Hoarding is exactly what the government is doing right now by filling the SPR, and frankly it's the best thing that could happen. It drives prices up. High prices encourage demand destruction. They also finance new well development. The hoarded oil gives us a buffer to fall back on once shortages become more prevalent. High prices are what we need in order to adapt to what's coming, and the sooner they happen, the better.
Posted: Thu Apr 17, 2008 10:53 am Post subject: Peak Investments
I have recently been learning about currency trading, and how traders leverage the instability of world currencies to make money.
This resonated with me, since I believe wild fluctuations in economies will become the norm as we march down the backside of Hubbert's peak. The idea that inflationary pressure from oil depletion would destabilize markets around the world. and the resulting changes in the value of a given currency actually creates investment opportunities rings clear to me
For those unfamiliar with currency trading, the wiki says:
Quote:
The foreign exchange (currency or forex or FX) market exists wherever one currency is traded for another. It is by far the largest financial market in the world, and includes trading between large banks, central banks, currency speculators, multinational corporations, governments, and other financial markets and institutions. The average daily trade in the global forex and related markets currently is over US$ 3 trillion.[1]
The way it works is currencies are traded against one another. Each pair of currencies thus constitutes an individual product and is traditionally noted XXX/YYY, where YYY is the ISO 4217 international three-letter code of the currency into which the price of one unit of XXX is expressed (called base currency). For instance, EUR/USD is the price of the euro expressed in US dollars, as in 1 euro = 1.3045 dollar. Out of convention, the first currency in the pair, the base currency, was the stronger currency at the creation of the pair. The second currency, counter currency, was the weaker currency at the creation of the pair.
By purchasing these paired products, and then selling them as values change, traders take advantage of these markets as they fluctuate throughout the day.
Each profitable day of trading adds money to the traders account which is then traded the next day compounding the profit margin. Over time, a disciplined trader will achieve as much as 50%-60% profit over the term of the investment. By compounding a modest 1%-3% profit per day over time, these funds perform better than almost any other investment I have examined so far.
Just like stock or commodity trading there are risks of losing money of course, but a reputable trader avoids risky positions even when a large potential profit might be in play.
So far the managed forex fund at The Principal Financial Group is up 36% and climbing & I could not be happier. (chart)
I have long been an advocate of oil futures as investments, and those have performed very well these past years, but Forex made sense to me since I feel fairly certain that the world is in for economic turbulence going forward.
Anybody else doing this? _________________ "We shall not cease from exploration
And the end of all our exploring
Will be to arrive where we started
And know the place for the first time." - TS Eliot*
Posted: Thu Apr 17, 2008 11:43 am Post subject: Re: Peak Investments
Curiouser and curiouser. I am, this moment and for the past week, trading, on a practice account, the Eur/Usd pair. I used to trade in a former life but have not for the past 12 years.
So many changes.
I never traded currencies, only bonds, but I'm seriously getting into trading again.
One constant, it's still very, very hard to make money trading. _________________ Who is John Galt?
Joined: May 13, 2005 Posts: 2364 Location: The Urban Village
Posted: Thu Apr 17, 2008 11:46 am Post subject: Re: Peak Investments
Isn't this how Soros made a fortune ? Anyway, my rail stocks have been chugging along quite nicely. So, I'm sticking with more tangible gambles. I always liked the railroads in monopoly.
Posted: Thu Apr 17, 2008 11:59 am Post subject: Re: Peak Investments
mark wrote:
Curiouser and curiouser. I am, this moment and for the past week, trading, on a practice account, the Eur/Usd pair. I used to trade in a former life but have not for the past 12 years.
So many changes.
I never traded currencies, only bonds, but I'm seriously getting into trading again.
One constant, it's still very, very hard to make money trading.
I considered trading myself, but I don't think I could do as well solo as with a managed fund.
Quote:
It's obviously impossible for people to earn hundreds of billions of dollars in profit, doing nothing, and increasing 36% per year.
It is a $3 trillion market. _________________ "We shall not cease from exploration
And the end of all our exploring
Will be to arrive where we started
And know the place for the first time." - TS Eliot*
Among trading currencies, stuffing envelopes at home for 3 grand a day, flipping real estate, I'll take neither.
Please be advised, all new investors out there, that if you choose to trade commodity contracts, any unrealized gain on December 31 becomes taxable income.
So, let's say you have a long rice position that expires in Summer 09. You buy it for 5 grand. On December 31, 2008 you have not sold your position, and your position has an Exchange provided value of 30 grand.
That 25k unrealized gain that you haven't cashed in yet is considered taxable in tax year 2008.
The same may be true for FOREX positions, but I'm not sure.
It's obviously impossible for people to earn hundreds of billions of dollars in profit, doing nothing, and increasing 36% per year.
Law of large numbers, exponential growth, etc.
Yes, the energetics of descent dictate that non-producing financial activities will no longer produce large gains. So a positive-sum game becomes negative-sum, and the least experienced traders get currency whiplash. _________________ "For my part, whatever anguish of spirit it may cost, I am willing to know the whole truth; to know the worst and provide for it." --Patrick Henry
Leveredged trading in forex strikes me as slightly more predictable than blackjack, but about equally risky. Long terms trends seem somewhat predictable, but short term...role the dice. OTOH, putting your money into European bonds or something because you think the dollar is going to fall vs. the Euro makes total sense. _________________ "I was born in a deep forest
I wish I could live here all my life
I am made from stones and roots
My home, these woods and roads
All my life I loved this sound
Of the woods all around
Eagles fly where the winds blow free" -Korpiklaani
Among trading currencies, stuffing envelopes at home for 3 grand a day, flipping real estate, I'll take neither.
Please be advised, all new investors out there, that if you choose to trade commodity contracts, any unrealized gain on December 31 becomes taxable income.
So, let's say you have a long rice position that expires in Summer 09. You buy it for 5 grand. On December 31, 2008 you have not sold your position, and your position has an Exchange provided value of 30 grand.
That 25k unrealized gain that you haven't cashed in yet is considered taxable in tax year 2008.
The same may be true for FOREX positions, but I'm not sure.
Be careful campers, the IRS never loses.
That's one appealing aspect of Forex... the tax shelter it provides while the money is in the fund. Pay tax on the actual profit you take out, but not the working capitol.
If it ends up making 50% or 60% I'm happy to pay the taxes of course.
I found quite a few shady-seeming guys out there brokering Forex, but this trader works for PFG (a giant company) and has an excellent track record of not taking too much risk, even when that could pay big-time.
Quote:
putting your money into European bonds or something because you think the dollar is going to fall vs. the Euro makes total sense.
That's what I thought as well.
And being the moderate doomer I am, I consider oscillations in currency values as higher oil prices force inflationary pressure going forward, a pretty good bet.
Going very well so far.
_________________ "We shall not cease from exploration
And the end of all our exploring
Will be to arrive where we started
And know the place for the first time." - TS Eliot*
Aaron--Familiarize yourself with this dude's writing. He's good.
Ambrose Evans Pritchard:
"It is unsettling to watch the world's reserve currency disintegrate. Commodities from gold to oil and wheat are taking on the role of safe-haven "currencies." The monetary order is becoming unhinged.
I doubt the dollar can fall much further. What is it to fall against? The spreading credit contagion will cause large parts of the globe to downgrade in hot pursuit -- starting with Europe.
Few noticed last week that the Italian treasury auction was also a flop. The bids collapsed. For the first time since the launch of the European Monetary Union, Italy failed to sell a full batch of state bonds.
The euro blasted higher anyway, driven by hot money flows. The funds are beguiled by Fermany's "Exportwunder," for now. It cannot last. The demented level of $1.57 will not be tolerated by French, Italian, and Spanish politicians. The Latin property bubbles are deflating fast.
The race to the bottom must soon begin. Half the world will be slashing rates this year to stave off credit contraction. The dollar will have a lot of company. Small comfort."
Sorry, Don't have a link. People are enamored of the Euro anti-dollar at the moment, but this could easily change as recessionary pressures move overseas, with a vengeance.
People are enamored of the Euro anti-dollar at the moment, but this could easily change as recessionary pressures move overseas, with a vengeance.
Agreed.
This much seems obvious.
In fact, that's really at the center of my thinking here. The rebound swings should be dramatic as recessionary pressures reach overseas markets.
Furthermore, the disparity between energy-rich economies and energy poor economies should produce major value swings as peak oil forces some markets lower, while others enjoy record profits. _________________ "We shall not cease from exploration
And the end of all our exploring
Will be to arrive where we started
And know the place for the first time." - TS Eliot*
I'm not a trader. I was considering buying stocks, but got cold feet as I feared peak oil would send stocks lower. I am currently considering investing in hardware. I work for a company that supplies alternative energy equipment and I regularly get customers who prefer rental over buying stuff. I can get a good return even if I take into account that I'll have to work a day less in the week to arrange my business. I still have to make a deal with my boss about it though. Ofcourse I want a discount.
I'm not a trader. I was considering buying stocks, but got cold feet as I feared peak oil would send stocks lower. I am currently considering investing in hardware. I work for a company that supplies alternative energy equipment and I regularly get customers who prefer rental over buying stuff. I can get a good return even if I take into account that I'll have to work a day less in the week to arrange my business. I still have to make a deal with my boss about it though. Ofcourse I want a discount.
That's another reason Forex appealed to me. It's decoupled from the stock market. There is no direct correlation between Forex movement and stock market movement. With 401k's or other regular funds, they track with the stock market. Which really sucks if market growth doesn't at least equal inflation. Several weeks so far where the market tanked, but this fund still made money. _________________ "We shall not cease from exploration
And the end of all our exploring
Will be to arrive where we started
And know the place for the first time." - TS Eliot*
Posted: Mon Apr 21, 2008 12:21 am Post subject: Re: Peak Investments
Hi.
Currency deflation drives commodies higher, particularly, metal, food, and fuels. We are in a bear market in terms of pre-summer 07 dollars now. By reducing the value of the measuring tool, one can make the total amount in the DOW and S&P
indices appear greater that it really is.
Have done well buying into oil service companies, railroads, and credit cards as well as activision. HP has come up over 50% since I got it last fall for example.
Lates.
g
PS
There was an article about PO in the Wall Street Journal a month or so ago.
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