentioned.