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    1 Reply Latest reply on Aug 2, 2016 5:42 PM by Peter Krawsky

    Understanding Asset Class Divergence and your Small Business

    Vilnius Industries Tracker

      What happens when the energy sector and energy commodities goes down for 2 years, but, everything else goes up?


      With only 5 to 10 percent of U.S Companies being in the Mining, Oil and Gas Industries and most of that being medium to large corporations, the recent fall in crude oil, gasoline and diesel fuel prices has not hurt the profits of small business, most small business consume these products, so when they are lower, small business have less monthly fuel cost.


      At the same time right now, the broader equity and financial markets are near all time highs providing 'wealth effect' to the millions of consumers that own these assets.


      What that means is people with stocks, IRAs, 401ks, and things like that, are enjoying lofty account values and low cost of fuel at the same time, this is the so called 'goldilocks' economy, where inflation runs low as the economy continues to expand and create jobs at a steady rate.


      Here at Vilnius Industries we would argue that small business are the beneficiaries of this divergence, low crude oil price and recent highs in the broader equity indexes such as the S&P 500 and tech heavy NASDAQ. Because the customers of small businesses feel good about their retirement accounts value, that makes them more likely to spend money on goods and services now in the present, instead of delaying.


      This divergence is what we are talking about, the broader economy expanding, creating jobs with innovation like tech leading the way. At The Same Time….  Energy, Oil and Commodities stay low and steady.


      This is the best time to have a product, write a business plan, do some networking and put that great idea into action.






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