Monday, October 15, 2007

“For every expert there is an equal and opposite expert” – unknown

People are always sending me this article and that quote from some “expert” on the future of oil prices. Beware the simple solution for the complex problem.

If everyone was cock sure that oil was going to $100, the price would be there, right now, as there would be no sellers at $84.50

If everyone was cock sure that oil was going to $50, the price would be there, right now, as there would be no buyers at $84.50

The reason oil is trading at $84.50 is that there are sufficient people wishing to sell to buyers willing to buy AT THAT PRICE.

This is no longer academic. I read with great amusement this “expert” and that “expert” predicting this price or that. I am always curious how much of their net worth they have placed at risk in energy commodities and equities, as well as the derivative trades in precious metals or agricultural property (not derivatives as in options, but betting on higher precious metals prices is frequently “derived” from a belief in higher energy prices as is betting on higher corn prices).

So here’s to the experts: Put your money where your mouth is. If you are correct, you will not need that tenured position any longer. You can be on the other side of the endowment solicitation. I will be taking the other side of the trade. May the smartest man win. You see, that is the beauty of the markets. The market environment is the ultimate meritocracy. The guy with the best balance of brains and chutzpah wins.

This is not to say that the front month could not trade down; considering its meteoric rise and the fact that we are heading into the “shoulder period”, well, I certainly think it could (or not). I am saying that the trend remains firmly upward, though not in a straight line. Will we break last year’s shoulder period lows? NAFC.

On another note… Do you know what the thousands of public relations firms actually do? They wine, and dine, and bribe, and drug, and solicit, and blackmail, etc… their media contacts into writing/producing articles/news segments that benefit their client – with no regard as to the accuracy of the report.

“All I know is what I read in the newspapers” - Will Rogers

Mentatt (at) yahoo (dot) com

No comments: