Long oil?
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He’s right. (If not a little “fringy”). I’ve been long “all things energy” since Dec. 2000. Don’t remember exactly what turned me on, but a combination of events/articles convinced me that the world was up against a supply problem of unprecedented proportions. “All things energy” include, oil, nat.gas, coal, drilling, transportation of same but only in North America. These impending shortages change everything we have been taught about investing.
I avoid trying to make "homerun-type" investment decisions. Logic may dictate that it's inevitable that "X" will happen in the markets and it's tempting to go there, but the markets aren't logical.
I remember back in 1996, my branch manager asked the brokers what could derail the internet stock bull run. Although, at that time, I had no clients in internet stocks due to valuation concerns, I wouldn't have predicted such a landslide a few years later.
With energy, I feel the same way. I have no idea what could drop the price of gas. It's eventual price fall (and it will fall) might not be due to supply and demand, at all. The financial failure of 1 or 2 major energy derivative players could force a price decrease. (It's been alleged that a large chunk of energy prices is due to speculation and derivatives.)
Investments in energy is a relatively easy sell to prospects and clients, at this time. But I approach from the standpoint that I'm getting in at the top; thus, the dollar amount invested is small by comparison.
Doberman,
I agree with you. I just posted the article because I thought it was interesting. Here you have a self made billionaire, who made his fortune buying things out of favor, and all of sudden he's bullish on a sector that already has seen significant gains, interesting or maybe he's ready to sell and ensuring he gets top dollar.
[quote=doberman]
I avoid trying to make "homerun-type" investment decisions. Logic may dictate that it's inevitable that "X" will happen in the markets and it's tempting to go there, but the markets aren't logical.
I remember back in 1996, my branch manager asked the brokers what could derail the internet stock bull run. Although, at that time, I had no clients in internet stocks due to valuation concerns, I wouldn't have predicted such a landslide a few years later.
With energy, I feel the same way. I have no idea what could drop the price of gas. It's eventual price fall (and it will fall) might not be due to supply and demand, at all. The financial failure of 1 or 2 major energy derivative players could force a price decrease. (It's been alleged that a large chunk of energy prices is due to speculation and derivatives.)
Investments in energy is a relatively easy sell to prospects and clients, at this time. But I approach from the standpoint that I'm getting in at the top; t-hus, the dollar amount invested is small by % oparison.
[/quote] I disagree. Energy investments are NOT easy to sell. Very simply because most people, like you, don't want to believe this is happening. The American people (and the world for that matter) would rather take the "ignore it and it'll go away" attitude. Of course a lot of the move in energy prices is due to speculation.Do not fail to remeber that energy "things" are terrifically fungible both from a futures/cash position and to a geographic position. As far as whether we are in for a price fall, I would point out that energy stocks make up about 9-10% of the market cap of the S&P 500 and at the peak in 1979 they made up about 27% of the same index. Remarkably similar to the tech stock weighting (27%) at the tech peak of 99-00. Long ways to go? I believe we are still in the early innings.Revealer:
I disagree. Energy investments are NOT easy to sell. Very simply because most people, like you, don't want to believe this is happening. The American people (and the world for that matter) would rather take the "ignore it and it'll go away" attitude. Of course a lot of the move in energy prices is due to speculation.Do not fail to remeber that energy "things" are terrifically fungible both from a futures/cash position and to a geographic position. As far as whether we are in for a price fall, I would point out that energy stocks make up about 9-10% of the market cap of the S&P 500 and at the peak in 1979 they made up about 27% of the same index. Remarkably similar to the tech stock weighting (27%) at the tech peak of 99-00. Long ways to go? I believe we are still in the early innings.
----------------------------
Hey, you could be right about energy prices. But I'm not willing to bet the farm (or my clients' farms) on speculation, whatever the logic that supports taking such action.
If history is any indicator, something out of left field will come and take the air out of gas prices.
I don’t bet the farm, either. Actually triple weighted (about 30%) personally. I’ve worked too long and too hard for my money to bet the farm on ANYTHING regardless of how bullish or bearish I might be. Most of my “stock” clients are heavily weighted in energy also. We talk about the risks of carrying heavy weighting in energy. Believe me, I can change my mind in a short time and I constantly remind myself not to get myopic about my positions. Right now, I still believe we are early in this energy “thing.”
Heavy stuff.
However, now that it’s getting to the point that this is such a universally held belief, I’m inclined to think that near-term prices have already hit their peaks…
[quote=joedabrkr]Heavy stuff.
However, now that it's getting to the point that this is such a universally held belief, I'm inclined to think that near-term prices have already hit their peaks.....
[/quote]
Wow, as you typed that oil traded in the futures markets for more than $75 per bbl.
Why not short a few contracts of sweet light crude?
[quote=NASD Newbie]
[quote=joedabrkr]Heavy stuff.
However, now that it's getting to the point that this is such a universally held belief, I'm inclined to think that near-term prices have already hit their peaks.....
[/quote]
Wow, as you typed that oil traded in the futures markets for more than $75 per bbl.
Why not short a few contracts of sweet light crude?
[/quote]
Is that your considered advice as a licensed broker?
[quote=Philo Kvetch][quote=NASD Newbie]
[quote=joedabrkr]Heavy stuff.
However, now that it's getting to the point that this is such a universally held belief, I'm inclined to think that near-term prices have already hit their peaks.....
[/quote]
Wow, as you typed that oil traded in the futures markets for more than $75 per bbl.
Why not short a few contracts of sweet light crude?
[/quote]
Is that your considered advice as a licensed broker?
[/quote]
You moron, advice does not end with a question mark.
[quote=NASD Newbie][quote=Philo Kvetch][quote=NASD Newbie]
[quote=joedabrkr]Heavy stuff.
However, now that it's getting to the point that this is such a universally held belief, I'm inclined to think that near-term prices have already hit their peaks.....
[/quote]
Wow, as you typed that oil traded in the futures markets for more than $75 per bbl.
Why not short a few contracts of sweet light crude?
[/quote]
Is that your considered advice as a licensed broker?
[/quote]
You moron, advice does not end with a question mark.
[/quote]
Ah, but asking for the order does, you simpleton!
[quote=Philo Kvetch][quote=NASD Newbie][quote=Philo Kvetch][quote=NASD Newbie]
[quote=joedabrkr]Heavy stuff.
However, now that it's getting to the point that this is such a universally held belief, I'm inclined to think that near-term prices have already hit their peaks.....
[/quote]
Wow, as you typed that oil traded in the futures markets for more than $75 per bbl.
Why not short a few contracts of sweet light crude?
[/quote]
Is that your considered advice as a licensed broker?
[/quote]
You moron, advice does not end with a question mark.
[/quote]
Ah, but asking for the order does, you simpleton!
[/quote]
Joedabrkr is not lucky enough to have me as an investment advisor so I was not asking for an order.
[quote=NASD Newbie][quote=Philo Kvetch][quote=NASD Newbie][quote=Philo Kvetch][quote=NASD Newbie]
[quote=joedabrkr]Heavy stuff.
However, now that it's getting to the point that this is such a universally held belief, I'm inclined to think that near-term prices have already hit their peaks.....
[/quote]
Wow, as you typed that oil traded in the futures markets for more than $75 per bbl.
Why not short a few contracts of sweet light crude?
[/quote]
Is that your considered advice as a licensed broker?
[/quote]
You moron, advice does not end with a question mark.
[/quote]
Ah, but asking for the order does, you simpleton!
[/quote]
Joedabrkr is not lucky enough to have me as an investment advisor so I was not asking for an order.
[/quote]
Grovelling for an order is more appropriate.
The days must go by pretty slowly for you now that Bozo the Clown is off the air, huh?
Well, I'm tired of you now.
See you in the funny papers!
i've been away for the long 4th week-end, but i finally got around to reading this excellent article- tho the original link was erased by the RR police-
you'll need to google The Rainwater Prophecy + Richard Rainwater to get the article-
Rainwater's suggestion for other scary sites including :
http://www.lifeaftertheoilcrash.net/
it does really get you to worrying- not only about client portfolios (tho, according to the thought/analysis on this site, you can't really position long-term for a second Stone-Age much anyway--more Gold?)-- but on the survivability of the spieces--- aka: Planet of the Apes?
i know it all sounds kooky, but also a bit scary since it is not totally out of the realm of possibility- i've been accused of being a bit oil-crazed due to the lack of foresight/action to cut consumption, but compared to these guys, i'm totally tame-
check it out-
Dr. Colin Campbell :It is becoming evident that the financial and investment
community begins to accept the reality of Peak Oil, which
ends the first half of the age of oil. They accept that banks
created capital during this epoch by lending more than they
had on deposit, being confident that tomorrow’s expansion,
fuelled by cheap oil-based energy, was adequate collateral
for today’s debt. The decline of oil, the principal driver of
economic growth, undermines the validity of that collateral
which in turn erodes the valuation of most entities quoted
on Stock Exchanges. The investment community however
faces a dilemma. It desires to protect its own fortunes and
those of its privileged clients while at the same time is
reluctant to take action that might itself trigger the
meltdown. It is a closely knit community so that it is hard
for one to move without the others becoming aware of his
actions.
The scene is set for the Second Great Depression, but the
conservatism and outdated mindset of institutional
investors, together with the momentum of the massive
flows of institutional money they are required to place, may
help to diminish the sense of panic that a vision of reality
might impose. On the other hand, the very momentum of
the flow may cause a greater deluge when the foundations
of the dam finally crumble. It is a situation without
precedent.
[quote=NASD Newbie][quote=Philo Kvetch][quote=NASD Newbie][quote=Philo Kvetch][quote=NASD Newbie]
[quote=joedabrkr]Heavy stuff.
However, now that it's getting to the point that this is such a universally held belief, I'm inclined to think that near-term prices have already hit their peaks.....
[/quote]
Wow, as you typed that oil traded in the futures markets for more than $75 per bbl.
Why not short a few contracts of sweet light crude?
[/quote]
Is that your considered advice as a licensed broker?
[/quote]
You moron, advice does not end with a question mark.
[/quote]
Ah, but asking for the order does, you simpleton!
[/quote]
Joedabrkr is not lucky enough to have me as an investment advisor so I was not asking for an order.
[/quote]
Are you kidding?
Oh I see...you meant "Joedabrkr is lucky enough to NOT have me as an investment advisor...."
Good Lord I'd rather chew glass......
[quote=Revealer]He's right. (If not a little "fringy").....convinced me that the world was up against a supply problem of unprecedented proportions. "All things energy" include, oil, nat.gas, coal, drilling, transportation of same but only in North America. These impending shortages change everything we have been taught about investing.[/quote]
Well, there are plenty of folks, it would seem, who are convinced that there's an "energy shortage" (ignoring the massive US coal reserves, increasing abilities to draw oil in places we couldn’t before, the recent demand destruction we saw at the last peak of gas prices and the tanking price of natural gas) and don’t think the current price of a barrel of oil has anything to do with a massive risk premium thanks to Chavez in Venezuela, Iran’s nuke stand-off with the world and the missile launches from the lunatic in North Korea.
Count me in the latter camp….
[quote=mikebutler222]
[quote=Revealer]He's right. (If not a little "fringy").....convinced me that the world was up against a supply problem of unprecedented proportions. "All things energy" include, oil, nat.gas, coal, drilling, transportation of same but only in North America. These impending shortages change everything we have been taught about investing.[/quote]
Well, there are plenty of folks, it would seem, who are convinced that there's an "energy shortage" (ignoring the massive US coal reserves, increasing abilities to draw oil in places we couldn’t before, the recent demand destruction we saw at the last peak of gas prices and the tanking price of natural gas) and don’t think the current price of a barrel of oil has anything to do with a massive risk premium thanks to Chavez in Venezuela, Iran’s nuke stand-off with the world and the missile launches from the lunatic in North Korea.
Count me in the latter camp….
[/quote] Mike: Please don't take my quotes out of context. I would ask that the readers read my ENTIRE comment. As far as lots of reserves of alternative source..... You are right. What I want you to do is some research on the COST of extracting those reserves. Of course there is a geopolitical premium in the price of oil. Think that's gonna go away?[quote=Revealer][quote=mikebutler222]
[quote=Revealer]He's right. (If not a little "fringy").....convinced me that the world was up against a supply problem of unprecedented proportions. "All things energy" include, oil, nat.gas, coal, drilling, transportation of same but only in North America. These impending shortages change everything we have been taught about investing.[/quote]
Well, there are plenty of folks, it would seem, who are convinced that there's an "energy shortage" (ignoring the massive US coal reserves, increasing abilities to draw oil in places we couldn’t before, the recent demand destruction we saw at the last peak of gas prices and the tanking price of natural gas) and don’t think the current price of a barrel of oil has anything to do with a massive risk premium thanks to Chavez in Venezuela, Iran’s nuke stand-off with the world and the missile launches from the lunatic in North Korea.
Count me in the latter camp….
[/quote] Mike: Please don't take my quotes out of context. I would ask that the readers read my ENTIRE comment. As far as lots of reserves of alternative source..... You are right. What I want you to do is some research on the COST of extracting those reserves. Of course there is a geopolitical premium in the price of oil. Think that's gonna go away?[/quote]
Sorry, Revealer, but I don't see where your message was changed when I trimmed down the post to the specific point I wanted to address. But, others can read your original post in its entirety to make their own decision. <?:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />
I'm aware of the cost of extracting the reserves, and as you well know, it still doesn't justify the current price. IMHO all the talk about “peak oil” affecting current prices is just talk, and prices are only moving on a larger than usual risk premium. As to the risk premium and whether or not it will "go away", the short answer is I think it will shrink to historic norms.
There's always been a risk premium of some size in energy prices and it expands and contracts with events. Personally I think it’s currently grossly exaggerated (as do people as diverse in opinion as the former CEO of Exxon and members of OPEC). It wasn’t all peace and light in the late 1990s when oil was at $16 a barrel and the world isn’t coming to an end (and we aren’t running out of energy) now at $75.
[quote=mikebutler222]
.....I'm aware of the cost of extracting the reserves, and as you well know, it still doesn't justify the current price. IMHO all the talk about “peak oil” affecting current prices is just talk, and prices are only moving on a larger than usual risk premium. As to the risk premium and whether or not it will "go away", the short answer is I think it will shrink to historic norms.
There's always been a risk premium of some size in energy prices and it expands and contracts with events. Personally I think it’s currently grossly exaggerated (as do people as diverse in opinion as the former CEO of Exxon and members of OPEC). It wasn’t all peace and light in the late 1990s when oil was at $16 a barrel and the world isn’t coming to an end (and we aren’t running out of energy) now at $75.
[/quote]
i've read nowhere anyone saying that "peak oil" is affecting current prices -- no one rational anyway.
but you've already proven that you'll make up your own enemy so you can shoot it down in an effort to solidify your position-
effective? yeah. honest? no.
[quote=TexasRep][quote=mikebutler222]
.....I'm aware of the cost of extracting the reserves, and as you well know, it still doesn't justify the current price. IMHO all the talk about “peak oil” affecting current prices is just talk, and prices are only moving on a larger than usual risk premium. As to the risk premium and whether or not it will "go away", the short answer is I think it will shrink to historic norms.
There's always been a risk premium of some size in energy prices and it expands and contracts with events. Personally I think it’s currently grossly exaggerated (as do people as diverse in opinion as the former CEO of Exxon and members of OPEC). It wasn’t all peace and light in the late 1990s when oil was at $16 a barrel and the world isn’t coming to an end (and we aren’t running out of energy) now at $75.
[/quote]
i've read nowhere anyone saying that "peak oil" is affecting current prices -- no one rational anyway.
but you've already proven that you'll make up your own enemy so you can shoot it down in an effort to solidify your position-
effective? yeah. honest? no.
[/quote]
Gee, and we were all getting along so nicely... a bunch of investment professionals...talking about the market...and you had to go personal. Well, I'm not going to take the bait, but I will give you a quote that provides some context to the direction the conversation took;
I've been long "all things energy" since Dec. 2000. Don't remember exactly what turned me on, but a combination of events/articles convinced me that the world was up against a supply problem of unprecedented proportions. "All things energy" include, oil, nat.gas, coal, drilling, transportation of same but only in North America. These impending shortages change everything we have been taught about investing.
Now, perhaps you can explain to me in civil terms how that's an argument that current prices aren't being effected by "supply problem" and not the risk premimum I mentioned.