Be ready to get out of energy when the recession comes, which will happen when home prices fall further and consumerss are squeezed. Get into China and India.
Isn't it awesome? I hated it when they did the pay thing, and would never fork over. I think it's a smart move on their part. He has some good points. I know everyone doesn't agree with a lot of his columns, but he's pretty dead-on in this one. D&D. Impeach Halliburton!
Yeah, his columns aren't always something can just classify as "left- wing" or "right- wing." He does a good job of analyzing problems without the usual partisanship that is often found in these types of columns.
it's bringing me this much closer to buying that diesel jetta i want and that's not sarcasm... biodiesel for me is just around the corner.
I just live close to work. Less than 10 miles. And I live in an apartment. My carbon footprint is miniscule.
question: what are you thoughts on it? when you read TJ's response in this thread, does it resonate with you?? do you agree with it? i'll readily admit that both of you probably know a ton more about this market than i do. but every market is subject to certain fundamentals. lawyers like to pretend their not subject to the same fundamentals that plumbers are...but they just are. with the dotcoms, we were told it was all different with them...we saw how that worked out. i recognize this is different because it's a commodity. but what do you think. i was just shocked to hear TJ ascribe to peak oil theories.
Even if it has problems, it doesn't really matter. The US real estate market bubble was never rock solid but a lot of people made quite a bit of money. The tricky part is when to get out.
I agree that energy has been a simple proxy indicator for economic growth, but I don't think India and China will be safe from our recession. It'll be like rats to a sinking ship at first, but I don't think their markets are sophisticated or disciplined enough to handle the influx of cash and investors. Even the Euro would face eventual rampant fears of volatility and inflation should investors start focusing abroad. So if there is a downturn, better hope it ends in 3-4 months... Our appetite for energy is determined by our perceived purchasing power. A big contributor to our increased demand is popularity of SUVs that occurred at the same period. Yet in the 70's, Japanese auto producers capitalized upon the Oil Crises and helped contribute to yearly declines in oil consumption and increases in fuel efficiency up in the 90s. It's a behavioral cycle. The biggest concern of this crisis is that it's supply limited, so the periodic crunches will be more pronounced upon the economy. The tide will shift when consumers become fed up with the monthly boom and fall cycles and start investing in fuel efficient vehicles much like they did 2 decades ago.
Are you referring to Shanghai market or to oil market - the Shanghai stock market (I don't know this cause of being a lawyer, but because I'm now somewhat in the financial news bidness) is one of the great bubbles of modern times - From what I hear/have read, the Shanghai SM bubble is largely driven by crazy mainlanders, and not such things as emerging market funds or big institutional multinational investors, who I don't believe are allowed to trade on Shanghai exchange , so the pain when it crashes will be domestic and not international, or so I've heard. I could be totally wrong. I have a really crappy investment strategy of buying into emerging markets of where I have traveled and drank a lot of beer and chased girls and had a good time, then I will buy an index fund of tht country. My Malaysia fund has not been one of my better investments, but I enjoyed the 3 weeks I spen there two years ago. Have had much better luck with Singapor though. As for Oil, I don't know a whole lot, but happily two years ago I bought shares in an energy index fund (XLE is the ticker sybol) which is now worth 2.5x as much as it was. I am definitely holding on to that one when I liquidate for down payment purposes (maybe) in the next few months.
Anyway, the high price of oil may have more to do with the weakness of the dollar than anything else.
Actually the price of oil is far from a record when viewed in Euro's. So not everyone is suffering. Oil is becoming like gold somewhat in that it is a hedge against a falling dollar, like New Yorker just posted. But longer term fundamentals in the oil industry are troubling. In Kazakhstan, the big Italian oil company, ENI had its contract thrown out. Since 1990 only one new field, Kashagan in Kazakhstan has been discovered that might pump more than 500K barrel a day at its peak. With ENI being thrown out, it doesn't bode well. Furthermore Mexico's oil production in places like Cantarell are slowing down quite a bit. Cantarell is the world's second biggest oil field. Mexico is badly in need of new infrastructure investment to boost more production. Right now it is not there. Then there are conspiracy theories as oil hoarding by national oil companies and oil traders manipulating futures contracts which has caused this run up in oil prices. But on the whole when you have supposedly bearish oil news like OPEC agreeing to boost output, and slowing US growth one would naturally think that oil should drop. But since it hasn't one can imagine oils new trading range will be above $65 for some time. On a personal note, I actually revel in light of high oil prices. I think its the only way people will be forced to adopt more efficient means of transportation.
It's the only way to push people to conserve energy, buy more fuel efficient cars, and incentivise investment into alternative energy and mass transit, and hopefully revive the nuclear industry.
it could result in an increase in the price of oil over time. if you are able to sell more gas at a lower price, it will result in a higher demand for oil, thus gas prices drop a bit, and oil prices would increase a bit.
