It's an Oil Bath

I'm sure we've seen this chart before.

Oh, that's right. We did. It's here, called Silver!

Remember that?

Unfortunately, Oil has far more impact and the lack of oil creates plenty of other problems.

I won't re-hash the reasons for the spike we are seeing in oil, we all know the reasons and I'm sure we all hope that we see resolution before the damage and the casualties mount further and definitely without further escalation.

The key question here is "how long does this last?".

A week?

No problem. It'll be a blip.

A month?

Problems. And bigger ones than "how am i getting to work because I can't buy petrol".

Longer?

Let's not go there.

Today (Monday, 9th March) we have seen markets become a big casualty of the conflict with the ASX200 falling 4.2% at the low and Asian markets faring even worse with Japan down 6%. The ASX has partially bounced from those lows.

ASX200 March 3 - 9, 2026

So, what to do?

The first point we have to note is we don't know how long this conflict rumbles on for but acknowledge that "the bottom" will likely time with the expectation that both sides (Iran & USA) are ready to talk. Once this happens oil flows and prices follow the path of silver.

Trump has a mid-term to worry about. He can't have gas prices at $5+ a gallon. He will want (NEED) a resolution and lower gas prices before then so I think this gives us an end point in the timeline.

Then we have to ask how far can markets fall?

The ASX200 is now down 7% from the recent high. During the 2025 correction which included the Liberation Day Tariff announcement the ASx200 fell 16.7% (from Feb 14 to April 7).

So, when considering what's next, you could sell and sit on your cash. I can promise you, the hardest part is then re-entering. You need to get it right (and in 20 years I've seen more fail to re-enter waiting for doom and end up buying back too late). Especially if you are crystalising capital gains.

By the time you include costs, tax and then "profit from the trade" I regularly calculate that the market must fall between 10 & 15% from the point you sell to make it even remotely worthwhile (pension phase super gets a little help with a 0% tax ratemaking that number lower).

From here, that says the market would need to enter Bear market territory. A Bear market is considered a fall of 20% or more and that occurs on average every 6-7 years.

The smaller 10% correction happens every 2-3 years (I do think we see 2 corrections in 12 months with the Liberation Day and this Iran conflict).

My point being, unless you see a Bear Market racing towards us, selling is not a hugely beneficial outcome (and even then, only if you re-enter at the right time).

So as much as it hurts, we sit tight and count our pennies looking for the opportunities that Mr Market presents.

Finally, I thought I'd share this summary from Pinnacle Investments looking at the ASX reporting season and summarising earnings and valuations.

Their picks are (as you can read) Materials and Industrials.

But we're only 3 months from FY27 beginning and surely a little more weight is being placed on growth going into 2027 than 2026, right?

If they did. Healthcare looks cheap! And IT is going to see profits soar.

Well, it's food for thought as we start to look for bargains if markets keep selling off.