I believe that I have discussed this topic in every prospect/client introduction meeting in which I have been engaged. If it is so elementary on the face, why does it bear examination? The reason is that it is very difficult to do. One doesn’t easily buy “low” because that implies buying something that has either traded down, or has just not gone up as much as other investments. Buying “low” means that we must overcome the “fear factor” that if something is down, it may fall further. Even if something has traded down, and begun to rise a little bit, there is fear of buying the “dead cat bounce.” My apologies if you have lost a loved feline. The phrase connotes the idea that even a dead cat will bounce back up a little bit if dropped from a height, however it is still dead despite the appearance of life because of the “bounce.” In investment terms this means that an investment that had dropped precipitously might have one little bounce left in it before it falls further. This is also known as a “suckers rally,” which describes an investor who buys into a slight rally that then retreats as prices fall even lower. When the stock market finally bottomed in March of 2009 I cannot count the number of pessimists who decried the “false” rally that began, advising investors to stay on the sidelines in cash. In retrospect, we know that would have been a mistake.

The first famous fund manager that I met in person was George Vanderheiden, who at the time managed the very successful Equity Income Fund for Fidelity. One of his favorite sayings was “I’d rather get in on the first floor going up than get in on the ground floor and take a trip into the basement.” So the difficulty is in trying to determine if something has truly bottomed, or if there is more room to fall before rising again.

While we still remain confident that fossil fuels will be in high demand for at least another decade, the question with which we are wrestling is how best to take advantage of the current situation. Our favorite energy ETF is off its trading high by almost 40%. We can buy that daily, or even intraday. Drilling costs are down between 30-50% in the Permian, Anadarko and Illinois basins. Should we invest in those offerings for 2016? Our private debt BDC which focuses on energy is down more than 20%, not because of loan accruals or failures, but because the few sales have been at tremendous discounts, forcing our fund managers to mark to the market. Is it a good time to add to that position? We are also looking at funds that are purely opportunistic, hoping to buy great assets at discount prices from troubled owners, who borrowed too much during boom times and now are being pressed as income is down, but debt service is still relatively high.

There is not one perfect answer for all clients. However, as we begin our 2016 review process, we are mindful of taking advantage of these lower prices for energy related options across multiple asset classes. We will be discussing this with each client, and determine which, if any, of these strategies to pursue for you. One last thought from Warren Buffet: “When others are greedy, be fearful; When others are fearful, be greedy!”

Securities offered through TD Ameritrade Institutional Services located at 5010 Wateridge Vista Dr., San Diego, California 92121-5775. Investment advisory services offered through AOG Wealth Management, Inc. AOG Wealth Management, Inc. is neither an affiliate nor subsidiary of TD Ameritrade Institutional Services.