As far as investing, I'm still not sure how things are going to play out. I'm looking at it in terms of inflation vs. deflation, and neither one looks like the definitive outcome, given what the fed may or may not do. In the longer term, I would be surprised if we didn't end up with 70's style stagflation.

Given that, we've done the things listed above to reduce debt, lower expenses, etc. It has really helped me mentally to deal with the uncertainty.

But I am confident that in the intermediate to long term that oil and natural gas will be relatively expensive. Based on that, I've moved some money toward energy services companies and natural gas exploration companies. As long as the prices remain relatively high, someone's going to pay to try to find it and get it out of the ground. Refiners are going to have a tougher time, as refining margins will continue to get squeezed. Integrated Internationals (e.g. Exxon, Shell, BP) are going to have a hard time since so much of the oil/gas is controlled by national oil companies. I see their market share as steadily declining over time.

I see energy services as a hedge. If I'm wrong and oil prices plummet, I still win, because everything else will likely be doing well (I don't see a major crash causing lower prices, as oil is just too important).


I've followed the strategy of diversified mutual funds for many years, and until recently, I was pretty sold on it. Right now, I really think things are changing, and I'm not so confident that it offers the risk-return tradeoff that matches the things that are going on in the credit and commodity markets.