TEXAS, USA — When stocks drop dramatically, worries can overcome reality
That's why experts like the CEO of Cargile Investment Management, Mickey Cargile, say perspective is everything.
"We are all victims of emotion, we're happy and afraid," said Cargile.
The 40 year veteran of financial advising to Midland broke down the key triggers to Monday's dramatic drop.
"When you look at oil stocks and our local economy, the OPEC situation has a bigger effect, but the overall stock market is more concerned with the Coronavirus," said Cargile.
In his perspective, the stock market has been sitting in flux over the Coronavirus, and the OPEC cartel falling apart in early March served as a tipping point.
Cargile says this change with the OPEC standing could have long lasting effects here in the Basin.
"I expect if prices stay low for about a year that will destroy the cash flow of some companies," said Cargile.
He believes businesses need to be more efficient than ever right now.
"The ones that often get hurt the worst are the late comers or this is their first time they've gone through a price decline so they get too much debt," said Cargile.
Cargile believes the stock market will bounce back because that's what the stock market does.
"Stocks are constantly in a price discovery as perceptions of future earnings and the price your'e willing to pay for those earnings change," said Cargile
Though with no resolution in sight for the OPEC cartel, an overload of oil supply may flood the market.
"Now the fear is that they are going to start producing at maximum output and put an extra 2.1 million barrels to the market," said Cargile.
If this happens, expect rig counts in the Basin to drop and the efficiency of our economy to be tested.
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