Like the illusion of Wall Street, with its vast and powerful investment banks, now shuttered, China too is an illusion perpetuated by the Globalists that gave us the 15,000 mile Caesar salad, poisoned cat food and lead based paint on babies' pacifiers. Like the illusion that money would come from thin air to always push housing prices higher, China has spent a generation pursuing its illusion. Pursuing an unattainable dream to be like the West, while 6000 years of its carefully shepherded top soil blows into the sea.
Posted: Fri Aug 15, 2008 10:06 am Post subject: Re: $111 oil?
To back up Joel's point there was a silver lining to the price drop for me too. I've been wanting to buy a couple of oils for a few months. When oil fell those stocks dropped 25 - 30%. They still looked good on the high end but who wants to buy there. As others just said: the fundamentals haven't changed. The market will always be schizo... but Mother Nature doesn't lie.
Unlike Joel I was never interested in day trading. But if we see oil doing the see saw act for a while I might be tempted.
First Global
OIL AT $30-$50 A BARREL? We don't know about you, but this wouldn't surprise us at all.
Our Quant side flagged the move in crude oil prices on May 30. They were, as nearly always, right on the money. And now it's time for the data crunchers like us to get into action. It is our firm belief that crude oil represents a true bubble. The tests of a true bubble are that it should have little connection with fundamental data; that the bubble's very existence should create ample nonsensical stories as to why the bubble is for ..
(The full article is available only to subscribers. Anyone got a subscription? Share it!) _________________ "May you live in interesting times"
Last edited by Carlhole on Fri Aug 15, 2008 10:21 am; edited 1 time in total
Joined: Apr 05, 2005 Posts: 2608 Location: South of Atlanta
Posted: Fri Aug 15, 2008 10:20 am Post subject: Re: $111 oil?
I think folks are forgetting we've been here before. The only difference is the swings are larger due to the level of the price. Do not pay attention to the man behind the curtain.
Watching day to day and week to week swings in price are not healthy and investing that way is not going to be very lucrative. Its more like gambling.
As others have pointed out where is the commensurate demand destruction?
Where is the huge increase in supply?
Without these, the price moves are not warranted and the only thing you can bet on is that wild swings, both ways will continue. Now If oil prices can stay lower over the longer haul, thats when to start paying attention to why. Right now the fools rushing in to say "All is well" are the real crazies.
Nothing fundamentally has changed over the short term,and as most of us tend to agree here, the longer term shows little promise of turning the current paradigm of consumption around.
Posted: Fri Aug 15, 2008 10:28 am Post subject: Re: $111 oil?
ROCKMAN wrote:
Unlike Joel I was never interested in day trading. But if we see oil doing the see saw act for a while I might be tempted.
I am not day trading in terms of wall street. I just don't have any faith in the markets for the next 6 months so besides my 401k I am not committing too much longer term capital. Actually less than 10% of my cash (which isn't much) has been going into the S&P 500.
Early this year I was only 50% invested and the rest in cash because everyone was predicting the economy would slow and therefore markets would come down. Interest rates are low so holding cash isn't making anything except security for some.
Then in April I started buying stocks. The market was and is very volatile and like I said I didn't have high hopes for the market over the next 6 months ie April through September.
So instead of having cash generate 2% interest I started buying stock in intervals. I would place an order to buy and almost immediately place an order to sell. Some executed within hours some I am still holding. However the majority of the stocks I have been purchasing popped up 15-30% over the last several months and my sell orders executed.
Bank of America is a perfect example. I have bought, sold, re-bought, and re-sold several times. Each time make above 15%. Financials are having big moves up and down as are others.
I feel sorry for those who sold off stocks early this year and bought oil or gold. They are getting killed right now.
joeltrout
Posted: Fri Aug 15, 2008 11:05 am Post subject: Re: $111 oil?
Joel,
That's exactly the game plan I'm thinking about. For months one of my oil seesawed up and down 10% or so evry coule of weeks until this last big drop. With cheap and easy online trading you can collect those small gains and reinvest. I didn't calc what I would have made over those several months but it would have easily been 20% per annum. I hoping it's ready to start that cycle again.
Posted: Fri Aug 15, 2008 11:15 am Post subject: Re: $111 oil?
ROCKMAN wrote:
Joel,
That's exactly the game plan I'm thinking about. For months one of my oil seesawed up and down 10% or so evry coule of weeks until this last big drop. With cheap and easy online trading you can collect those small gains and reinvest. I didn't calc what I would have made over those several months but it would have easily been 20% per annum. I hoping it's ready to start that cycle again.
It works great as long as the market does NOT know what to do.
If the market turns totally bullish then you lose out on some upside but you still made good money.
Vice versa if the market turns totally bearish then you might have to hold onto your stocks for some time before they recover. As long as you don't need the money in the next 12 months or so then it isn't a bad plan. This is why I like stocks rather than options. It is also important to buy quality companies that have little risk of going under.
The one major suggestion I would make is set aside enough for taxes at the end of the year. Don't invest money you need for taxes.
Posted: Fri Aug 15, 2008 11:23 am Post subject: Re: $111 oil?
So true about the TAXMAN joel. That's why I was glad to see my oils drop. Worse comes to worse they'll still be up in a year or so. And you're right: the instability in the market over oil is our best friend. It almost guarentees good swings every few months: a new war...a new hurricane...a new big discovery hitting the head lines. anything that temporarially pushes the market either way.
I have that book (Profit from the Peak) but haven't gotten around to reading it. Might be the time now.
Posted: Fri Aug 15, 2008 11:57 am Post subject: Re: $111 oil?
Few here pretend they know what oil will do day to day, week to week, or even month to month. Most have long predicted long term trend toward increasing prices and, crucially for this discussion, increasing volatility.
Many new to the topic focus only on the former and forget the latter. Things are turning out just as most predicted--overall higher prices year-to-year on average, with much and ever increasing volatility in between.
If you want to try to make money on that in-between volatility, you've got to take your lumps. Catching the lows at their lowest has been compared to trying to catch a falling knife. If you get it nice, it's fine. Get it wrong, and you can get badly cut.
That's one of many reasons I don't do any short term trading in this stuff.
Posted: Fri Aug 15, 2008 12:27 pm Post subject: Re: $111 oil?
I do not care much what oil prices do from one month to another. I do not speculate on them and I do not use the stuff for transport or heating, so I have lost nothing. Ask those who do how they liked that bill.
Peak oil itself is about much more than price. Availability, product mix, net energy, export flows, trade deficits, and so on. Also, $100 oil is less affordable than $140 oil once the latter eliminates your job. What economic activity will the future support and are you a part of it? That is the question. This is a long term game. _________________ Volatility. When life isn't exciting enough.
First Global
OIL AT $30-$50 A BARREL? We don't know about you, but this wouldn't surprise us at all.
Our Quant side flagged the move in crude oil prices on May 30. They were, as nearly always, right on the money. And now it's time for the data crunchers like us to get into action. It is our firm belief that crude oil represents a true bubble. The tests of a true bubble are that it should have little connection with fundamental data; that the bubble's very existence should create ample nonsensical stories as to why the bubble is for ..
(The full article is available only to subscribers. Anyone got a subscription? Share it!)
It's here. Some people have no respect for pay walls.
Others seem to have no respect for geology, like the author of the article:
Quote:
The bull case for oil rested on insatiable supply from China and India, and dwindling reserves. Both are patently wrong. China and India, combined, simply can't make up for consumption slowdowns from the rest of the world, especially the U.S., Eurozone and Japan. And there is plenty of anecdotal evidence to suggest that even the Chinese demand is exaggerated because China has overbought for the Olympics. The world has fairly comfortable reserves. And there is frenetic discovery exploration in Russia, Brazil, India, Iran and elsewhere. So, it's a fairly easy case to make that the world will be awash in oil in a few years from now, relative to demand.
_________________ Joe P. United Political Debate
"Only when the last tree is cut; only when the last river is polluted; only when the last fish is caught; only then will they realize that you cannot eat money." - Cree Indian Proverb
Posted: Fri Aug 15, 2008 12:53 pm Post subject: Re: $111 oil?
I disagree with the reserves and exploration angle, but demand destruction in the West outrunning developing world demand growth for a few years, that I can believe. I just see it for the false comfort that it is without substantial new reserves entering the picture. Unfortunately the prevailing view will be to buy the whole story, waste time acting triumphant and complacent, then experience a surprise. I really get the feeling I can see this mistake a year before people make it and five years before they realise that is what it was. _________________ Volatility. When life isn't exciting enough.
Posted: Fri Aug 15, 2008 12:54 pm Post subject: Re: $111 oil?
Well, according to Barron's, the world really does run on zeroes and ones, and not on that black shiat in the ground. Amazing hubris and pablum, given that oil has yet to give back the gains made up until early this year. _________________ "It's called the American Dream because you'd have to be asleep to believe it."
Posted: Fri Aug 15, 2008 3:01 pm Post subject: Re: $111 oil?
I believe the current floor price will be controlled by OPEC. The oil traders follow herd mentality and that herd has decided to run for shelter most recently. They need a reason to see a bottom and the fact the Georgia issue which is tangible and does have an effect on oil shipments hasn´t stopped the decline is telling when we think that just rumors have driven the price much higer in the not so distant past (Iran war etc). I read somewhere today the belief is Opec will step in at $90, I think they will start making noise around $105 and then will actually limit production at around $95. Remember that costs have not been declining in lockstep with the price so we are going to very quickly reach the marginal return limit at which point activity will be seriously curtailed. To my mind this will limit the downside as well.
For all those who thought speculation had nothing to do with the current price of oil......shame on you.
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